Why People Relocate

In ancient times it seemed normal for a person to be born, live a full lifetime and never set foot farther than 25 miles from the site of his or her birth. As recently as a couple of centuries ago, many of our forebears, who grew up in their parents’ home, thereafter became the senior occupant before passing on and leaving it as the residence for one of their progeny. Perhaps it’s understandable that when enterprise is mostly local, and with travel limited to a horse-drawn wagon, there is little justification to travel the earth in search of advancement or variety.

We now live in a different milieu. If a single event can truly be credited as the cause for modernizing the world and inducing large numbers of people to become travelers – both itinerant and implanted – it was the industrial revolution. As a term designating the period of transition from manual to machine techniques of production, it began in Great Britain about 1760 and enveloped the United States in the latter part of the 19th century. Its effect: the replacement of the domestic method of manufacturing with the factory system.

If this change accomplished one thing, it created new markets for goods and provided capital for the development of industry. It also facilitated the invention of profitable industrial devices such as the spinning jenny (1764), the steam engine (1769) and the power loom (1785). The industrial revolution substantially raised income and, as markets widened, complex systems of transportation and communication developed. The larger scale of business accelerated the evolution of the corporation and before long Britain emerged as the leading economic and political power of the 19th century, with the U.S. succeeding to the position in the 20th century.

With this as our lead-in, we shall consider what factors – short of catastrophic life-threatening events – might induce persons to relocate to various places, by moving prolonged distances and disrupting their lives in ways virtually unthinkable to their ancestors. By reviewing a pair of just such happenings, perhaps we will find some commonality – and better understand why people pick up and move on.

If you take a close look at California back in the year 1860, you find the only center of vibrant activity to be the city of San Francisco. With its population of 56,802, and experiencing phenomenal growth, it functioned as a burgeoning metropolis to be reckoned with. If, however, you glanced 382 miles to the south, you encountered an insignificant little hamlet – La Cuidad de Los Angeles – where its 4,385 inhabitants seemed to be involved in doing nothing in particular. Quite clearly, any future prosperity the state might attain would be relegated to its northern portion.

In 1863 a prolonged strike of tailors for higher pay led to the formation of the San Francisco Trades’ Union – the first prominent labor body in the state. A group of 15 local unions joined to coordinate activities of common interest to their members. They chose as their leader a remarkably competent organizer, Alexander Kenaday, the son of Irish immigrants, whose background included employment on a Mississippi River steamboat, service as a sergeant in the U.S. Army during the Mexican War, a prospector during the California gold rush and a printer for various newspapers in San Francisco, where he helped to organize the Typographical Society and later served as its president.

Under Kenaday’s leadership, the Trades’ Union became central to – and eventually successful in – building a movement for an 8-hour day for all California workers. And remarkably, how he conducted his activities required no intimidation, coercion or threat of violence. He functioned respectably. One local newspaper observed “There was nothing incendiary in the nature of his speeches, no threats were indulged in, nor any efforts made to intimidate those who disagreed with him, but he evidenced a determination to achieve success by proper and legitimate means.”

Over the next several decades unionism in San Francisco became firmly established … and with it workers’ wages grew while business leaders forfeited control over the workers they employed and the businesses they operated. Simply put: entrepreneurship became far less assured or profitable. And by the turn of the century another change took place. The city’s population had risen to 342,782 – though merely a fivefold increase over a 40 year period. However, the residents of uninspiring little Los Angeles now numbered 102,479 – a 2,340% increase during the same period.

But perhaps the major difference between the two communities involved their approach to business. From its creation in 1893, the powerful Los Angeles Merchants and Manufacturers’ Association, whose goal involved supporting local firms and promoting their products, used its influence to minimize the influence of labor unions. It opposed strikes, boycotts, collective bargaining, picket lines and legal restrictions on the authority of employers over their workers. And it proved remarkably effective in maintaining favorable treatment for businesses by city officials.

It is accurate to say the stage was set when, on April 18, 1906, San Francisco suffered devastation from an earthquake. With both water and gas mains ruptured, leaking gas was the catalyst for inextinguishable fires due to a lack of water pressure at the hydrants. With 3,000 deaths and more than 28,000 buildings destroyed, estimated property damage in 1906 dollars amounted to over $400 million – an astounding amount at the time. But in what way was the stage set? You shall see.

When in 1892 Edward L. Doheny discovered oil in Los Angeles, he set off an oil-drilling spree making the city one of the world’s major petroleum fields … and the oil fostered industrialism … and the 1906 San Francisco earthquake spurred many of the city’s manufacturers to relocate their operation south where wages were lower and the city friendlier to business … and the workers followed their jobs. With such an impetus, Northern California saw its population shifting southward – instituting a change in the state’s dynamics which never reversed. You see what causes people to relocate.

Let us now take a look at another relocation currently underway: the moving of Californians to other states of the nation. The reasons they are leaving are readily understood . A major justification is the inability of middle-income residents to afford suitable homes, either rental or owned, due to unaffordable prices caused, to a great extent, by systematic government overregulation.

Another inducement is the prevalence of homelessness, manifesting itself in a scattering of ineffectively regulated homeless encampments. Because of the inability of municipalities to enact and enforce reasonable laws and ordinances, these eyesores impact residential areas and encourage respectable persons to flee the area.

Regardless of the reasons, California manages to maintain the highest gasoline prices, income taxes and sales taxes in the nation. If nothing else were amiss, these alone would be sufficient to drive many cost-conscious residents to go elsewhere. Quite possibly they are more likely to discourage outsiders of even becoming Californians.

But the more recent insult relates to the COVID-19 pandemic, where at 8:10 AM on March 20, 2020, California Governor Gavin Newsom initiated – for no discernable reason – the first statewide mandatory lockdown in the nation, lasting for two-and-one- half months. In doing so, he effectively impoverished approximately 6 million low and lower-middle-income workers, many for whom it will take years to recover.

Thereafter, employing a succession of executive orders, Newsom succeeded in forcing about one-third of all restaurants to close forever, caused the bankruptcies of thousands of businesses, ended the jobs of an untold number of employees and prohibited all landlords and mortgage holders from collecting rents and mortgage payments to which they were entitled. It’s fair to say the harm inflicted thus far on California far exceeds what the 1906 earthquake managed to do to San Francisco ... and as our governor seems inclined to rule the state by executive decree on an indefinite basis, there is no way to tell what may yet be in store for we hapless inhabitants.

Under the circumstances, is there any valid reason why large numbers of Californians – many of them long term residents – are not eagerly seeking suitable ways to exit the state? The term is often referred to as voting with your feet … a technique used throughout the world for centuries. I specifically recall an acquaintance who once told me his grandfather chose to flee Czarist Russia in the 1870s to escape the pogroms. Similarly, is it not reasonable many residents are choosing to flee overregulated California in the 2020s to escape the confiscations?

A final word: As a resident here for more than 75 years, it’s improbable I’ll disrupt my life to the extent of searching for a new home elsewhere. However, for the tens of thousands who are not as firmly implanted here as I, the view of a distant Shangri-La can be enticing. This explains why Californians are choosing to relocate elsewhere.

Al Jacobs, a professional investor for nearly a half-century, issues weekly financial articles in which he shares his financial knowledge and experience. Al may be contacted at al@abjacobs.com