California sits near the top of the global economic food chain, cranking out innovation, investment and sky‑high paychecks. Yet for millions of people trying to make rent, keep the lights on and buy groceries, that prosperity might as well be happening in another state.
According to a new white paper from the Berkeley Economy & Society Initiative, California is “less affordable and poorer than it should be” given its income levels. The researchers point out that in 2023 the state’s Regional Price Parity clocked in at about 113, housing costs ran roughly 88 percent above the median state, and median household income sat just over $100,000 in 2024. Once you adjust for those prices, poverty climbs into the mid‑teens.
That split reality shows up in national scorecards. The State of the Nation Project ranks California number one on the economy, while putting it near the bottom on inequality and environment. Conning’s State of the States 2026 analysis, meanwhile, pushes California well down the list because of its high costs and migration headwinds. As laid out by the State of the Nation Project and Conning, those rankings underscore how a top‑tier economy can coexist with daily hardship on the ground. CalMatters/Palo Alto Online notes that the next governor will inherit a long list of unresolved problems baked into that contradiction.
Policy, Not Just Prices
Berkeley’s follow‑up analysis argues the main culprit is not that Californians earn too little or that the weather is too nice, but that state and local policy keeps the basics artificially scarce. The authors highlight decades of growth controls, an environmental review process that is easy to litigate, and a maze of permits that slow or derail projects. All of it makes it harder to build the housing, energy infrastructure and water systems that could bring costs down.
The paper calls for streamlined approvals and stronger statewide planning to tackle those bottlenecks instead of just accepting high costs as the price of living in California. The policy installment from the Berkeley Economy & Society Initiative lays out those recommendations in more detail.
How Lawmakers Are Trying To Build
Some lawmakers are already trying to translate that theory into concrete and steel. A March report from UC Berkeley’s Terner Center digs into how California could scale up industrialized, factory‑built construction and modernize building codes to cut costs and reduce timeline uncertainty. Those ideas are not just collecting dust in an academic PDF.
The Assembly’s Select Committee on Housing Construction Innovation has leaned on that research to shape a package of bills aimed at lowering construction costs. The Terner analysis and the committee’s work outline practical steps, from updating building codes to aggregating demand for new construction methods and tailoring financing so projects finally “pencil” in markets where they currently do not. For more, see the paper from the Terner Center and the announcement from the Assembly Select Committee on Housing Construction Innovation.
What This Means For People
All of this policy jargon shows up in very real household decisions. A 2023 statewide PPIC survey found that 45 percent of Californians said housing costs had made them seriously consider moving. Many of those respondents said that if they left, it would be the state they ditched, not just their neighborhood. Census‑based analysis summarized by the Population Reference Bureau shows domestic migration trends that have already become a drag on recent population growth, which is one more reason supply‑side fixes are not a theoretical exercise. For details see PPIC and Population Reference Bureau.
For Bay Area readers, the takeaway is blunt: glowing GDP headlines do not shield renters, transit riders or service workers from rising housing and utility bills. Whether modular housing, permitting reform and the other wonky fixes now sitting on lawmakers’ desks actually move forward will determine whether California’s high‑flying economy finally lifts more people with it, or continues to shower most of the benefits on a relatively narrow slice at the top.
