Business
Opinion: California ruled with great jobs and boom times. What happened?
Gov. Gavin Newsom’s constant reminders that California’s economy ”leads the nation” as well as being a model for social justice are delusional. To be sure, California has a huge GDP, paced largely by high real estate prices and the stock value of a handful of tech companies, but it is not widely seen as a place for class mobility, and it is slowly ceding its dominance, even in tech-related industries.
In contemporary California, home to four of the world’s seven most valued tech firms, tech bros and real estate speculators occupy what Lenin called “the commanding heights,” while the reality on the ground is far less ethereal. The view from where most Californians reside is revealed in a new study sponsored by Chapman University: “Is California Losing Its Mojo?,” by business professors Marshall Toplansky (Chapman) and Kenneth Murphy (UC Irvine).
Historically, the report notes, California has outpaced the rest of the country in terms of the growth of its goods and services. However, that pace of GDP growth in the state has dropped significantly since 2022, with the measure now lagging when compared with other states. The distribution of jobs and wealth is even more worrisome.
California has been a particularly poor bet for blue-collar professions, such as manufacturing, the traditional path to upward mobility for minorities and non-college educated people. Bureau of Labor Statistics data, analyzed by Lightcast, shows California has lagged far behind places like Utah, Nevada, Texas and Arizona over a decade.
The Chapman paper acknowledges that the state has experienced enough job growth to keep unemployment levels low, but as the report details, most new jobs in California aren’t concentrated in high-wage sectors. Over the last 10 years, 62% of jobs added in California were in lower-than-average paying industries, versus 51.6% for the nation as a whole. In the last three years, the situation worsened, with 78.1% of all jobs added in California coming from lower-than-average paying industries, versus 61% for the nation as a whole.
In a state with high living costs, a dearth of well-paying jobs seems likely to bear responsibility for the state’s out-migration rate and its poverty rate, which the Census Bureau calculates, in its most comprehensive estimate, as 15.4%, one of the highest in the nation. California may be home to a lot of billionaires, but it also is home to nearly 30% of the country’s homeless.
Of course, not everyone has suffered. Besides tech billionaires, who is doing well in California? Older homeowners, for one, whose bottom line has risen as home values increased dramatically. Government workers have also thrived.
Census Bureau data highlighted in the Chapman report show that California public sector job growth over the last decade has been growing at about the same pace as jobs overall in California, but the average annual pay for those government jobs was almost double that of private sector jobs. In other words, the road to the middle class comes not from private employment but from jobs that are funded by taxpayers.
In the past, California cities including San Francisco, San Jose and San Diego all ranked in the top 10 among hubs for “advanced industry” employment — where there’s high investment in R&D and a high percentage of STEM roles. But since 2020, only San Jose remains in the top 25 metro areas for growth in such employment. Today the emerging hot spots are often east of the Sierra: Austin, Texas; Nashville; Indianapolis; Salt Lake City; and Phoenix.
Can California get its mojo back? After all, many of the state’s assets — research universities, leading tech firms and the lifestyle appeal — have not disappeared.
First, Newsom and other state cheerleaders have to stop using the size of the economy as a cover for real problems. Whatever the state’s strengths, as the Chapman report puts it, low-wage jobs overtaking advanced industry work is not sustainable.
The Biden administration emphasized bringing manufacturing back to the U.S., and President-elect Donald Trump promises to do the same, but California misses out on opportunities due to the costs associated with its regulatory regimes.
Consider technologies largely developed and embraced by California, such as EVs and the batteries that run them. Jobs in those manufacturing industries overwhelmingly fall to red states, largely a reflection of such things as easier permitting rules, lower energy costs and less intrusive labor regulations.
Remarkably, Newsom, who feuds with Elon Musk and has taken on the role of the national anti-Trump, has promised that if the next administration in Washington eliminates the federal $7,500 buyer EV tax credits, California will step in with state rebates for the vehicles — with reportedly one exception, Teslas, which happen to be the dominant American brand and the only EVs made in California. The plant in Fremont employs thousands in good manufacturing jobs.
And that’s hardly the end of the self-destructive politicking.
One “advanced industry” where California, and in particular Southern California, still has a leg up is aerospace, and its corollary, defense. The state remains well in the lead in terms of aerospace-related employment, and innovative new firms, such as Anduril in Orange County, seem primed to take advantage of Trump’s emphasis on military spending. In his first term, he increased the defense budget to historic highs.
But is California’s Democratic leadership on board?
Once again, the state’s relations with Musk, Trump “first buddy” and the world’s preeminent space pioneer, would indicate just the opposite. Musk, upset at a California law that allows schools to keep parents in the dark when their children identify as LGBTQ+, decided to move SpaceX’s headquarters from Hawthorne to Texas this year. And just weeks ago, the California Coastal Commission denied SpaceX’s request to increase its rocket launches from Vandenberg Air Force Base; reportedly after commissioners discussed his political views before they voted on the issue. Even Newsom objected.
This is not the way to build a truly inclusive and healthy economy. Gavin Newsom can talk all he wants about California’s bounty, but the road the state’s Democrats have set for us has been profoundly regressive.
Joel Kotkin is a contributing writer to Opinion, the presidential fellow for urban futures at Chapman University and senior research fellow at the Civitas Institute at the University of Texas, Austin.
Early in April, Ruben Hallali got an unusual alert on his phone: The evening temperature at Paris Charles de Gaulle International Airport had jumped about 6 degrees Fahrenheit in seconds.
Mr. Hallali, the chief executive of the weather risk company Sereno, had set up notifications for extreme weather swings. Then, nine days later, it happened again.
“It was an isolated jump, at one single station, early in the evening,” said Mr. Hallali, who added that he noticed another strange coincidence about the spikes: The timing was just right for somebody to reap a windfall on the betting site Polymarket.
He wasn’t the only one who sensed a problem. Météo-France, the country’s national meteorological service, filed a complaint last week with the police and local prosecutors, saying it had evidence that a weather sensor at Charles de Gaulle, the country’s largest airport, may have been tampered with.
The temperature swings, experts said, coincided with a period of unusual activity on Polymarket, one of the leading online prediction markets, which allow users to wager on the outcome of virtually anything.
One increasingly popular area is weather betting, where speculators can make real-time wagers on temperature readings, rainfall totals, the number of Atlantic hurricanes in a year and much more — with payouts in the thousands of dollars and higher.
As the stakes rise, so has the temptation to tamper with the instruments used to generate weather readings in hopes of engineering a lucrative outcome. Experts warn that this could have dangerous ripple effects, like degrading the information that underpins safe air travel.
Temperature data is used in a host of calculations at airports, helping determine correct takeoff distance, climb rate and whether crews need to apply frost treatment to planes. It’s crucial to airport safety, Mr. Hallali said.
“The Charles de Gaulle incident is not an isolated curiosity,” Mr. Hallali said. “It is what happens when financial incentives meet fragile data infrastructure.”
On April 6, the temperature reading at Charles de Gaulle jumped from 64 degrees Fahrenheit to 70 degrees at 7 p.m., before slowly falling over the next hour, according to data from Météo-France.
On April 15, the recorded temperature climbed even more sharply, from 61 degrees at 9 p.m. to 72 at 9:30 p.m., then dropping back to 61 a half-hour later.
In both instances, the spikes set the high temperature for the day, the metric on which some Polymarket wagers rest.
Laurent Becler, a spokesman for Météo-France, said the service contacted the police after noticing the discrepancies in temperature data. He declined to comment further on the case, saying it was under investigation.
Mr. Hallali said that after the first instance, experts and commenters on the French weather forum Infoclimat began to search answers. Theories were floated, including user error. But after the second spike, commenters zeroed in on the unusual Polymarket wagers, which totaled nearly $1.4 million over the two days, according to the company’s data.
The sums bet on April 6 and 15 were hundreds of thousands of dollars higher than on typical days this month.
It is not the first time that strange bets on prediction markets have raised accusations of insider trading.
On Thursday, a U.S. Army special forces soldier who helped capture President Nicolás Maduro of Venezuela in January was charged with using classified information to bet on outcomes related to Venezuela, making more than $400,000 on Polymarket. Late last year, another trader on the site made roughly $300,000 betting on last-minute pardons from President Joseph R. Biden Jr. before he left office.
Polymarket did not immediately respond to a request for comment. While the site used to tie some bets to temperature readings at Charles de Gaulle, this week, after Météo-France filed its complaint, the platform began using temperatures taken at another airport near the city, Paris-Le Bourget, according to recent bets on the site.
Representatives for Charles de Gaulle airport declined to comment beyond saying that the case was under investigation. The airport police also declined to comment. The Bobigny Public Prosecutor’s Office, which is handling the case, declined to answer questions about the investigation but said that no complaint had been filed against Polymarket.
As to how the instruments could have been tampered with, a number of theories have been offered online, including by use of a hair dryer or a lighter. Mr. Hallali said that the precision of the spike on April 15 suggested the use of a calibrated portable heating device, although he declined to speculate about what kind.
“Markets are expanding into every domain where an outcome can be observed, measured, and settled,” he said. “As these markets multiply, so does the surface area for manipulation.”
As the war in Iran strangles the flow of oil around the globe, California’s jet fuel reservoirs are running low.
The state — which refines much of its own fuel in El Segundo and elsewhere but still relies on crude oil imports — has seen its jet fuel stock decline by more than 25% from last year’s peak to a level not seen since 2023, according to data from the California Energy Commission.
The supply is shrinking as a global shortage is already affecting travelers’ summer plans with canceled flights and higher fares. It could even affect plans for people coming to Los Angeles for the 2026 World Cup, which starts in June, said Mike Duignan, a hospitality expert and professor at Paris 1 Panthéon-Sorbonne University.
“People don’t know exactly how this is going to escalate,” he said. “There’s a huge black cloud over the sea for the World Cup and the travel slump that we’re seeing is all linked to this oil shortage.”
As fuel supplies shrink, flight prices are rising. Airlines are adding baggage surcharges to cover fuel costs. Several routes leaving from smaller California hubs, including Sacramento and Burbank, have already been canceled.
Air Canada has suspended flights for this summer, cutting routes from JFK to Toronto and Montreal.
“Jet fuel prices have doubled since the start of the Iran conflict, affecting some lower profitability routes and flights which now are no longer economically feasible,” the airline said in a statement last week.
Europe had just more than a month’s supply of jet fuel left last week, the International Energy Agency said. In an effort to cut costs, the German airline Lufthansa slashed 20,000 flights from its summer schedule this week.
Without a fresh oil supply flowing through the Strait of Hormuz, the situation is unlikely to improve, experts said. The oil reserves countries and companies have in storage are helping fill shortfalls, but the squeezed supply chain could still wreak economic havoc.
“When there’s a shortage somewhere, everything is affected,” said Alan Fyall, an associate dean of the University of Central Florida Rosen College of Hospitality Management. “Airlines are being cautious, and I would say that is a very wise strategy at the moment.”
California’s jet fuel stock reached its lowest levels in two and a half years at 2.6 million barrels last week, down from a peak of more than 3.5 million barrels last year.
The California Energy Commission, which tracks fuel inventory, said the state’s current jet fuel stock is sill sufficient.
“Current production and inventory levels of jet fuel are within historical ranges,” a spokesperson said. “Although supply is tight, no structural deficit has emerged yet. The present tightness reflects short‑term global market stress. As long as refinery operations remain stable, California is positioned to meet regional jet fuel needs.”
Europe has been affected more directly because it relies on the Middle East for the vast majority of its crude oil and many refined products, experts said. California gets crude oil from the Middle East but also from Canada, Argentina and Guyana.
The state has the capacity to refine around 200,000 barrels of jet fuel per day, most of it from refineries in El Segundo and Richmond.
The amount of crude oil originating in the state has been declining since the early 2000s, as state regulations and drilling costs have led to more imports.
California has become particularly vulnerable to supply-chain shocks like the war in Iran, says Chevron, one of the companies that provides jet fuel in the state.
“The conflict in the Mideast Gulf has exposed the danger of California’s decision to offshore energy production,” said Ross Allen, a Chevron spokesperson. “Taxes, red tape and burdensome regulations cost the state nearly 18% of its refinery capacity in just the past year, and we urge policymakers to protect the remaining manufacturing capacity.”
In 2025, 61% of crude oil supply to California’s refineries came from foreign sources, according to the California Energy Commission. Around 23% came from inside the state, down from 35% five years ago.
The state’s refining capacity has also been declining, said Jesus David, senior vice president of Energy at IIR Energy. The West Coast region’s refining capacity has decreased from 2.9 million to 2.3 million barrels a day since 2019, he said.
“California’s had issues prior to the war,” David said. “Nothing new has been built over the past 30 years, and California has closed a lot of capacity.”
The result is higher prices for both gasoline and jet fuel in the state. Jet fuel at LAX costs close to $15 per gallon this week, compared with almost $10 at Denver International Airport and $11 at Newark International Airport.
Gasoline prices have also been hit hard by the global conflict. Average gas prices in California are close to $6 a gallon, around $2 higher than the national average.
The West Coast is a “fuel island” because it’s not connected by pipelines to the rest of the country, United Airlines chief executive Scott Kirby said in an interview last month. That means oil and refined products have to be brought in by ships.
“Fuel price is more susceptible to supply weakness on the West Coast than anywhere else in the country,” Kirby said.
Some airlines might not survive the turmoil if oil prices don’t level out soon, he said. Spirit Airlines, a budget carrier based in Florida, is reportedly facing imminent liquidation if it isn’t bailed out by the Trump administration.
Nike is cutting about 1,400 jobs in its operations division, mostly from its technology department, the company said Thursday.
In a note to employees, Venkatesh Alagirisamy, the chief operating officer of Nike, said that management was nearly done reorganizing the business for its turnaround plan, and that the goal was to operate with “more speed, simplicity and precision.”
“This is not a new direction,” Mr. Alagirisamy told employees. “It is the next phase of the work already underway.”
Nike, the world’s largest sportswear company, is trying to recover after missteps led to a prolonged sales slump, in which the brand leaned into lifestyle products and away from performance shoes and apparel. Elliott Hill, the chief executive, has worked to realign the company around sports and speed up product development to create more breakthrough innovations.
In March, Nike told investors that it expected sales to fall this year, with growth in North America offset by poor performance in Asia, where the brand is struggling to rejuvenate sales in China. Executives said at the time that more volatility brought on by the war in the Middle East and rising oil prices might continue to affect its business.
The reorganization has involved cuts across many parts of the organization, including at its headquarters in Beaverton, Ore. Nike slashed some corporate staff last year and eliminated nearly 800 jobs at distribution centers in January.
“You never want to have to go through any sort of layoffs, but to re-center the company, we’re doing some of that,” Mr. Hill said in an interview earlier this year.
Mr. Alagirisamy told employees that Nike was reshaping its technology team and centering employees at its headquarters and a tech center in Bengaluru, India. The layoffs will affect workers across North America, Europe and Asia.
The cuts will also affect staffing in Nike’s factories for Air, the company’s proprietary cushioning system. Employees who work on the supply chain for raw materials will also experience changes as staff is integrated into footwear and apparel teams.
Nike’s Converse brand, which has struggled for years to revive sales, will move some of its engineering resources closer to the factories they support, the company said.
Mr. Alagirisamy said the moves were necessary to optimize Nike’s supply chain, deploy technology faster and bolster relationships with suppliers.
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