Why So Many Billionaires Live in California

Of the 100 wealthiest people in America, 26 live in California.

That’s more than any other state, and not simply a byproduct of California’s large population. If the country’s 100 top billionaires were evenly distributed, we would expect just 12 of them to reside here.

Yes, this is largely because of Silicon Valley. But it’s also a reflection of the fact that California has the fifth-largest economy in the world, said Richard Walker, an emeritus professor at U.C. Berkeley who studies economic geography.

“California has been the main engine for American growth for the last 50 years,” Walker told me. “This is not sufficiently acknowledged — how immense the California economy is.”

Before we dive in: I’m going off the official Forbes 2021 billionaire rankings, but they shift daily with the stock market. All of these figures should be viewed as estimates, as there is no system or requirement that Americans report their total wealth to the government.

Now on to the good stuff. There are 724 billionaires in the United States, and California is home to 189 — roughly a quarter of the total, according to Forbes.

The state’s “open, experimental culture” has long attracted entrepreneurs, Walker said. That’s contributed to the movie and aerospace industries flourishing here, and, of course, the tech industry.

Forty-four percent of California’s billionaires made their fortunes in tech, followed by 23 percent in finance and 7 percent in real estate, according to Forbes.

The three richest Californians are tech titans: The Facebook creator Mark Zuckerberg and the Google co-founders Larry Page and Sergey Brin.

Zuckerberg invented Facebook while a student at Harvard, but then “he moves to Silicon Valley because that’s where the action is,” Walker told me. “That’s been going on for two, three, four generations now — you come to Silicon Valley if you’re in tech.”

Silicon Valley’s tendency to mint billionaires has led to a startling trend: Of the 26 Californians who rank among America’s 100 richest people, 19 live in the Bay Area.

(The wealthiest person in Southern California is Donald Bren, America’s richest real estate baron.)

Perhaps you’re wondering about Elon Musk, who relocated Tesla headquarters to Texas, or Oracle’s Larry Ellison, who moved to Hawaii. But it turns out they’re outliers.

Thirty-five people made California’s billionaire list for the first time in 2021, Forbes reported, and more than half of them had the tech industry to thank. California still has more billionaires than any other state; New York is second with 126.

Adam Sterling, executive director for the Berkeley Center for Law and Business, said that people who’ve made their fortunes in California prefer to stay here, close to their professional and personal communities. The high cost of living and higher taxes probably aren’t much of a deterrent if you’re a billionaire, he said.

Plus, the cachet of a California billionaire — think a wealthy techie in a hoodie — may not translate in a place like New York, where the rich are more likely to have inherited their wealth.

“There’s a lot of stickiness in California,” Sterling told me. “This is where your billionaire community is.”

-Collected from Internet