First the good news on the job front: California is leading the nation in job creation. Job growth in the Golden State last year increased by 3.1% while job growth in the rest of the nation settled in at 2.3%. And with 67,300 new jobs created in January alone, the state’s unemployment rate dropped to 6.9% from 7.1%, the lowest in nearly seven years, although still higher than the national unemployment figure of 5.5%. Still, the January California job gains made up 28% of all jobs created in the entire nation.
Yet, wage growth is not keeping pace, especially in populous Los Angeles County. Low paying jobs make up a large share of the job increase in the county and elsewhere.
According to Jordan Levine of Beacon Economics in L.A. the cost of hiring middle class workers in California is expensive. The reasons Levine mentioned in a Long Beach Press Telegram report were regulations and environmental laws that have driven up the cost of doing business and the cost of housing. It becomes difficult for businesses to meet the higher wages needed to keep middle-wage workers.
“It really comes down to the cost of living,” Levine said. “If you look at who’s moving out, it’s people making $50,000 or less.”
So while the legislature looks for solutions to housing costs to help create affordable housing through tax credits and fees, legislators also should consider how past regulations and laws have driven up the cost of housing and look for ways to ease up on those rules.
Beyond that examination, the legislature should go further and see how regulation reform could add to job creation in the middle class.
As the California Business Roundtable noted not long ago, “By a large margin, California’s regulatory environment is the most costly, complex and uncertain in the nation. No other state comes close to California on these dimensions.”
Let’s hail the increase in jobs that is occurring now and celebrate California’s recovering economy. But, now is also the time to take steps to continue job growth and make moves that encourage businesses to generate more middle class jobs.