CalChamber Unveils List of 2015 “Job Creator” Bills

Since 2008, CalChamber has been identifying bills that will improve the state’s job climate and stimulate our economy.  We put them on our annual “Job Creator” list hoping to put a spotlight on proposals that will encourage investment in our economy.

Last week, we released the 2015 “Job Creator” list.  This year’s list includes 11 bills that will improve our legal climate, lower costs for employers, spur tourism, and create construction jobs. The list follows recommendations made in our annual business issues guide, called “Foundation for a Better California.”

Each year we hope to have as many job creator bills on our list as we do on our job killer list.  Let’s hope our policy makers make that possible in the years to come! 

The list of 2015 job creator bills includes the following proposals:

Creates Construction Jobs

AB 35 (Chiu; D-San Francisco) Creates Affordable Housing Opportunities. Expands the existing low-income housing tax credit program, making the state better able to leverage an estimated $200 million more in Federal Tax Credits.

AB 323 (Olsen; R-Modesto) Expedites and Reduces Cost for Roadway Repair and Maintenance Projects. Streamlines infrastructure development by extending indefinitely the current CEQA exemption for certain roadway repair and maintenance projects.

AB 641 (Mayes; R-Yucca Valley) Expedites and Reduces Cost for Housing Projects. Streamlines and reduces regulatory burdens for the approval and construction of housing developments by providing an expedited review process under the California Environmental Quality Act.

Improved Legal Climate

AB 52 (Gray; D-Merced) Disability Access Litigation Reform.  Seeks to improve access for disabled customers and limit frivolous litigation against businesses for construction-related accessibility claims by providing an opportunity for the businesses to timely resolve any potential violations.

AB 54 (Olsen; R-Modesto) Disability Access Litigation Reform. Seeks to improve access for disabled patrons without harming businesses through frivolous lawsuits by providing businesses with a 60-day right to correct the violation for a claim based upon a constructed related accessibility standard that was changed or modified in the prior three years.

AB 588 (Grove; R-Bakersfield) Reduces Frivolous Litigation. Seeks to limit frivolous litigation under the Labor Code Private Attorneys General Act, by allowing an employer a 33 day right to cure technical violations on an itemized wage statement that did not cause any injury to the employee.

AB 1252 (Jones; R-Santee) Protects Businesses from Proposition 65 Lawsuits. Provides needed relief to small businesses by prohibiting a person from bringing a Proposition 65 lawsuit against a business employing fewer than 25 employees. Failed passage in the Assembly Environmental Safety and Toxic Materials Committee, 04/14/15. Reconsideration Granted

AB 1470 (Alejo; D-Salinas) Reduction of Costly Employment Class Action Litigation. Limits frivolous class action litigation against employers in California who are creating high paying jobs by creating a rebuttable presumption that employees earning at least $100,000 and performing non-manual labor and at least one exempt duty are exempt from overtime requirements.

SB 67 (Galgiani; D-Stockton) Disability Access Litigation Reform. Seeks to limit frivolous litigation against small businesses and those that have sought to comply, by limiting remedies to injunctive relief and expanding the current period to correct any violation from 60 to 120 days.

Tourism

SB 249 (Hueso; D-Logan Heights) Enhanced Driver’s License. Encourages international trade and tourism by authorizing the Department of Motor Vehicles to issue enhanced driver licenses to U.S. citizens to expedite legal traffic at the border.

Workplace Improvements/Training

AB 1038 (Jones; R-Santee) Flexible Workweek. Provides employers with the opportunity to accommodate employees’ needs as well as business demands by allowing employees to request a voluntary, flexible workweek agreement that can be repealed by the employee at any time with proper notice. Failed passage in the Assembly Labor and Employment Committee, 04/22/15. Reconsideration Granted.

Cumulative Job Creator Signatures

2014: 14 job creator bills identified, 5 sent to Governor, signs 5

2013: 16 job creator bills identified, 2 sent to Governor, signs 2

2012: 34 job creator bills identified, 9 sent to Governor, signs 9

2011: 5 job creator bills identified, 0 sent to Governor

2010: 16 job creator bills identified, 4 sent to Governor, signs 4

2009: 18 job creator bills identified, 2 sent to Governor, signs 2

2008: 3 job creator bills identified, 2 sent to Governor, signs 2

Originally published by Fox and Hounds Daily

Denise Davis is vice president, media relations and external affairs at Cal Chamber

2015 Job Killers — CalChamber Releases Its Preliminary Report

The California Chamber of Commerce yesterday released a preliminary list of “job killer” bills to call attention to the negative impact that 16 proposed measures would have on California’s job climate and economic recovery, should they become law.

Although we will be opposing a number of bills throughout this year, the ‘job killer’ list represents the worst of the worst. These proposals will unnecessarily increase costs on California employers that will likely lead to a loss of jobs.

The list is preliminary. We expect to add more bills to the list in the coming weeks as legislation is amended, and we will periodically release “job killer” watch updates as legislation changes. Please track the status of “job killer” bills on www.cajobkillers.com or by following @CAJobKillers on Twitter. 

Here is the preliminary list of 2015 “job killer” bills:

Increased Labor Costs

AB 357 (Chiu; D-San Francisco) Predictable Scheduling Mandate/Protected Leave of Absence — Imposes an unfair, one-size fits all, two-week notice scheduling mandate on certain employers that perform retail sales activity, and penalizes these employers with “additional pay” for making changes to the schedule with less than two weeks notice, and additionally imposes an unlimited, protected leave of absence from work as well as a broad new protected class of employees who are receiving public assistance or have an identified family member receiving such assistance.

SB 3 (Leno; D-San Francisco/ Leyva; D-Chino) Automatic Minimum Wage Increase— Unfairly increases’ employers costs while ignoring the economic factors or other costs of employers by increasing the minimum wage by $3.00 over the next two and a half years with automatic increases tied to inflation.

SB 406 (Jackson; D-Santa Barbara) Significant Expansion of California Family Rights Act — Creates less conformity with federal law by dramatically reducing the employee threshold from 50 to less than 5 employees and expanding the family members for whom leave may be taken, which will provide a California-only, separate 12 week protected leave of absence on both small and large employers to administer, thereby increasing costs and risk of litigation.

Increased Fuel Costs

SB 350 (de León; D-Los Angeles) Costly and Burdensome Regulations — Potentially increases costs and burdens on all Californians by mandating an arbitrary and unrealistic reduction of petroleum use by 50%, increasing the current Renewable Portfolio Standard to 50% and increasing energy efficiency in buildings by 50% all by 2030 without regard to the impact on individuals, jobs and the economy.

Tax Increases

ACA 4 (Frazier; D-Oakley) Lowers Vote Requirement for Tax Increases — Adds complexity and uncertainty to the current tax structure and pressure to increase taxes on commercial, industrial and residential property owners by giving local governments new authority to enact special taxes, including parcel taxes, by lowering the vote threshold from two-thirds to 55%.

SB 684 (Hancock; D-Berkeley) Increased Tax Rate — Threatens to significantly increase the corporate tax rate on publicly held corporations and financial institutions up to 15% according to the wages paid to employees in the United States, and threatens to increase that rate by 50% thereafter, if the corporation or institution reduces its workforce in the United States and simultaneously increases its contractors.

SCA 5 (Hancock; D-Berkeley) Lowers Vote Requirement for Tax Increases — Adds complexity and uncertainty to the current tax structure and pressure to increase taxes on commercial, industrial and residential property owners by giving local governments new authority to enact special taxes, including parcel taxes, by lowering the vote threshold from two-thirds to 55%.

Increased Burdensome Environmental Regulation

AB 356 (Williams; D-Santa Barbara) Limits In-State Energy Development — Jeopardizes high paying middle class jobs in resource extraction fields by severely restricting wastewater injections sites and requiring unnecessary monitoring of those sites.

AB 1490 (Rendon; D-Lakewood) Limits In-State Energy Development — Drives up fuel prices and energy prices by imposing a de facto moratorium on well stimulation activities by halting the activity after an  earthquake of a magnitude 2.0 or higher.

SB 32 (Pavley; D-Agoura Hills) Halts Economic Growth — Increases costs for California businesses, makes them less competitive and discourages economic growth by adopting further greenhouse gas emission reductions for 2030 and 2050 without regard to the impact on individuals, jobs and the economy.

Increased Health Care Costs

SB 546 (Leno; D-San Francisco) Health Care Rate Regulation — Threatens employers with higher premiums and interferes with their ability to negotiate with health plans by imposing unnecessary and burdensome new reporting requirements on health plans and insurers in the large group market, and giving the Department of Managed Health Care and the Department of Insurance authority to modify or deny all rate changes in the large group market.

Economic Development Barriers

AB 359 (Gonzalez; D-San Diego) Costly Employee Retention Mandate — Inappropriately alters the employment relationship and increases frivolous litigation by allowing a private right of action and by requiring any successor grocery employer to retain employees of the former grocery employer for 90 days and continue to offer continued employment unless the employees’ performance during the 90-day period was unsatisfactory.

SB 576 (Leno; D-San Francisco) Stifles Mobile Application Technology Development — Stifles innovation and growth in the mobile application economy and creates unnecessary and costly litigation by mandating unnecessary, redundant and impractical requirements that will leave many current and future mobile applications unusable, with no benefit to the consumer.

Increased Unnecessary Litigation Costs

AB 244 (Eggman; D-Stockton) Private Right of Action Exposure — Jeopardizes access to credit for home mortgages, increasing the challenge to attract business to California because of high housing prices, by extending the homeowner’s bill of rights to others, thereby opening the door to more private rights of action.

AB 465 (Hernández; D-West Covina) Increased Litigation — Significantly drives up litigation costs for all California employers as well as increases pressure on the already-overburdened judicial system by precluding mandatory employment arbitration agreements, which is likely pre-empted by the Federal Arbitration Act.

SB 203 (Monning; D-Carmel) Lawsuit Exposure — Exposes beverage manufacturers and food retailers to lawsuits, fines and penalties based on state-only labeling requirements for sugar-sweetened drinks.

 president and CEO of the California Chamber of Commerce

Originally published by Fox and Hounds Daily

CA Jobs are Booming, But What Kind of Jobs?

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.

This piece originally ran on Fox and Hounds Daily

Understanding the Meaning about Green Jobs

Given the upcoming proposals on the next generation climate policies, it is critically important to start understanding exactly what the green economy means to California’s long term jobs future. According to a recent review from the Center for Jobs and the Economy, multiple studies indicate that 2% of all California jobs are classified as green jobs.  There is evidence that California has gained temporary jobs around construction and installation of solar facilities and consulting work for government and private employers, but it appears that the green sector has not yet developed substantial permanent, middle income jobs for a long term employment base.

We need to put the numbers into perspective and understand the unique role they will play and how we can develop state policies that recognize their importance while growing the other 98% of our current jobs in other sectors.

For example, the only hard green jobs data from the state was a California Employment Development Department (EDD) survey from May 2009 to January 2010 which found that “the results also showed no discernable difference in the likelihood that a green or non-green firm would experience a net job gain.” The state should have the latest and most transparent green jobs data to help the Governor and policymakers in their decision-making.

While some green industry sectors are growing, many studies rely on reclassification of traditional jobs such as those in garbage, public transit, utilities, and government regulatory positions as “green” in order to arrive at their numbers.  This issue is critically important because major environmental and energy policy decisions will be based on these classifications and incomplete numbers. The Center noted that some reports on green jobs build their numbers by including indirect jobs, including supporting services such as “consulting, finance, tax, and legal services.”

The analysis also found that nuclear, hydro, and natural gas power jobs are treated as green jobs, including in the most recent higher estimates, although those facilities are not designated as such under the AB 32 program.  If we expect to have an accurate accounting that will guide policy-making, then we need to start with a reasoned and practical definition of a green job to be used by government and private entities.

You can find the study here.
Rob Lapsley is President, California Business Roundtable

U.S. Economy Needs Hardhats Not Nerds

The blue team may have lost the political battle last year, but with the rapid fall of oil and commodity prices, they have temporarily gained the upper hand economically. Simultaneously, conditions have become more problematical for those interior states, notably Texas and North Dakota, that have benefited from the fossil fuel energy boom. And if the Obama administration gets its way, they are about to get tougher.

This can be seen in a series of actions, including new regulations from the EPA and the likely veto by the president of the Keystone pipeline, that will further slow the one sector of the economy that has been generating high-paid, blue collar employment. At the same time, housing continues to suffer, as incomes for the vast majority of the middle class have failed to recover from the 2008 crash.

Manufacturing, which had been gaining strength, also now faces its own challenges, in large part due to the soaring U.S. dollar, which makes exports more expensive. Amidst weakening demand in the rest of the world, many internationally-oriented firms such as United Technologies and IBM forecast slower sales. Low prices for oil and other commodities also threatens the resurgence of mainstream manufacturers such as Caterpillar, for whom the energy and metals boom has produced a surge in demand for their products.

Left largely unscathed, for now, have been the other, less tangible sectors of the economy, notably information technology, including media, and the financial sector, as well as health services. In sharp contrast to manufacturing, energy, and home-building, all of these sectors except health care are clustered in the high-cost, blue state economies along the West Coast and the Northeast. As long as the Fed continues to keep interest rates very low, and maintains its bond-buying binge, these largely ephemeral industries seem poised to appear ever more ascendant. No surprise then that one predictably Obama-friendly writer called the current economy “awesome” despite weak income growth and high levels of disengagement by the working class in the economy. If Wall Street and Silicon Valley are booming, what else can be wrong?

Should the whole economy become more bluish?

One consistent theme of blue-state pundits, such as Richard Florida, is that blue states and cities “are pioneering the new economic order that will determine our future.” In this assessment, the red states depend on an economy based on energy extraction, agriculture and suburban sprawl. By this logic, growing food for mass market consumers, building houses for the middle class, making cars, drilling for oil and gas—all things that occur in the red state backwaters—are intrinsically less important than the ideas of nerds of Silicon Valley, the financial engineers of Wall Street, and their scattered offspring around the country.

But here’s a little problem: these industries do not provide anything like the benefits that more traditional industries—manufacturing, energy, housing—give to the middle and working classes. In fact, since 2007, according to the Bureau of Labor Statistics, the information and technology sectors have lost more than 337,000 jobs, in part as traditional media jobs get swallowed by the Internet. Even last year, which may well prove the height of the current boom, the information and technology industry created a net 2,000 jobs. And while social and on-line media may be expanding, having added 5,000 jobs over the last decade, traditional media lost ten times as many positions, according to Pew.

In contrast, energy has been a consistent job-gainer, adding more than 200,000 jobs during the same decade. And while manufacturing lost net jobs since 2007, it has been on a roll, last year adding more than 170,000 new positions. Construction, another sector hard hit in the recession, added 213,000 positions last year. The recovery of these industries has been critical to reducing unemployment and bringing the first glimmer of hope to many, particularly in the long suffering Great Lakes region.

These tangible industries seem to be largely irrelevant to deep blue economies. A prospective decline of energy jobs, for example, does not hurt places like California or New York, which depend heavily on other regions to do the dirty work. Overall, for example, California, despite its massive energy reserves, created merely 15,000 jobs since 2007, barely one-tenth as many as in Texas. Energy employment in key blue cities such as New York and San Francisco has remained stagnant, and actually declined in Boston.

Similarly, a possible slowdown in manufacturing—in part due to an inflated dollar, depressed international demand, and the loss of industrial jobs tied to energy—will affect different regions in varying degrees. Since 2009, the manufacturing renaissance has been strongly felt in traditional hubs like Detroit, Grand Rapids, and Louisville, as well as energy-charged places such as Houston and Oklahoma City. All saw manufacturing growth of 10 percent or more. Meanwhile New York, Los Angeles, Chicago, San Francisco, and Boston all lost industrial positions.

Finally, there remains the housing sector, a prime employer of blue collar workers and the prime source of asset accumulation for middle class families. Sparked by migration and income growth, construction growth has been generally stronger in Texas cities but far more sluggish in New York and California, where slower population growth and highly restrictive planning rules make it much tougher to build affordable homes or new communities. Last year at the height of the energy boom, Houston alone built more single family homes than the entire state of California.

If you think inequality is bad now …

The new ephemera-based economy thrills those who celebrate a brave new world led by intrepid tech oligarchs and Wall Street money-men. The oligarchs in these industries have gotten much, much richer during the current recovery, not only through stocks and IPOs, but also from ultra-inflated real estate in select regional areas, particularly New York City and coastal California. As economist George Stiglitz has noted, such inflation on land costs has been as pervasive an effect of Fed policy as anything else.

Even in Houston, some academics hail the impending “collapse of the oil industrial economy,” even as they urge city leaders to compete with places like San Francisco for the much ballyhooed “creative class.” Yet University of Houston economist Bill Gilmer notes that low energy prices are driving tens of billions of new investment at the port and on the industrial east side of the city. This growth, he suggests, may help offset some of the inevitable losses in the more white collar side of the energy complex.

The emergence of a new ephemera-led economy bodes very poorly for most Americans, and not just Texans or residents of North Dakota. The deindustrialized ephemera-dominated economy of Brooklyn, for example, has made some rich, but overall incomes have dropped over the last decade; roughly one in four Brooklynites, overwhelmingly black and Hispanic, lives in poverty. Similar patterns of increased racial segregation and middle class flight can be found in other post-industrial cities, including one-time powerhouse Chicago, where areas of  concentrated poverty have expanded in recent years.

Nowhere is this clearer than in ephemera central: California. Once a manufacturing juggernaut and a beacon of middle class opportunity, the Golden States now suffers the worst level of poverty in the country. While Silicon Valley and its urban annex, San Francisco, have flourished, most of the state—from Los Angeles to the Inland regions—have done poorly, with unemployment rates 25 percent or higher than the national average. The ultra-“progressive” city now suffers the most accelerated increase in inequality in the country.

Similar trends have also transformed Silicon Valley, once a powerful manufacturing, product-producing center. As the blue collar and much of older middle management jobs have left, either for overseas or places like Texas or Utah, the Valley has lost much of its once egalitarian allure. San Jose, for example, has long been home to the nation’s largest homeless encampment. Black and Hispanic incomes in the Valley, notes Joint Venture Silicon Valley, have actually declined amidst the boom, as manufacturing and middle management jobs have disappeared, while many tech jobs are taken by predominately white and Asian younger workers, many of them imported “techno-coolies.”

In contrast, the recoveries in the middle part of the country have been, to date, more egalitarian, with incomes rising quickly among a broader number of workers. At the same time, minority incomes in cities such as Houston, Dallas, Miami, and Phoenix tend be far higher, when compared to the incomes of Anglos, than they do in places like San Francisco, New York, or Boston. In these opportunity cities, minority homeownership—a clear demarcation of middle income aspiration—is often twice as high as it is in the epicenters of the ephemeral economy.

To succeed in the future, America needs to run on all cylinders.

The cheerleaders of the ephemeral economy often point out that they represent the technological future of the country, and concern themselves little with the competitive position of the “production” economy—whether energy, agriculture, or manufacturing. They also seek to force the middle class into ever denser development, something not exactly aspirational for most people.

Nor is the current ephemera the key to new productivity growth. Social media may be fun, but it is not making America more competitive or particularly more productive (PDF). Yet there has been strong innovation in “production” sectors such as manufacturing, which alone accounts for roughly half (PDF) of all U.S. research and development.

What is frequently missed is that engineering covers a lot of different skills. To be sure the young programmers and digital artists are important contributors to the national economy. But so too are the many more engineers who work in more mundane fields such as geology, chemical, and civil engineering. Houston, for example, ranks second (PDF) behind San Jose in percentage of engineers in the workforce, followed by such unlikely areas as Dayton and Wichita. New York, on the other hand, has among the lowest percentage of engineers of major metropolitan areas.

To be sure, an aerospace engineer in Wichita is not likely to seem as glamorous as the youthful, urbanista app-developers so lovingly portrayed in the media. Yet these engineers are precisely the people, along with skilled workers, who keep the lights on, planes flying and cars going, and who put most of the food on people’s tables.

The dissonance between reality and perception is most pronounced in California. The state brags much about the state’s renewable sector to the ever gullible media. But in reality high subsidized solar and wind account for barely 10 percent of electrical production, with natural gas and coal, now mostly imported from points east, making up the vast majority. In terms of transportation fuels, the state has a 96 percent dependence on fossil fuels, again large imported, despite the state’s vast reserves. Los Angeles, although literally sitting on oil, depends for 40 percent of its electricity on coal-fired power from the Intermountain West.

Equally critical, the now threatened resurgence of the industrial and energy sectors could reverse trends that have done more to strengthen the U.S. geopolitical situation than anything else in recent decades. Foreign dictators can easily restrict a Google, Facebook, or Twitter, or create locally-based alternatives; for all its self-importance, social media has posed no mortal danger to authoritarian countries. In contrast, the energy revolution has undermined some of the world’s most venal and dangerous regimes, from Saudi Arabia and Iran to Russia and Venezuela.

In no way do I suggest we don’t need the ephemeral sectors. Media, social and otherwise, remain important parts of the American economy, and testify to the country’s innovative and cultural edge. But these industries simply cannot drive broader based economic growth and opportunity. Part of the problem lies in the nature of these industries, centered largely in Silicon Valley and San Francisco, which require little in terms of blue collar workers. Another prime issue is that these areas can only import so many people from the rest of country due to extraordinary high housing costs.

Under current circumstances, the centers of the ephemeral economy such as New York or San Francisco cannot accommodate large numbers of upwardly mobile people, particularly families. These, for better or worse, have been vast gated communities that are too expensive, and too economically narrow, to accommodate most people, except those with either inherited money or elite educations. This is why Texas—which has created roughly eight times as many jobs as California since 2007 and has accounted for nearly one-third of all GDP growth since the crash—remains a beacon of opportunity, and the preferred place for migrants, a slot that used to belong to the Golden State.

As a country, we stand at the verge of a historical opportunity to assure U.S. preeminence by melding our resource/industrial economy with a tech-related economy. Our strength in ephemera can be melded with the power of a resource and industrial economy. In the process, we can choose widespread and distributed prosperity or accept a society with a few pockets of wealth—largely in expensive urban centers—surrounded by a downwardly mobile country.

The good news is America—alone among the world’s largest economies—has demonstrated it can master both the ephemeral and tangible economies. To thrive we need to have respect not for one, but for both.

Editor of NewGeography.com and Presidential fellow in urban futures at Chapman University

This piece first appeared at The Daily Beast.

Cross-posted at New Geography and Fox and Hounds Daily 

Hoover Poll: CA Wants Growth, Not Green Programs or Bullet Train

Gov. Jerry Brown just won a resounding re-election victory. But his new budget released last week for Fiscal Year 2015-16, which begins on July 1, is out of sync with Californians on some important issues, according to the Hoover Institution’s new Golden State Poll. It questioned people between Dec. 9 and Jan. 4.

The poll’s findings are consistent no matter political party, income or education level, race, gender, ideology or interest in following the news.

The overwhelming voice of California likely voters seeks:

  • Economic growth: 72 percent
  • Solving the state’s drought and other water problems: 69 percent
  • Improving jobs: 66 percent
  • Balancing the state budget: 61 percent

Much lower down on the list are some of Brown’s top priorities:

  • Dealing with the environment: 32 percent
  • Global warming: 26 percent
  • Making public pensions sound: 26 percent
  • Strengthening gun laws: 26 percent
  • Continuing the state’s high-speed rail project: 16 percent

(See table below for a full list.)

Brown’s budget proposal runs against the grain of public opinion by:

  • Spending $532 million of the new $7.5 billion Water Bond from Proposition 1 that will do nothing directly to deal with drought (poll respondents had a 69 percent priority to deal with the drought).
  • Moving ahead with the bullet-train project (only 16 percent priority) with $250 million of funding from the California Air Resources Board’s cap-and-trade tax on industries and public utilities (only 26 percent priority).
  • Doing nothing to reduce the state’s $15 billion duplicative and ineffective energy efficiency and renewable energy programs per the California Legislative Office report of December 19, 2012 (only 40 percent priority).
  • Funding a school facilities bond that caters to special interests (54 percent priority against special-interest funding).
  • Including $1.4 billion for teacher pension funding (only 34 percent priority).

Pensions

High responses (65 percent or higher) and low responses (35 percent or lower) are both strong indicators of what Californians want to be emphasized in the state budget and other policies. Conversely, modest responses (40 to 60 percent) are not strong indicators one way or another.

Viewed in that frame, the Hoover Poll indicates Californians want economic growth, jobs and a concrete solution to the state’s perpetual drought problems.

Conversely, they consider it a low priority to make pensions sound, reduce income inequality, protect the environment, deal with global warming or proceed with the high-speed rail. In fact, the rail project received the lowest priority of all by far: just 16 percent.

That means 84 percent of Californians are not enthusiastic about the project. Yet Brown has branded rail opponents “dystopians and declinists.”

Californians have modest and equivocal responses to improving roads, K-12 education, reforming the tax system, reducing crime, dealing with energy problems, helping the needy and reducing Medi-Cal costs.

One anomaly is over public pensions. Despite low public awareness, this is a $500 billion problem that just can’t go away. Even the bankrupt cities of Vallejo, San Bernardino and Stockton have been forced to fund pensions above all other priorities. Doing so has brought both large budget cuts to essential services and tax increases.

Legislature unlikely to rectify budget priorities

The voters’ voice is clear from the Hoover poll: Californians want economic growth, private sector jobs and a real solution to the drought problem.

However, it is unlikely the Legislature is going to rectify the budget to be more in line with voters’ priorities given that only 34 percent of those polled by Hoover had any trust in state government.

A mismatch between voter desires and government action is a recipe for political dysfunction.


Top Priorities for California’s State Government – Most Likely Voters

Question: In his State of the State speech, Governor Brown will talk about what he thinks should be priorities for California’s state government in 2015. Thinking about the issues facing California, what do you think should be a top priority, important but lower priority, not too important or should not be done?
Percent saying each is a “top priority” Total
Strengthening the state’s economy 72%
Dealing with the state’s water problems 69%
Improving the job situation 66%
Balancing the state’s budget 61%
Reducing influence of special interests on state government 54%
Dealing with the issue of illegal immigration 49%
Improving state’s roads, bridges and public transportation 47%
Improving the K-12 education system 46%
Reforming the state’s tax system 45%
Reducing crime 44%
Dealing with state’s energy problems 40%
Helping the poor and needy people 37%
Reducing the costs for Medi-Cal program 36%
Make public employee pensions fiscally sound 34%
Protecting the environment 32%
Reducing income inequality 29%
Reforming the state’s pension system 26%
Dealing with global warming 26%
Strengthening gun laws 26%
Continuing the state’s high speed rail project 16%
Data Source: Hoover Institution Golden State Poll, Dec. 9, 2014 to Jan. 4, 2015

This article was originally published by CalWatchdog.com

Are Millennials Being Priced Out of California?

Are millennials being priced out of California?california empty pockets

recent report by the U.S. Census Bureau analyzing statistics from the latest American Community Survey showed the Millennial Generation is struggling to find full-time employment, obtain affordable housing and reach financial independence. The problems are particularly bad here in California.

Young Californians are not only worse off than their parents’ generation, but they’re doing worse than their counterparts in the rest of the country.

“Many of the differences between generations examined within these latest data reflect long-term demographic and societal changes,” said Jonathan Vespa, a Census Bureau demographer. “Three decades of decennial census statistics combined with the latest American Community Survey statistics give us a unique view of how — and where — our nation is changing.”

Better educated but worse job climate for young Californians

Among the five years of data, the most striking statistics are in the area of employment. Despite being better educated, young Californians are earning less money than their parents and are less likely to have full-time employment.

In 1980, 71.1 percent of Californians aged 18 to 34 were employed — better than the national average of 69.3 percent. Today, California’s employment rate of young adults is lower than the national average at 62.1 percent.

Tom Allison and Konrad Mugglestone of Young Invincibles write, “The great recession hit young workers hard, leaving roughly 5 million young adults unemployed five years after the downturn officially ended.

Young Californians earning less today

Of those young people working full-time, wages are down in 2013 inflation-adjusted dollars. Thirty-four years ago, the average Californian earned $36,961 dollars per year. That median wage has dropped to $35,734 per year for the average Californians aged 18 to 34.

As Slate recently wrote of U.S. Census data analyzed by the Young Invincibles, “For Americans between the ages of 25 and 34, annual income earned from wages has fallen in four of the top five biggest employment sectors — retail (down 9.9 percent), the leisure and hospitality business (down 14.65 percent), manufacturing (down 2.87 percent), and professional and business services (down 4.28 percent).” According to the study, the one exception is health care, which has remained nearly unchanged.

While Californians earn more than the national average, much of the wealth has been concentrated in the Bay Area, which skews California’s statewide figures.

In San Francisco County, the average full-time worker, between the ages of 18 and 34, earned a median annual salary of $59,580 — more than double the average wages in rural Madera and Modoc counties. The average young worker in the tech-dominant San Jose metro region earns $51,149 per year — 52 percent more than their counterparts in the Los Angeles metro area.

Millennials can expect lower wages  throughout  their working lives. Lisa Kahn, a labor economist at Yale University, found that college graduates that enter a weak economy suffer lower wages throughout their entire careers.

“I find large, negative wage effects of graduating in a worse economy which persist for the entire period studied. I also find that cohorts who graduate in worse national economies are in lower-level occupations, have slightly higher tenure and higher educational attainment, while labor supply is unaffected. Taken as a whole, the results suggest that the labor market consequences of graduating from college in a bad economy are large, negative and persistent.”

Price of housing top in nation

While wages have declined for millennials, the cost of housing has continued to increase.

California is home to three of the most expensive major cities for housing in the country: Los Angeles, San Diego and San Francisco. The most expensive city in the country, San Francisco, has an average median home price of $744,400 and requires an annual salary of $145,500 to pay the nearly $3,400 mortgage, according to Business Insider. That’s double Seattle and Chicago and more than three times the cost of Houston, Dallas and San Antonio.

The city of San Jose estimates the average apartment in San Jose rents for $2,230 — up by 49 percent in the past four years.

“Housing costs in the peninsula, from San Francisco to San Jose, have doubled in the last five years,” writes Kerry Cavanaugh of the Los Angeles Times. “It’s even worse in San Francisco, which recently surpassed New York City as the most expensive rental market in the nation.”

More Californians live with Mom and Dad

Unsurprisingly, due to these increased housing costs, millennials in California are more likely to live with their parents than those in the rest of the country or previous generations.

According to the U.S. Census Bureau report, 34.5 percent of Californians aged 18 to 34 are living with a parent who is the householder. That represents a dramatic shift from 1980, when just 1 in 5 young Californians lived with their parents. Then, fewer Californians lived with their parents in comparison to the rest of the country. Now, more Californians live at home than the national average.

“Housing is typically the largest share of household expenditures and raising its price reduces discretionary incomes, while increasing poverty,” writes Wendell Cox, principal of Demographia, an international public policy and demographics firm.

Poverty, too, has increased among young Californians. Nearly one in five Californians aged 18 to 35 lives below the poverty line, an increase from 1980.

“Let’s say you’re a kid out of college and your first job, you’re getting paid $40,000 a year,” Richard Green, director of the USC Lusk Center for Real Estate, told the Los Angeles Times. “You want to live in a safe neighborhood in Los Angeles, with decent access to jobs, transit, et cetera. You’re looking at $1,400 to $1,500 a month in rent. So that means you’re paying $18,000 a year out of your $40,000 just in rent.”

The U.S. Census Bureau analyzed five years of demographic, economic and housing data collected between 2009 and 2013.

This article was originally published by CalWatchdog.com

The Long Stall: CA’s jobs engine broke down well before the financial crisis

Everybody knows that California’s economy has struggled mightily since the 2008 financial crisis and subsequent recession. The state’s current unemployment rate, 12.1 percent, is a full 3 percentage points above the national rate. Liberal pundits and politicians tend to blame this dismal performance entirely on the Great Recession; as Jerry Brown put it while campaigning (successfully) for governor last year, “I’ve seen recessions. They come, they go. California always comes back.”

But a study commissioned by City Journal using the National Establishment Time Series database, which has tracked job creation and migration from 1992 through 2008 (so far) in a way that government statistics can’t, reveals the disturbing truth. California’s economy during the second half of that period—2000 through 2008—was far less vibrant and diverse than it had been during the first. Well before the crisis struck, then, the Golden State was setting itself up for a big fall.

One of the starkest signs of California’s malaise during the first decade of the twenty-first century was its changing job dynamics. Even before the downturn, California had stopped attracting new business investment, whether from within the state or from without.

Economists usually see business start-ups as the most important long-term source of job growth, and California has long had a reputation for nurturing new companies—most famously, in Silicon Valley. As Chart 1 shows, however, this dynamism utterly vanished in the 2000s. From 1992 to 2000, California saw a net gain of 776,500 jobs from start-ups and closures; that is, the state added that many more jobs from start-ups than it lost to closures. But during the first eight years of the new millennium, California had a net loss of 262,200 jobs from start-ups and closures. The difference between the two periods is an astounding 1 million net jobs.

Between 2000 and 2008, California also suffered net job losses of 79,600 to the migration of businesses among states—worse than the net 73,800 jobs that it lost from 1992 through 2000. The leading destination was Texas, with Oregon and North Carolina running second and third (see Chart 2). California managed to add jobs only through the expansion of existing businesses, and even that was at a considerably lower rate than before.

Another dark sign, largely unnoticed at the time: California’s major cities became invalids in the 2000s. Los Angeles and the San Francisco Bay Area had been the engines of California’s economic growth for at least a century. Since World War II, the L.A. metropolitan area, which includes Orange County, has added more people than all but two states (apart from California): Florida and Texas. The Bay Area, which includes the San Francisco and the San Jose metro areas, has been the core of American job growth in information technology and financial services, with San Jose’s Silicon Valley serving as the world’s incubator of information-age technology. During the 1992–2000 period, the L.A. and San Francisco Bay areas added more than 1.1 million new jobs—about half the entire state total. But between 2000 and 2008, as Chart 3 indicates, California’s two big metro areas produced fewer than 70,000 new jobs—a nearly 95 percent drop and a mere 6 percent of job creation in the state. This was a collapse of historic proportions.

Not only did California in the 2000s suffer anemic job growth; the new jobs paid substantially less than before. Chart 4 reveals the sad reversal. From 2000 to 2008, California had a net job loss of more than 270,000 in industries with an average wage higher than the private-sector state average. That marked a turnaround of nearly 1.2 million net jobs from the 1992–2000 period, when 908,900 net jobs were created in above-average-wage industries. Further, during the earlier period, more than 707,000 net jobs were created in the very highest-wage industries—those paying over 150 percent of the private-sector average.

Chart 5, which indicates job growth or decline in selected industries, again suggests that a lopsided amount of California’s economic growth in the 2000s was in below-average-wage fields. It included nearly 590,000 net jobs in “administration and support”—clerical and janitorial jobs, for example, as well as positions in temporary-help services, travel agencies, telemarketing and telephone call centers, and so on. The largest losses in the state during the 2000s were in manufacturing, which traditionally provided above-average wages. After adding a net 64,900 manufacturing jobs from 1992 to 2000, California hemorrhaged a net 403,800 from 2000 to 2008. But information jobs also went into negative territory, while professional, scientific, and technical-services employment experienced far lower growth than in the previous decade.

The chart also shows that California’s growth in the 2000s, such as it was, took place disproportionately in sectors that rode the housing bubble. In fact, 35 percent of the net new jobs in the state were created in construction and real estate. All those jobs have vaporized since 2008, according to Bureau of Labor Statistics data. They are unlikely to come back any time soon.

These are troubling numbers. Fewer jobs and lower wages do not a robust economy make. A continuation of this trend, even if California’s recession-battered condition improves, would result in a far more unequal economy, shrunken tax revenues, and a likely increase in state public assistance—all at a time when officials are struggling with massive deficits.

 

 

 

A final indicator of California’s growing economic weakness during the 2000–2008 period is that the average size of firms headquartered in the state shrank dramatically. As Chart 6 shows, California had a huge increase over the 1992–2000 period in the number of jobs added by companies employing just a single person or between two and nine people, even as larger firms cut hundreds of thousands of jobs. Many of the single-employee companies may simply be struggling consultancies: if they were doing better, they’d likely have to start hiring at least a few people. While start-ups are indeed crucial to economic growth, small companies are especially vulnerable to economic downturns and often feel the brunt of taxes and regulations more acutely than larger firms do. The awful job numbers for the bigger companies—including a net loss of nearly 450,000 positions for firms with 500 or more employees—suggest the toxicity of California’s business climate. After all, bigger firms have the resources to settle and expand in other locales; in the 2000s, they clearly wanted nothing to do with the Golden State.

What is behind California’s shocking decline—its snuffed-out start-ups, unproductive big cities, poorer jobs, and tinier, weaker, or fleeing companies—during the 2000–2008 period? Steven Malanga’s “Cali to Business: Get Out!” identifies the major villains: suffocating regulations, inflated business taxes and fees, a lawsuit-friendly legal environment, and a political class uninterested in business concerns, if not downright hostile to them. One could add to this list the state’s extraordinarily high cost of living, with housing prices particularly onerous, having skyrocketed in the major metropolitan areas before the downturn—thanks, the research suggests, to overzealous land-use regulation.

One thing is for sure: California will never regain its previous prosperity if it leaves these problems unaddressed. Its profound economic woes aren’t just the result of the Great Recession.

Wendell Cox is the principal of Demographia, a public policy consultancy. This article was first posted in City Journal. City Journal thanks the Hertog/Simon Fund for Policy Analysis for its generous support of this issue’s California jobs package.

Legal Reform = Job Creation

We all agree that the number one priority in this state and nation should be job creation. However, it seems like some people are more focused on spending money than saving money, at the expense of job creation.

A new study published by the U.S. Chamber Institute for Legal Reform called Creating Conditions for Economic Growth: The Role of the Legal Environment sheds some light on how the high cost of tort systems in the United States is raising the cost of doing business and hurting job creation. This study is based on a data set of state liability costs never before made available to public policy researchers, which provides an excellent basis for a reliable state-by-state comparison of costs.

I have often cited the Pacific Research Institute’s U.S. Tort Liability Study, which stated that just one tort reform in California would create 141,000 jobs. This study, looking at updated data, concludes the same thing: improvements in states with the costliest legal environments could increase employment between 1% and 2.8%. In California, that could mean more than a quarter million jobs.

Will this latest study simply be placed on a bookshelf with all the other studies and rankings or will someone (in the Legislature or Governor’s office) clue in and get it? We need to make legal reform part of California’s jobs package and thoroughly examine our regulations so we can get California back on track.

It is pretty clear that if we want people to invest or expand businesses in our state, we need to make the business climate more inviting. Right now, it is fair to say (and many CEOs agree) California’s business climate is among the worst in the nation. Legal and regulatory reform will create a positive business climate where investors will come and build.

Are you listening California? Legal reform = Jobs. Don’t just take my word for it – there are plenty of materials you can read to back it up.

(Tom Scott is the Executive Director for California Citizens Against Lawsuit Abuse.  This article was first featured in Fox & Hounds.)

AT&T, T-Mobile USA Merger Means Jobs

From CA Majority Report:

California’s dismal economic outlook has squelched many job opportunities, including those that would allow employees to organize and demand better conditions. With the jobless rate hovering somewhere around 12% since 2009, one of the highest in the country, nearly two million Californians are looking for work, but are unable to find jobs. On the street, most visibly in the Occupy Wall Street movement, you can sense the frustration.

Californians are impatient with the state of the economy – and afraid that the future may not bring better circumstances.

During the worst economic downturn in a generation, it’s our job to make sure no opportunity to create new jobs and protect existing jobs is left on the table.

(Read Full Article)