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)

U.S. economy added 80,000 jobs in October, fewer than expected

From the LA Times:

The nation’s economy continued to grow sluggishly in October, adding just 80,000 jobs as concerns about the future weighed on employers and consumers, curtailing both hiring and spending. 

The unemployment rate dipped slightly, to 9.0% from 9.1% the month before, and the government revised upwards employment figures from both August and September. But the economy still isn’t creating the 125,000 jobs a month economists say are needed to bring down the unemployment rate.

“Employers are riding a turtle when we were hoping they’d get on a Thoroughbred,” said Patrick O’Keefe, a former assistant secretary at the Department of Labor who is now director of economic research at accounting firm J.H. Cohn.

(Read Full Article)

Don’t Let Rural Jobs in CA become Extinct

If a tree can’t be cut down on rural property because of unjustified federal rules, and no one’s around to hear the owner’s frustrated grumbles, do they make a sound?

The question occurred when I read the headline on a magazine item about the regulatory manacles imposed on landowners by the U.S. Endangered Species Act: “Boring but important”

It’s true that the minutiae of environmental restrictions on farms, forests and undeveloped land is not the sexiest of subjects, even for many conservative/libertarian activists who are passionate about opposing the advance of big government.

But attention needs to be paid. If we want California to become a land of promise again, we need to liberate not just the over-encumbered entrepreneur, the overburdened employer, and the overtaxed working men and women in our cities and suburbs, but also the enterprises rooted in the soil — the forestry, agriculture, timber and land-development industries that were the foundation of the state’s prosperity from the beginning.

– Item: Record snowfalls blanketed the Sierras this year — but farmers in the agricultural Central Valley were still squeezed on water supplies for much of the winter.

The reason: federal “fish before people” policies under the Endangered Species Act. Over the past two years, a misguided scheme to revive a declining three-inch fish, the Delta smelt, caused draconian cutbacks in pumping from the Sacramento-San Joaquin Delta into the San Joaquin Valley and Southern California. Hundreds of thousands of farm acres were fallowed and thousands of jobs went down the drain.

Although the media now tell us “the water crisis is over,” that’s only half right. If the drought of snow and rain has ended (for now), the regulatory crisis continues. In explaining why water users still aren’t getting their full allocations, the California Department of Water Resources fingers the feds: a May 2 DWR press release said that a 100% allocation is “difficult to achieve even in wet years due to pumping restrictions” for ESA-protected fish.

Those regulations flow from “sloppy science,” Fresno-based Federal Judge Oliver Wanger found. No wonder that the smelt population has continued to evaporate. All that was achieved was to turn green fields brown in one of the most fertile agricultural regions in the world and a historic backbone of California’s economy. Look for more of the same in future dry years, if the feds’ don’t flush their scorched-earth formula for fish protection.

Item: In 2006, a federally commissioned study concluded that the valley elderberry longhorn beetle no longer needed ESA coverage, and land-use limits could be lifted on private property up and down Central California, from Redding to Bakersfield. Five years later, the feds still haven’t acted; the beetle remains designated as “threatened” – flouting their own scientific findings.

The victims include businessman and environmentalist Bob Slobe, who wants to put up a small, environmentally sensitive office park in Sacramento County. His land has been labeled “critical habitat” for the beetle, so he can’t disturb a bush or tree without paying a massive sum for “mitigation.”

Slobe spends his time and resources shooing away and cleaning up after transients who camp on the land that he’s forbidden from putting to productive use.

The beetle regulations also bug flood-control agencies. They can’t easily fix or build levees where elderberry bushes are present. Levee improvements in Yuba County were delayed for months last year, and the current cost to mitigate for one bush along a Sacramento levy exceeds $160,000.

Says Rep. Dan Lungren: “There is no failure to thrive on the part of the beetle, only a failure to act on the part of [federal officials]. We could not afford it five years ago, and we certainly cannot afford it now.”

Item: Federal officials insist on keeping the California gnatcatcher on the ESA protected status – even though the small, insect-eating bird can be shown to be part of a species that flourishes in Mexico.

The listing ropes off nearly 200,000 acres in San Diego, Orange, Riverside, San Bernardino, Los Angeles, and Ventura Counties. The Fish and Wildlife Service admits that the economic hit from these restrictions is nearly $1 billion – quite a price to safeguard a species that isn’t in peril.

All these useless regulations offer a reminder: The recovery route for the Golden State has to run through Washington, D.C. Unless the federal government adopts a more balanced, people-friendly – and scientifically defensible – approach to environmental protection, California’s rural economy – and probably the state’s larger economy as a result – will linger on the endangered list.

Harold Johnson is an attorney for the Pacific Legal Foundation

Fail-ifornia: Other Than the Weather, What’s So Golden about California?