Rebuilding California’s Job Base

How can we rebuild California’s job base? The latest employment numbers released last week should provide the sense of urgency. An additional 267,123 new unemployment claims were filed just for the one week ending July 4, bringing the total to over 7.4 million claims filed in California since mid-March, and $41.5 billion paid out in unemployment insurance. Our California economy has now reached a position that it survives in good part on unemployment insurance payments.

To understand how to respond to the current predicament, Californians might turn to the front lines of employment: California’s network of 45 Local Workforce Development Boards. Though these Boards are not well known, they represent the heart of the public workforce system in California. Overseen by business and labor representatives appointed by the local Mayor or Board of Supervisors, they administer the bulk of the federal and state job training/placement funds in the state, totaling over $1 billion. They interact daily with job seekers and local businesses. 

The Fresno Board is one of the larger Boards, with a budget of nearly $19 million, 31 direct staff and over 200 contractors involved in job training and placement. It serves an area population of just under one million, with unemployment and poverty rates well above the state average. Blake Konczal, the Executive Director since 2002, started his career during the economic downturn in 1992, providing placement services to laid-off Southern California aerospace workers. He has experience with several other downturns since then, and is actively now in Central Valley recovery efforts.

In recent conversations with Konczal and other Board directors, they emphasize that there is no silver budget for recovery. Rather, their experiences with the current and previous downturns point to a series of five strategies to bring back California jobs.

The first strategy involves how Californians should start the comeback immediately: by identifying the jobs that are available, and rapidly filling them. According to the latest Bureau of Labor Statistics (BLS) data, even in the midst of the worst job devastation in April 2020, approximately 400,000 separate hires occurred during this single month in California. The state economy has improved since then, and the number of monthly hires will increase as it has in the past when the economy improves. In April 2019, for example, the state had over 650,000 separate hires.

Throughout the past few months, Konczal and his staff have been in close contact with Central Valley employers.  Amazon has been adding workers in the Central Valley, as have UPS, grocery store chains, logistics companies, health care providers and security and janitorial firms. Additionally, the Board has partnered with CALFIRE, the state’s fire protection agency, to offer training in forest management and firefighting, taking advantage of job openings in these fields. The Board is also partnering with its public health system for hiring and training custodial workers in COVID-19 disinfecting practices. 

Fresno County has been ahead of much of the state in lifting COVID-19 related restrictions on businesses–which has helped in job placement. The unemployment rate in Fresno went up to 16.7% in May, a doubling of the rate prior to the pandemic. But this increase was far less than the increase in unemployment in other California counties. Konzcal plans to continue his proactive job placement efforts, reaching out to employers, and utilizing virtual job fairs. Konzcal comments, “We, like many of our sister workforce boards in the State of California, were forced into routing our services into the digital world or risk closing completely. In this instance, necessity has proven the mother of enlightenment as we will continue most of these practices in our post COVID-19 operations, especially for employer outreach.”

Reaching out to employers and identifying job openings won’t be enough, though, if employers worry that rehiring may bring liability for any COVID-19 cases among workers or customers. This leads to the second strategy: California must protect employers from lawsuits, as they follow safety protocols to reopen.

The Boards are hearing from employers confused by the myriad rules on the county and state level. “Businesses are confused about these rules, fearful of lawsuits brought by customers or workers who may contact COVID-19 even outside of the job, unclear on what procedures they need to put in place,” Konczal explains. In response, the Fresno Board has brought on a consulting firm to offer no-cost guidance on re-opening protocols. “The high volume of calls from businesses who are asking for this guidance is well beyond what we expected,” Konczal adds. 

Beyond guidance, there is a further element needed from the state legislature: providing employers who follow the safety protocols with greater protection against COVID-19 lawsuits. Rob Lapsley, President of the California Business Roundtable, recently highlighted liability protection as one of the top priorities of his members in hastening the recovery: “Statewide, businesses, large and small, will be able to move more quickly as they can confidently follow safety protocols and not operate in fear of lawsuits.”

A pragmatic approach on liability should inform a third strategy–also connected to the rules for reopening. These rules need to be simplified, and to recognize the tradeoffs and risks involved. The major California counties started lifting their economic lockdowns a few weeks ago, but in hesitant manner and accompanied by complex rules that were nearly impossible to understand. Most businesses chose not to fully re-open. Things got even more complicated this week, as the state ordered retreats from re-opening in 19 counties, in response to the increased rates of infections.

Retreat is the last thing needed now, and it is not justified by the data. According to state officials, the infection increases are being driven most of all by interactions outside of worksites: at social gatherings, family get-togethers, and the large protests. Clearly, mask and social distancing protocols must be more fully enforced in all settings. But it’s that enforcement, rather than new lockdowns, that is called for. At the same time, the new protocols should focus on the mask and distancing requirements, and eliminate the hundreds of detailed rules. 

There will be tradeoffs.  Opening the economy more fully will lead to infections, even without the other increased social interactions. But so long as the hospitals are not overwhelmed, it’s time for the balance to shift toward more fully rebuilding the economy. As the lockdowns continue, the job devastation proceeds apace. Each extra day that the lockdowns last, more jobs are lost and, more importantly, businesses decide that they can no longer hold on and close permanently. 

Economic recovery will be a long road, and it will require bridges. One proven bridge—the fourth of the five strategies—involves the use of transitional jobs, a term that refers to jobs for unemployed workers to provide public services.  The California workforce system has utilized transitional jobs in past recoveries dating back to the public job creation in the President Jimmy Carter administration.  

This month, six of the workforce boards are launching transitional job programs, using federal disaster and workforce funds to create temporary jobs cleaning up parks and recreation areas, staffing food bank distribution, and working as contact tracers. The numbers so far are small (fewer than 700 jobs statewide), but the approach could assume a greater role, depending how quickly the recovery proceeds after being fully reopened for a few months. 

The fifth and final strategy is a cousin of the transition job program: expediting public works projects. The California workforce system has also leaned on the speeding-up of public works in past recoveries, most notably under the American Recovery and Reinvestment Act (ARRA), or 2009 federal stimulus, during the Great Recession. ARRA projects did succeed in long-lasting infrastructure improvements, though the number of jobs created was limited and the cost per job high compared to other approaches.  

Will these five strategies be enough? It’s hard to say. As Konczal summarizes, “The rapidity of this downturn’s growth, the fact that this downturn is hitting almost all sectors of the state economy at once, the added fact that this downturn is effecting individuals of all education levels, make it far more severe than any of the other downturns since World War II.” To be sure, the response will require a mix of approaches, and a determination not to step back from the re-openings.

Michael Bernick is counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department.

This article was originally published by Fox and Hounds Daily.

Comments

  1. Nonsense article. California was destroying its Job base before the virus. The mere fact that Newsom shut down the entire states private business with no thought for the effect demonstrates his lack of concern for employees or employers.

    Government bureaucracy and high taxes will continue to drive businesses from the state. Asking the coyote to restrain itself from eating the sheep is a fools errand.

  2. Really??? says

    Did you see buried in the article how government placement is available?

    Things have become so twisted that instead of going to the Chamber of Commerce where there are “private” sector jobs and contacts the article points to government.

    No longer are the wealth producers viewed as the good guys. The Marxist/Communist Democrats have won the day … the question is will you Joe Public private citizen want to get away from heavy taxation and welfare economy?

    If not prepare for the Confederate Dictatorship called the Democrat Party.

  3. James Healey says

    SHUT DOWN (Recall) Newsom!!!

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