Dan Walters: California's economy is still shaky

dwalters@sacbee.comOctober 28, 2012 

The Bee recently published a monograph by Mike Rossi, Gov. Jerry Brown's economic adviser, in which he sought to debunk criticism of California's business climate.

"The fact is that California is once again the national leader in job creation," Rossi wrote, citing 298,000 private sector jobs gained in the past year, "which is more than New York, New Jersey, Florida and Nevada combined."

Rossi cited as a "just this week" example of such job creation, an announcement that the Sacramento-based Sutter hospital chain would open a new facility in Roseville "that employs upwards of 1,000 people."

Curiously, he omitted the part of Sutter's announcement saying the new facility merely consolidates operations that have been scattered in other locations and, as The Bee reported, "ultimately will result in a reduction of Sutter's overall workforce spread out over Northern California."

Is that how the Brown administration defines job creation?

California's economic situation may not be as dire as many contend, but neither is it as rosy as Rossi – and by extension, Brown – would have us believe.

The reality is more nuanced. California is, indeed, very slowly emerging from its worst recession since the Great Depression, which wiped out about 1.3 million jobs. We have since recovered about 300,000 jobs – but that still leaves us a million short from the recession, plus nearly a million on the unemployment rolls before the recession began.

According to new data from Brown's own Employment Development Department, we still have 1.9 million unemployed workers and our jobless rate, 10.2 percent, while down a couple of points, is still one of the nation's highest.

Actual employment over the last year, EDD said, is up 203,000, or to put it another way, it would take five more years of gains at that rate simply to bring California back to pre-recession employment levels – not counting the job growth needed for population and labor force growth.

Moreover, recovery is very uneven, with unemployment rates below 10 percent confined to a few counties, mostly in the tech-heavy San Francisco Bay Area.

There is, too, some doubt that this weak recovery is sustainable, given the precarious state of national and global economies.

The University of the Pacific's new forecast sees slowing California job growth in the immediate future.

Finally, there are legitimate doubts about the state's current receptivity to job-creating investment, and rational concerns about the potential effects of Brown's tax increase, if passed by voters, another measure that would hit out-of-state corporations with new taxes, and rising utility costs and heavy new business fees due to the state's anti-global-warming drive.

Ignoring such real world issues doesn't make them vanish.

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