Low unemployment numbers hide income inequality, other economic issues in California

Note to readers: Each week through November 2019, a selection of our 101 California Influencers answers a question that is critical to California’s future. Topics include education, healthcare, environment, housing and economic growth.

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California has now experienced almost 10 years of uninterrupted economic growth. But as the state braces itself for the inevitable downturn, the storm clouds on the horizon are becoming more menacing.

“California’s current robust top-line job statistics disguise underlying problems that have plagued the state for decades,” said Chad Peace of the Independent Voter Project and IVC Media. “Nowhere in America is the middle class shrinking faster than in California. Nowhere in America is there a higher concentration of both wealth and poverty than in California.”

USC Professor Manuel Pastor emphasized California’s vast income inequality, but also cited other critical issues for the state’s political leaders to address.

“With California unemployment at its lowest level in the four decades, it might seem time to rest on the Golden State’s job creation credentials. But there are several key challenges facing the state,” Pastor said, pointing to the worsening housing crisis and the economic disparity between the coast and inland. “While the governor and the legislature might want to focus on just one issue, they will definitely need to multi-task.”

California Chamber of Commerce Executive Vice President Jennifer Barrera also cautioned of potential dangers ahead.

“California’s impressive economic recovery has been welcome news for job seekers,” Barrera said. “But the recovery will not be sustainable without spreading the recovery to all parts of the state, limiting additional burdens on employers, and addressing California’s affordability crisis.”

Influencers from both political parties outlined measures to encourage additional job creation to further extend the current growth cycle.

“The most important area of economic policy and job creation for both the Governor and the Legislature in the coming years should be the small business sector,” said Assemblywoman Monique Limon (D-Goleta). “If there is a slowdown in the economy… small businesses may be forced to stop hiring, reduce their workforce, or have to exit the market. This in turn will … lead to less economic and social opportunities for all Californians.”

Former Republican Congressman Tom Campbell also warned of the broader impact of a weakening business climate.

“Being compassionate is not inconsistent with being fiscally responsible,” Campbell said. “Indeed, we can’t be generous without having something to be generous with – the wealth we used to create in California when everyone wanted to start, or expand, a business here.”

Caitlin Vega, Legislative Director for the California Labor Federation, stressed the role of unions in helping to close the state’s income gap.

“Working people through their sacrifice – and sometimes their lives – won workplace regulations and won unions and that is what created the middle class,” Vega said. “If we want to rebuild it today, the only path is to raise workplace standards, enforce landmark labor laws like AB 5, and protect all workers seeking to join unions.”

Other Influencers focused on the importance of worker training – and retraining – to meet the challenges of a digital economy.

“As we face the challenges brought by an evolving economic landscape, the top priority for Governor Newsom and the State Legislature should be to prepare today’s workforce for tomorrow’s economy,” said Donna Lucas, President of Lucas Public Affairs. “Automation alone will eliminate jobs and change the way we work, making it imperative to educate and upskill Californians so that we do not lose our economic viability.”

The most frequently mentioned obstacle to continued economic growth was the state’s dire shortage of affordable housing.

“Housing shortages weaken the state economy more broadly because employers can’t find workers, especially in areas like San Francisco and Silicon Valley,” said Sacramento public affairs specialist Cassandra Walker-Pye. “If we’re unable to place skilled workers in homes, we’re limiting job creation in a very real way.”

Bay Area Council President Jim Wunderman minced no words in his appeal to the state’s elected leaders.

“Build. More. Housing,” Wunderman pleaded. “The legislature in recent years has taken some modest steps to reform outdated and onerous housing policies that are largely to blame for the problem, but … without immediate action to increase our housing supply California’s vaunted economic competitiveness will suffer dearly.”

David Townsend, Managing Partner for TCT Public Affairs, called for a no-holds-barred effort to take on the twin challenges of affordable housing and homelessness.

“We are the fifth-largest economy in the world, with the brightest minds in the intellectual universe,” Townsend said. “We need a level of effort equal to the Marshall Plan for Europe or the New Deal during the Depression. We have the money. Now we need the effort from our leaders. We can do this.”

This story was originally published December 1, 2019 at 3:01 AM with the headline "Low unemployment numbers hide income inequality, other economic issues in California."