What should California’s economic and job priorities be in 2020? Inequality, homelessness and more

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 Influencers this week answered the following question: What should the most important priority in the area of economic policy and job creation be for Governor Newsom and the State Legislature in 2020? Below are the Influencers’ answers in their entirety.

“Create a level playing field to revive the California Dream”

Lenny Mendonca – Director of the Governor’s Office of Business and Economic Development

Our top priority for economic policy in 2020 remains as it was from the start of the Newsom administration: inclusive, high-quality job growth. Right now California has record low unemployment of 3.9 percent, record long job expansion of 116 straight months – nearly 3.4 million more Californians employed since the expansion began, the most of any state – but more work needs to be done. Seventy percent of the job growth this decade has been in greater LA, San Diego and the Bay Area, but over 50 percent of the population growth the next few decades is in inland communities. Imperial County still has more than 21 percent unemployment. And we have staggering levels of inequality and lack of economic mobility – many of the state’s fastest growing industries pay low wages. Eight million Californians live below the poverty line, about 35 percent of jobs in California are $15 or less, including over 50 percent for our LatinX community. As the innovation capital of the world, with strong entrepreneurial spirit, and fifty-one percent of all venture capital nationwide, our fundamental objective is to create a level playing field to revive the California Dream and, with it, the American Dream.

Reform Job Creation Regulation

Tom Campbell – Professor of Law and Professor of Economics, Chapman University

California cannot expect to face its challenges and opportunities without a sound economic base. It cannot hope to lead the nation, and the world, while driving jobs out of our state. For fifteen years in a row, after surveying companies thinking of relocating, Chief Executive Magazine has reported that California is number 50 – the worst state – for attracting or keeping businesses. California was number 50 again this year. We’re worst at creating an environment for new jobs.

Reform would include making solid assurances that no new state regulations will be imposed on job creation in California, without a thorough cost-benefit analysis of why California has to regulate beyond the rules imposed on all states by the federal government. Reform would require making a credible pledge that California will not be increasing taxes, but will, instead, try to live within our means. Reform would assure possible investors in California that our state government has implemented a plan to fund our huge public pension debt, so that they needn’t fear about a crash in our state’s bond-rating.

Overall, there needs to be a change in attitude. Being compassionate is not inconsistent with being fiscally responsible. 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.

“The best social program is a job” – Ronald Reagan.

Resolve issues facing power utilities

John Chiang – Former California State Treasurer

In 2020, the top-of-mind economic priority for Governor Newsom and lawmakers should be the resolution of issues facing power utilities especially PG&E. Across California, numerous households and businesses are experiencing the uncertainty of power supply and safety. With more than 6,400 fires recorded this year alone and their ever increasing severity, the difficult decisions by our State’s leadership on the issues of operational transformation, hardening and modernization of infrastructure and financial stability of the electric utilities must be made now to mitigate further disaster.

Protect the small business sector

Monique Limon – California State Assemblywoman (D-Goleta)

I believe 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. In 2018, small businesses made up 99.8% of all businesses in California and generated about 95% of the exports for the State. If there is a slowdown in the economy, the greatest impact will be on small businesses. Small businesses may be forced to stop hiring, reduce their workforce, or have to exit the market. This in turn will further reduce investment and lead to less economic and social opportunities for all Californians. Improving the small business climate may involve further capital investments, regulatory changes that increase access to capital, and a regional approach to those investments and regulations.

Economic policy should be focus on helping low- and moderate-income households help themselves

Luisa Blanco Raynal – Associate Professor, Pepperdine University’s School of Public Policy

California policymakers should focus on designing economic policies with the purpose of helping low- and moderate-income households help themselves. Public programs should be redesigned because in some instances households must deplete all resources in order to qualify for public assistance, which puts them at great disadvantage. If we want households in California to save and plan for retirement, public assistance programs must be redesigned to allow individuals to accumulate some wealth that can be used at retirement age. Furthermore, tax laws could be redesigned to help low- and moderate-income households deal with income volatility. An optional year-round earned income tax credit, could allow families to receive the tax credit on a paycheck to paycheck basis, which could make a difference for those households that have a volatile income. Economic policy should also focus on ensuring that the adequate financial products are available to meet the needs of this group. Economic policy that has a direct impact on household finances should be designed with the premise that households make informed and rational decisions and aim to protect and ensure the financial wellbeing such households in the short and long term.

Take immediate action to build more housing

Jim Wunderman – President and CEO, Bay Area Council

BUILD. MORE. HOUSING. A recent report by McKinsey & Co. found that Los Angeles suffers $36 billion in economic loses annually because of the state’s historic housing shortage and affordability crisis. We can only imagine how astronomical the loss is statewide. And that figure didn’t include a variety of other affordability measures that likely pushes the number much, much higher. In the Bay Area, the state’s economic powerhouse, the housing affordability crisis is causing many companies to question the viability of their continued growth in the region, with the result of seeing some companies move more new and existing jobs out California than they otherwise would.

Gov. Newsom thankfully has made housing one of his top priorities, setting aside $1.75 billion for affordable housing programs and helping secure billions more in contributions from large tech companies. He’s also signed important housing production reform bills, including legislation to expand the supply of accessory dwelling units.

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 much more is needed. The Bay Area Council will be working hard in the coming year to help pass bold reform legislation that seriously moves the dial. Without immediate action to increase our housing supply California’s vaunted economic competitiveness will suffer dearly.

We Must Make One Job Enough Again

Caitlin Vega – Legislative Director, California Labor Federation

In 2018, Unite Here hotel workers went on strike with a simple yet undeniably powerful demand: “One job should be enough.” This is the mission of the Labor Movement. We fight for every worker to have a job that provides them with a dignified way of life. That means job security, wages that allow them to meet basic needs, affordable family healthcare, and pensions that reward a lifetime of hard work.

Those kinds of jobs have disappeared as union density has declined. We’ve been told that workers should accept a life of multiple side gigs where no company has employer obligations and the worker is on their own to navigate the uncertainties and the injustices of the economy.

But the Labor Movement will not surrender. For hundreds of years, workers have taken to the streets to demand safe workplaces, fair wages, and the right to a union. Working people through their sacrifice—and sometimes their lives—won workplace regulations and won unions and that is what created the middle class. 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.

“Prepare today’s workforce for tomorrow’s economy”

Donna Lucas – CEO and President, Lucas Public Affairs

Investments in California’s education system, health care, infrastructure and more rely on the economic well-being of our state. A prosperous economy makes us run – if we can’t get that right, we will not have the engine necessary to drive us forward.

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. 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 to automation too.

The Governor, legislators and California’s leaders in business and education should continue working to build partnerships between employers and educators – from cradle to career – that enable opportunity for workers and ensure that our prosperity as a state and as Californians are not lost to the new economy.

Spread economic recovery to all parts of California

Jennifer Barrera – Executive Vice President, California Chamber of Commerce

California’s impressive economic recovery has been welcome news for job seekers. 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. The Legislature and Governor should welcome and nurture skilled, middle class jobs in all industries including oil production, agriculture and logistics that form much of the economic base of inland California, and that are threatened by unbalanced policies that increase costs and burdens on employers. Elected leaders must also focus more urgently on the growing unaffordability of basic needs, such as housing, transportation and utilities. Middle and working class Californians cannot hope to thrive in our state as long as their basic necessities, along with taxes and nonmonetary costs like commute times, continue to escalate faster than incomes.

Adopt a four-day work week

Chad Peace – Founder and President, IVC Media LLC

California’s current robust top line job statistics disguise underlying problems that have plagued the state for decades and are only exacerbated by international trends in the workplace.

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.

California is at the front edge of technological innovation that has driven productivity gains that were unimaginable 20 years ago.

It is past time that American workers get their share of these dramatic productivity gains in the same way we have spread these benefits to workers in the past. Nothing would improve the daily lives of Californians more than the adoption of the four day work week.

Pilot programs in Japan and elsewhere have demonstrated that shorter work weeks actually improve worker productivity. Families are better able to cope with child care and other issues. And a population that is living longer can be expected to work a little later into their lives, while being given more freedom to enjoy their younger years.

Renewing California’s Promise Will Require the Ability to Focus on More Than One Priority

Manuel Pastor – Director, USC Program for Environmental and Regional Equity

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 – and while the governor and the legislature might want to focus on just one issue, they will definitely need to multi-task.

The first is job quality and the widening divide in our labor markets. The state could help by further expanding the earned income tax credit, helping businesses adjust to the new higher minimum wage, and promoting community college education.

A second is housing and the rising share of households that can barely make their rent. The state could help by further loosening restrictions on building, mandating and providing more support for affordable housing, and enforcing new rent regulations.

A final challenge is geography and the way in which the state’s coastal tech boom has often left inland California behind. The state could help by supporting local efforts like Fresno’s community-driven DRIVE initiative to attract $4.2 billion in investment, with a special focus on closing the racial wealth gap.

When asked to name the single most important thing to address (name your issue), I nearly always reply “Stop thinking there is just one thing.” It took time (and effort) to become the nation’s fourth most unequal state – and renewing California’s promise will require all hands on deck and all policies moving forward.

The Carrot over The Stick

Cassandra Walker-Pye – Founder and CEO, 3.14 Communications

If you had posed this question to me in any other year, my response would have likely called out need for our Governor and state lawmakers to address the cost of doing business in California, namely taxes and fees; and, I may have also referenced the regulatory climate, particularly those environmental regulations which drive costly litigation in the state. However in 2020, given the remarkable and unprecedented impact the housing shortage is having on our state and local economies, I believe state government must craft thoughtful, reasonable incentives to local governments to drive housing construction. We learned in last year’s session that cities don’t respond politely to “sticks” so I’d recommend that, going forward, state policymakers consider bringing more “carrots” into the debate in 2020. It’s really important to challenge the NIMBYism deeply ingrained in our culture for the sake of economic growth. Housing shortages weaken the state economy more broadly because employers can’t find workers, especially in areas like San Francisco and Silicon Valley. If we’re unable to place skilled workers in homes, we’re limiting job creation in a very real way. Or, as economist Chris Thornberg told the Sac Bee, ‘the economy is choking on a lack of housing.”

Innovate and prioritize resiliency

Debbie Mesloh – Commission President, San Francisco Commission on the Status of Women

Governor Newsom and the State Legislature must prioritize resiliency in 2020, both for economic and job growth as well as long-term economic survival of the state. We must prioritize this and address it or long-term property values will plummet, given the likely cancellation of homeowner’s insurance (which we are seeing already) and could be the foundation of a tipping point situation akin to the financial collapse due to the mortgage crisis. Better building codes, zoning ordinances and infrastructure are only part of the solution. Other approaches include restoring wetlands, increasing water-absorbing parkland and decreasing paving, adding green roofs, increasing the use of distributed energy resources and microgrids, and developing public-private partnerships to re-evaluate the building process. In addition to preserving the long-term economic viability of our state, these projects all mean jobs – good paying jobs at a union wage. The state must be innovative about finding and unleashing capital to energize these projects, relying on local expertise and decision making. It is clear innovation is needed and the status quo is not working.

Make California more enterprising—and livable

Maria Mejia – Los Angeles Director, Gen Next

For most residents, California is a difficult place to live.

Yes, it is outrageously expensive, but with an extreme housing shortage, a dense regulatory environment, a lack of mobility across most communities, and an education system that is painfully broken, being successful in California isn’t just about wealth, but about how well you can navigate a world of constant economic constraint.

This is the journey we all share as we pursue new levels of collective growth and prosperity.

While progressive state leaders have lead the way in the creation of a social safety net—a smart and moral economic move by any modern society, we have over indexed on it as a long term strategy, and instead have an economy (communities & industries) whose growth is perpetually bound and stifled by a ceiling of rules.

Beyond the short term view, I fear that the weight of our own rulebook will prevent us from collaborating across sectors freely, and innovating with the level of boldness that our biggest and most vexing generational economic challenges require us to do.

We have the money to fix homelessness – now we need the effort

David Townsend – Managing Partner, TCT Public Affairs

Statewide polling shows that over 80% of voters believe that homelessness is the most important issue facing California. Housing for working families is unaffordable. The state is forecasting several billion dollars in surplus revenue. It is unconscionable that the Governor and the Legislature cannot create a multi-year plan to solve both issues and create a stronger economy for California. There needs to be a Special Session of the Legislature and a total commitment from the Governor to solve these problems. We are the fifth largest economy in the world, with the brightest minds in the intellectual universe. We need the political courage to stand up to the NIMBYs, CEQA purists and the construction trades and forge a compromise that gets all types of housing built and built now. As a last resort, do we need to reconsider the government building public housing? 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 "What should California’s economic and job priorities be in 2020? Inequality, homelessness and more."