California lawmakers wrestle with 12% jobless rate
Wyatt Buchanan, Chronicle Sacramento Bureau
San Francisco Chronicle August 24, 2011 04:00 AM
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Sacramento --
As California's unemployment rate climbs - the state is stubbornly stuck with the second-worst jobless problem in the nation - leaders at the Capitol are focusing on jobs in the final three weeks of the legislative session.
Last week, Gov. Jerry Brown named a senior jobs adviser while legislative leaders met to decide what changes in laws they would push to spur employment. They said they will seek to streamline some permit procedures as well as loosen environmental regulations that can slow down new projects.
The proposals have yet to be completed, and some economists say a focus on regulations misses the real problem in the economy - anemic consumer spending - and will do nothing to create jobs to cut into the state's 12 percent unemployment rate.
Even Brown downplayed the impact California could have in revving up a sputtering economy that is at the mercy of international forces.
"We've got the plan Obama has been looking for. And if you believe that, I've got a bridge to sell you, too,"
Brown said. He added later, "We'll do what we can at the state level. The state is a different kettle of fish than the nation. We don't have the Federal Reserve, we don't have the instruments of massive fiscal capacity that the United States government has."
Still, lawmakers and business leaders said they believe making changes that improve the business environment in California will spur job growth.
"Job creation happens on multiple levels. The state's role is to make sure we don't do anything that shrinks jobs," said Assembly Speaker John Pérez, D-Los Angeles. Pérez is sponsoring a bill, AB29, that will create a permanent Office of Economic Development to assist businesses that want to locate or expand in California.
In the Senate, leaders are looking at laws to shorten and simplify the process to get permits to start businesses or begin new projects, along with easing some environmental regulations. One bill, SB226, would exempt some projects like the installation of solar panels from the state's environmental regulations, meaning those projects would not have to undergo review and would be built faster.
The Senate also is considering requiring that any new regulations be evaluated to determine their impact on the economy, and measures that would create incentives for clean energy projects.
State Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he believes that if the measures are enacted, they will lead directly to new jobs.
Still, he said, "What you don't want to do is over-promise and under-deliver. On the other hand, the people expect us to do everything that we can do to reduce the unemployment rate."
Allan Zaremberg, president and chief executive officer of the California Chamber of Commerce, said the state can do many things to spur job growth; top among those is to ensure that businesses won't face new taxes, regulations or other costs once they choose to locate here.
He said the adage that what starts in California spreads to the rest of the nation isn't always true.
"Many things don't migrate to the rest of the country if they are going to increase costs," he said, citing rules on overtime and lunch breaks, and the state's high energy costs.
The chamber has pushed an economic recovery plan that has as its first goal simplifying meal and rest break rules for workers. Zaremberg said companies face lawsuits over the issue, driving up costs, but Pérez said the chamber is using the "economic crisis for ideological policy."
Just how far the ruling Democrats, who are formulating the policy changes, are willing to compromise on such issues in the quest for job development will be key in what impact those changes have, said Sen. Sam Blakeslee, R-San Luis Obispo.
Blakeslee said a test of the effectiveness of the job-creation bills is, "Which employers and projects will occur in 2012 that would otherwise not have happened?"
But some economists say the debate misses the point entirely.
Sylvia Allegretto, an economist at UC Berkeley, said about changes in regulations: "They've already done a lot of that, and it's not going to work. The reason it's not going to work is because they misread the problem. ... Jobs are lacking because of demand. People don't have money and they're not spending."
She also noted that cuts in state spending have led to the loss of public-sector jobs, driving up the unemployment rate. Over the past year, three sectors posted losses totaling 37,200 jobs in the state and 33,000 of them were government jobs, according to the Employment Development Department.
"It's a vicious downward spiral that we're in," Allegretto said, adding that the only way out is a big government spending program.
Steve Levy, director and senior economist at the Center for Continuing Study of the California Economy, agreed that the short-term approach to move the economy is to get more money in people's hands. But he said the longer-term focus should be on making California a highly desirable place to live and work. That, he said, will attract jobs.
"The stuff (lawmakers) are talking about can't do any harm, it can only help," Levy said. "But it's not - for any economist I know - the heavy lifting."
As California's unemployment rate climbs - the state is stubbornly stuck with the second-worst jobless problem in the nation - leaders at the Capitol are focusing on jobs in the final three weeks of the legislative session.
Last week, Gov. Jerry Brown named a senior jobs adviser while legislative leaders met to decide what changes in laws they would push to spur employment. They said they will seek to streamline some permit procedures as well as loosen environmental regulations that can slow down new projects.
The proposals have yet to be completed, and some economists say a focus on regulations misses the real problem in the economy - anemic consumer spending - and will do nothing to create jobs to cut into the state's 12 percent unemployment rate.
Even Brown downplayed the impact California could have in revving up a sputtering economy that is at the mercy of international forces.
"We've got the plan Obama has been looking for. And if you believe that, I've got a bridge to sell you, too,"
Brown said. He added later, "We'll do what we can at the state level. The state is a different kettle of fish than the nation. We don't have the Federal Reserve, we don't have the instruments of massive fiscal capacity that the United States government has."
Spurring growth
The governor said long-term investment in education and infrastructure is important, even as the state has slashed spending for public schools and higher education, along with removing barriers to development.Still, lawmakers and business leaders said they believe making changes that improve the business environment in California will spur job growth.
"Job creation happens on multiple levels. The state's role is to make sure we don't do anything that shrinks jobs," said Assembly Speaker John Pérez, D-Los Angeles. Pérez is sponsoring a bill, AB29, that will create a permanent Office of Economic Development to assist businesses that want to locate or expand in California.
In the Senate, leaders are looking at laws to shorten and simplify the process to get permits to start businesses or begin new projects, along with easing some environmental regulations. One bill, SB226, would exempt some projects like the installation of solar panels from the state's environmental regulations, meaning those projects would not have to undergo review and would be built faster.
The Senate also is considering requiring that any new regulations be evaluated to determine their impact on the economy, and measures that would create incentives for clean energy projects.
State Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he believes that if the measures are enacted, they will lead directly to new jobs.
Still, he said, "What you don't want to do is over-promise and under-deliver. On the other hand, the people expect us to do everything that we can do to reduce the unemployment rate."
Allan Zaremberg, president and chief executive officer of the California Chamber of Commerce, said the state can do many things to spur job growth; top among those is to ensure that businesses won't face new taxes, regulations or other costs once they choose to locate here.
He said the adage that what starts in California spreads to the rest of the nation isn't always true.
"Many things don't migrate to the rest of the country if they are going to increase costs," he said, citing rules on overtime and lunch breaks, and the state's high energy costs.
The chamber has pushed an economic recovery plan that has as its first goal simplifying meal and rest break rules for workers. Zaremberg said companies face lawsuits over the issue, driving up costs, but Pérez said the chamber is using the "economic crisis for ideological policy."
Just how far the ruling Democrats, who are formulating the policy changes, are willing to compromise on such issues in the quest for job development will be key in what impact those changes have, said Sen. Sam Blakeslee, R-San Luis Obispo.
'Sacred cows'
"I just question whether or not they're willing to turn any sacred cows into hamburger," Blakeslee said. Republican bills to change regulations have been voted down this year, and GOP lawmakers attempted to secure some changes as part of the budget deal but could not come to an agreement with Brown.Blakeslee said a test of the effectiveness of the job-creation bills is, "Which employers and projects will occur in 2012 that would otherwise not have happened?"
But some economists say the debate misses the point entirely.
Sylvia Allegretto, an economist at UC Berkeley, said about changes in regulations: "They've already done a lot of that, and it's not going to work. The reason it's not going to work is because they misread the problem. ... Jobs are lacking because of demand. People don't have money and they're not spending."
She also noted that cuts in state spending have led to the loss of public-sector jobs, driving up the unemployment rate. Over the past year, three sectors posted losses totaling 37,200 jobs in the state and 33,000 of them were government jobs, according to the Employment Development Department.
"It's a vicious downward spiral that we're in," Allegretto said, adding that the only way out is a big government spending program.
Steve Levy, director and senior economist at the Center for Continuing Study of the California Economy, agreed that the short-term approach to move the economy is to get more money in people's hands. But he said the longer-term focus should be on making California a highly desirable place to live and work. That, he said, will attract jobs.
"The stuff (lawmakers) are talking about can't do any harm, it can only help," Levy said. "But it's not - for any economist I know - the heavy lifting."
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