K-12 Tax, Spending and Referendum climate: Covid-19 Crisis Will Make Clear How Tenuous California’s Financial Condition Has Become

Joel Kotkin:

The pressure on California’s government resources is made much worse by a bifurcated economy that produces a disproportionate amount of poorly paid jobs. As manufacturing and middle-management jobs have fled the state, notes new research from Chapman University’s Marshall Toplansky, the vast majority of all new jobs—some 80 percent—pay less than the median income, and roughly half of those pay under $40,000 annually, virtually a poverty income in the expensive coastal areas. Critically, California has been among the worst states in producing middle-income jobs, while rivals such as Utah, Texas, Arizona, Nevada, and Washington have boosted these kinds of positions at five to ten times California’s rate.

California’s low-end jobs in restaurant and retail have been hard-hit by the pandemic, as they have everywhere. But California’s pain will be made worse by the outsize role of tourism and hospitality in employment. This sector, now 2 million strong, has accounted for a quarter of all new jobs created in the state this decade; according to the Bureau of Labor Statistics, its share of all employment grew from 10.6 percent to 13.4 percent, with much of the growth concentrated in idyllic coastal Southern California.

Even one of the steadiest sources of higher-wage blue-collar employment, shipping and trade, could be severely affected. International trade, including exports and imports, supports nearly 5 million California jobs—nearing one in four jobs. Yet due to regulatory and labor issues, Southern California’s ports, Long Beach–Los Angeles, have been losing market share to other regions, notably in the American South. Reduced trade flows, particularly with China, could have additional negative effects.

Under the governorship of Pat Brown in the late 1950s and 1960s, California, observed the late historian and onetime state librarian, Kevin Starr, enjoyed a “golden age of consensus and achievement, a founding era in which California fashioned and celebrated itself as an emergent nation-state.” In 1971, the economist John Kenneth Galbraith described the state government as run by “a proud, competent civil service,” and enjoying among “the best school systems in the country.”

This competence is now rarely seen. For all its activism, California’s bloated nanny state, for example, showed a distinct lack of preparation for a pandemic. Looking to save money under Governor Jerry Brown, the state abandoned a program to store ventilators and other emergency equipment for a future pandemic. Even after the budget crisis ended and the surplus surged along with rapid spending, the state did not revive the program. To his credit, Governor Newsom admits to “owning” the state’s slow implementation of testing, which has lagged other states, notably New York.