California jobs picture dragged down by construction, government

There is an ongoing debate about the state of the California economy. One set of voices argues that the state has a terrible business climate and that the state lags in job growth because firms are “fleeing” California. Another set of voices says “wait a minute”—the data show that the state’s poor job growth is the result of the housing bust and, more recently, the loss of government jobs. Both voices acknowledge that the state must deal with an ongoing budget deficit and develop an economic strategy for prosperity but they offer different roadmaps for success. Recent revisions to job estimates added jobs in California while showing slower job growth in the nation than previously thought. What do these numbers tell us?

California’s Legislature is so polarized over the state budget that lawmakers in recent years have mostly kicked the problem down the road. But even when lawmakers do agree and the governor goes along, they don’t have the final say. Judges do.

Talk of rolling back public employee pensions appears to be gaining momentum in Sacramento. Some lawmakers increasingly link budget negotiations to pension reform, and an independent state commission last week called for dramatic changes in the way California compensates its retired employees. But anyone who hopes that reducing pension benefits will help balance next year’s budget, or any budget in the near future, might be disappointed. California is facing a $25.4 billion budget deficit right now, yet changes to the public employee pension system generally take years or even decades to produce significant savings.

Here’s a fact that should command the attention of every policymaker in California: Nearly 5 billion dollars in federal funding is lost each year when California families eligible for food stamps aren’t enrolled in the program. Funny how a state unemployment rate stuck at 12 percent-plus since August 2009 can turn a bureaucratic issue like “program participation rates” into a strategic discussion about economic stimulus.