California Government Makes Recovery More Difficult
by Stephen Frank
On March 26, national unemployment numbers were released. Nationally, in the past week, 3.3 million Americans were unemployed. In California, we contributed over one million to that number. While we are 14% of the nation, we had 33% of the unemployed. Could it be the implementation of AB 5, which was expected to kill hundreds of thousands of jobs, “worked.” No more free-lance journalists, photographers, health care workers, truckers and more.
Then you have the price of gas. On March 25, the national average cost of unleaded was $2.06 a gallon. In Dallas the price was $1.61 a gallon—in Simi Valley it was $3.09. The difference between the Dallas cost and California: Sacramento taxes and government regulation of the gas formula.
The City of Hayward, in the Bay Area is rethinking its increase in the minimum wage, due to the virus.
“The move by the three councilmembers comes in the wake of already massive layoffs in the Bay Area related to the COVID-19 outbreak and shelter in place order given last week by Gov. Gavin Newsom,” reports Online journal Eastbay Citizen.
“I’m trying to preserve jobs,” opined Councilwoman Elisa Marquez, in a bid to study the impacts of delaying a July 1 scheduled $1 wage increase. “I’m fearful if we don’t do something to help these businesses, people will be out of work.”
Councilmember Sara Lamnin, who voted for the minimum wage ordinance last month, said Tuesday the wage bump actually foments jobs loss. “Minimum wage increases do eliminate jobs, and in a time like this, we need to preserve them,” she said.
Even those who supported the minimum wage increase when the economy was going good understood it would cost jobs. Now with the Wuhan Virus, the disaster magnifies.
Yet, the State of California is on the way to a mandated $15 minimum wage.
How do you recover when AB 5 makes it too expensive to hire new workers, the minimum wage forces business to pay unqualified people wages and benefits that are not warranted?
Because of the factors noted, and others, this will accelerate the use of technology in California businesses. For instance, the push for driverless cars—already on the roads in San Fran, Oakland and Santa Ana, will be done by the end of 2021—then rider share companies will need much fewer drivers and cars. Oh, the new cars will be electric, making environmentalists happy.
Telecommuting will continue to explode, on a permanent basis. The State could even give tax credits for telecommuting employees. This will alleviate a lot of the gridlock on the roads.
The biggest change will be in urban planning. The Left has been promoting the New York lifestyle. High density communities, pushing people on buses and subways, by the millions, causing close contact and the spreading of disease before the health care industry is aware of the problem. State Senator Scott Weiner, with his SB 50 and current legislation, SB 902, wants us to look and feel like New York. That goes along with the push to get people out of safe cars and into disease carrying, and physically dangerous, government transportation.
After this crisis is over, one way of staying well is to stay out of crowds. No elbow-to-elbow commute on the BART, watch movies that are streamed into your home instead of sitting inches away from strangers with the sniffles at a theater.
Life is going to change when this crisis is over. As part of that is the way we do business. In California, high taxes, bad regulations, dangerous housing policies and more, make it more irresponsible and unhealthier—and maybe it is a necessity that productive and responsible families leave the State.
Even the illegal aliens are going to be a bigger problem. Since the cost of hiring is so high in the former Golden State, the use of people that can be paid under the table makes more economic sense. So, low skilled or inexperienced Californians will not get hired, while cheap illegal labor will get the menial and bottom rung jobs.
The crisis has forced government to reconsider regulations and rules that hold back healthcare innovations, the building of needed masks, ventilators and pushing lifesaving drugs to the patients. The governors of Maine and New Hampshire have suspended the ban on plastic grocery bags, since they knew cotton bags are disease carriers. Hopefully, like housing density, this too will be rethought, and ended.
Do not expect California to become responsible after this crisis ends. Only the financial collapse of the State will accomplish that. Just last week, Kaiser Permanente decided not to build a $900 million facility in Oakland, due to delays, government costs, and regulations. As tech firms leave the State, maybe the politicians will get the message?
Until then I would “short” California as if it was a stock. We are in trouble and those in charge are short-term thinkers. Long term, they still believe in making us the Socialist Paradise.
Can California recover? Not with current policies and leadership.
Stephen Frank is Senior Contributing Editor of California Political Review. Read California news that is incisive, hard-hitting, and solution-oriented with a free subscription to Steve’s daily emails at http://eepurl.com/UAspv
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