Friday, September 28, 2018

California an economic model? Not quite

California an economic model? Not quite

By Dan Walters | Sept. 23, 2018 | COMMENTARY, DAN WALTERS

A significant sub-theme of Gov. Jerry Brown’s climate change conference in San Francisco this month was that California is a living model of how a nation-state can go green while experiencing economic prosperity.

Some Californians take it a step further, contending that going green is itself an economic spur.

Certainly California’s current economy is, at least superficially, booming.

The state’s official unemployment rate is 4.2 percent, a record-low level, reflecting tens of thousands of new jobs being added each month – nearly 50,000 in July alone, according to the most recent employment report.

California’s total economic output is more than $2.5 trillion a year, which would place it fifth in the world were it a nation.

However, the claims that California is a model of green prosperity are somewhat overblown.

California is prospering these days mostly because the nation as a whole is experiencing a record-long economic expansion. The steps it has taken so far to reduce its carbon footprint have been relatively mild, so their economic impact, positive or negative, has been relatively scant.

The contentions that going green has been an economic positive are unproven. The cheerleaders for that claim notoriously overcount “green jobs,” including many that would exist regardless and discounting the jobs that might be lost in the conversion.

The biggest negative about the state’s economic standing, however, came in a new report issued by the Census Bureau as Brown’s conference was underway.

It was the bureau’s updated report on poverty and once again, California found itself in the unenviable position of being No. 1 in that category when all economic factors are included in the calculation.

While the state’s poverty rate by the Census Bureau’s “supplemental” method declined slightly since the previous report, it still is the nation’s highest at 19 percent and that’s because of California’s very high cost of living, particularly for housing.

That means 7.5 million Californians, more than the population of most states, are counted as poor. And the situation is even darker when other data are put into the mix.

The Public Policy Institute of California, using a methodology similar to that of the Census Bureau, came up with very similar results, but also calculated that another 20 percent or so of Californians are living in “near-poverty.”

Adding the near-poor to the total brings us to about 16 million Californians struggling to survive. That number is bolstered by the fact that 14 million Californians are being covered by the state’s Medi-Cal program of medical care for the poor and the number would probably climb to 16 million if undocumented immigrants were eligible for its benefits.

Finally, the state’s record-low unemployment rate is also somewhat misleading. The jobless rate most often cited – 4.2 percent currently – is the percentage of those considered to be in the workforce who lack jobs. But that doesn’t account for adults who, for one reason or another, don’t work or seek work, nor those who are working only part-time and/or below their skill levels.

The Bureau of Labor Statistics actually calculates unemployment and underemployment six different ways and the most revealing, called “U-6,” includes not only the officially unemployed but “marginally attached” workers and those involuntarily working part-time. California’s U-6 rate is 9.2 percent, more than a full percentage point higher than the national rate and tied with Louisiana for the sixth highest.

Until its real poverty rate and its real unemployment rate drop at least to the national average no one, especially no politician, should be boasting of California’s prosperity.

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