California – Lack Of Business, As Usual

Senator Mimi Walters
California State Senator, 37th Senate District

Nearly 8.0% of Californians are currently unemployed compared to the national average of 6.7%. Using an alternative method of looking at poverty, which includes factors such as cost of living and public benefits, the official rate released by the U.S. Census Bureau this past September determined that over a three year period, California has more people living in poverty than any other state in the nation. Nearly one in four California residents is considered to be impoverished.

In addition, the Golden State is one of only two states in the nation where one-fifth of its labor force is underemployed, a situation which occurs when skilled and educated workers are forced to accept employment for which they are overqualified and/or accept fewer hours due to a lack of opportunities within the current job market. California has the second highest rate of underemployment at 17.8%. This state of affairs creates a domino effect that reduces economic opportunity as higher skilled workers edge out those with fewer skills as they compete over entry-level positions.

Understanding the barriers and hurdles that businesses experience while trying to operate within California’s borders will provide insight as to why California is failing to provide sustainable economic opportunities for its residents. In a recent Chief Executive Magazine poll, 736 CEO’s from across the nation were asked about issues which they consider to be critical to maintaining and building a sustainable business, such as taxation and regulation, quality of the workforce and living environment. Taxes and regulations also measure how CEOs view a state’s attitude toward business, a key ingredient for a business looking for a place to call home. Among the fifty states, California was ranked dead last as the worst place in the nation to do businesses, right behind New York.

As a result of a poor job market, many Californians are stuck in a cycle of part-time work or underemployment, which has far-reaching negative impacts on personal earnings by limiting access to employer healthcare and benefits, reducing discretionary spending, and denying inclusion in Social Security programs. According to the American Psychological Association, underemployment has the same psychological effects on individuals, families, and communities that unemployment has, including depression, anxiety, increased alcohol abuse, low well-being and self-esteem, as well as low birth weight among babies born to underemployed women.

A recent study by the Center for Household Financial Stability found that “the average young family-defined as a single- or multi-person family unit headed by someone under 40-has recovered only about one-third of the wealth it lost during the financial crisis and recession.” The study also examines the massive retreat from America’s primary vehicle for economic mobility-homeownership. Many of these young families have either lost their jobs or their homes, and in far too many cases, both.

If we are going to restore the American Dream for Californians, we must first remove barriers and create opportunity in the Golden State. Failure to act means California will continue to lose business to states such as Texas, which is now ranked the best place in the nation to do business. In fact, Fifty-two Fortune 500 companies now call Texas home, and Texas’s job creation rate outpaces the national average; these economic and policy missteps translate into lost opportunities for Californians. Creating opportunities for businesses to grow and thrive in California is the first step to ensuring that workers in all job sectors have the ability to be employed in sustainable long-term jobs. We can no longer afford to go about business as usual in California, or we may need to coin a new phrase: “Lack of business, as usual.”

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