Business Leaders to the Governor: Time to Flatten the Unemployment Curve

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

As Governor Gavin Newsom was offering guidelines that allows businesses to begin opening their doors, many business leaders sent the governor recommendations on how to quickly but safely get the California economy humming again. Some of the policy proposals are controversial and run headlong into positions held by labor unions but the recommendations are designed to avoid the mistakes that lead to a too-slow reviving of the economy after the Great Recession. 

The heads of twenty state, regional and local business organizations signed a cover letter and report urging the governor to adopt the “necessary policy reforms to help restart our economy… that will help get workers back into their jobs in the short term and help grow jobs in the long term.”

In essence, the business groups argued they have the professional expertise to get the economy up and running but need government to do its part by eliminating obstacles, with many barriers to a quick recovery in place because of current laws.

The business leaders pointed to the troubling numbers that California’s unemployment rate jumped from a record low of 3.2% to a projected high of almost 20% in just six weeks. While praising the governor for taking quick action to control the spread of the disease and flatten the curve of projected COVID-19 cases, the next step the report argued is to begin to achieve economic health for workers and businesses by flattening the unemployment curve.

In the report, business leaders warned against following the steps taken after the Great Recession. Jobs in California took 82 months to return to pre-recession levels because of government actions that increased regulations, taxes and fees. 

This time the report argued, strategies for recovery must be based on actions to get the state on its feet as soon as possible.

Among the recommendations the business groups thought important that are sure to stir the political pot in Sacramento are:

  •     Pause the minimum wage increase. The report argued that the $1 per hour increase scheduled for January would eliminate jobs when the goal is to bring more people back to work. “The issue is simple mathematics. Taking into account payroll taxes and benefits, an employer with 50 full-time minimum wage employees in December will only be able to cover 46 in January.” The decision to suspend the scheduled increase is set for July 28 based on certain requirements.
  •     Allow for flexibility in labor laws to accommodate at-home workers; freeze most regulations; and blunt the threat of Private Attorneys General Lawsuits. Work at home opportunities, which will expand in light of experiences during the lockdown, could be jeopardized under some current labor laws. Eight-hour workday mandates and meal and rest breaks are prime targets of Private Attorneys General Act lawsuits. Without reforms to these rules, and dealing with the threat of PAGA litigation in general, businesses concerned with legal action over minor paperwork mistakes will hesitate in building back businesses to meet the next normal.
  •     Repeal AB 5. Allow workers alternative opportunities to deal with the next normal and make a living.
  •     Set a timeline to sunset Executive Orders.
  •     Provide clear standards to limit misuse of COVID-19 as a “workplace injury.” The report particularly questioned how the workplace injury laws would apply to stay-at-home telecommuters.

The governor already has weighed into the workplace injury issue at odds with the business coalition’s position signing an Executive Order to put the burden of proof on employers to prove that COVID-19 infection was not part of the work experience, a burden the business community says will stunt the recovery.

However, on the issue of health guidelines to be in place after businesses open, the business recommendations and the governor’s positions seem to be aligned.

As the report notes, the economy won’t restart with a flip of the switch. It could take up to two weeks for a business to implement the health and safety procedures necessary to open, depending on an individual business’s size, type of business and other unique requirements. 

The report incorporated an optimistic note insisting that what happens next in the reopening of California will not be the “new normal” but the “next normal.” It will be just be the next stage in California working back to its full vitality.

But to get there quickly, the business coalition urged the governor to back its proposals. 

With the announcement that the budget will have a $54 billion deficit, business openings done promptly to help the state climb out of the budget hole is of the greatest urgency.

The document was created on behalf of: Associated General Contractors of California, Building Industry Association of Southern California, California Hotel & Lodging Association, California Building Industry Association, California Business Properties Association, California Business Roundtable, California Chamber of Commerce, California Farm Bureau Federation, California Manufacturers & Technology Association, California Retailers Association, Central Valley BizFed, Engineering Contractors’ Association, Fresno Chamber of Commerce, Greater Bakersfield Chamber of Commerce, Inland Empire Economic Partnership, Los Angeles County BizFed, Orange County Business Council, Personal Insurance Federation of California, Southern California Leadership Council, and Valley Industry & Commerce Association. 


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