Bringing California’s Unemployment Insurance Fund Out of the 1930s

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

The Legislative Analyst’s Office recently released its
report on the state Unemployment Insurance (UI) fund ("California’s Other Budget
Deficit: The Unemployment Insurance Fund Insolvency").
It is a well-written
report, summarizing the current insolvency ($8.5 billion and growing), the
staggering imbalance in revenues and benefit payments ($11.3 billion in
benefits paid to workers in 2009, with only $4.5 billion collected), and the absence
of legislative agreement on how to address the insolvency.  

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The Rise of the Contingent Workforce in California

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

By most recent count, the Great Recession has resulted in a loss of more than 1.4 million payroll jobs in California ($15.2 million payroll jobs in December 2006, and 13.8 million payroll jobs in September 2010). Beyond the job losses, though, the Great Recession also has brought changes in the structure of work in California. It will be some time before we recognize the full extent of these changes. But one is likely to be the continued weakening of the employer-employee structure that characterized work in California for more than four decades after World War II.

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Leandro Soto and a More Tumultuous Job Training Era in California

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

Leandro Soto passed away last week in Marin at the age of 89. Though his passing attracted little attention in California’s media, Lee was an important figure in California’s community job training world. His career started in California’s tumultuous job training of the 1960s and continued to the more business-oriented training model of the 1990s and today.

Lee, as he was widely known, was born in Los Angeles in 1921. Lee often referred to the variety of jobs he held growing up in the California of the 1920s and 1930s, including as a shoe shiner and as a farm worker in the San Joaquin Valley. Lee graduated from Fresno State and worked for a time as a newspaperman for a series of small newspapers.

He was in his forties before he became involved in job training, starting as a job developer with the Urban League. On May 13, 1965, Lee, Herman Gallegos and James McAllister founded the Organization for Business, Education and Community Advancement in San Francisco’s Mission District, initially as a social services/job training agency for the Mission’s growing Latino population. The agency’s name was changed in 1967 to Arriba Juntos (Upward Together).

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How California Is Falling Further Behind the Nation in Employment

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department







The state monthly job numbers released last Friday show
California falling further behind the nation in employment growth. The
California unemployment rate throughout the Great Recession has been well above
the national rate, and at 12.4%, the  current state unemployment rate continues to be above the
national rate of 9.6%. However, the main storyline of last week’s job numbers
is California’s payroll job losses.

Overall, the nation lost a net 95,000 payroll jobs in
September 2010. Of this amount, California accounted for a loss of 63,600 net
payroll jobs, far above any other state. New York suffered the second largest
loss at 37,600 jobs. In contrast, several states showed net job gains,
including North Carolina (+10,100 jobs), 

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The Great Automation Scare in California

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

When employment professionals in California meet today, as at the recent California Workforce Association gathering in Monterey, a central issue is the following: To what extent is the job losses brought by the Great Recession cyclical, representing the ups and downs of the business cycle? To what extent do these job losses represent structural change in a California economy that will need fewer workers?

We won’t know the answer to this for some time. However, some perspective on this discussion can be gained from going back nearly 50 years in California when we had a similar discussion in state government about technology. In the mid-1960s, California state government was up in arms about the march of automation, and the job losses following automation.

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The Next Health Care Workforce in California

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department






This
past week, the California Workforce Investment Board along with the state
Office of Statewide Health
Planning and Development formed the state Health Workforce Development Council
(HWDC) to map the future of health care employment in the state.

Over
the past decade, health care has been the one sector in California that job
training professionals could always count on to continue to generate jobs. Even
in the past 36 months of this Recession, while other job sectors in California
were shedding jobs at a rapid rate,  health care continued to hold its own each month, and
sometimes gain jobs. This job growth is shown in the chart below, compiled from
payroll job data provided by Mr. Spencer Wong of the Employment Development
Department.

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Amateur Hour at the Whitman Job Analysis Show

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

In the Governor’s race, the primary jobs discussion in the final month should be about the next 4 years and beyond, and strategies for job growth and sustainability.

However, the Whitman campaign continues to make Jerry Brown’s governorship from 1975-1981 a main issue, including the claim that it was a time of job loss and unemployment. As someone involved in job training during that time, I didn’t recall it that way, and dug up the payroll job growth during that time and the terms of subsequent governors. The research showed a 1.9 million job growth during Brown’s governorship-a larger share of the national job growth than any subsequent time.

A few days ago, Marc Lifsher of the Los Angeles Times wrote of a new study by an economist at Claremont McKenna College that is being pushed by the Whitman campaign as evidence of Brown’s employment  failure. Claremont McKenna is one of our leading colleges in California. The study was conducted by the Lowe Institute of Political Economy. 

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The Brownian Motion of the California Workforce

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

The California economy is often  described  today as stagnant. The latest state unemployment numbers covering  August 2010 showed unemployment  changed  only slightly to  12.4% and minimal movement in net payroll jobs-a loss of 33,500 payroll jobs over the month out of 13,827,900 payroll jobs overall in California.

Of course, below the surface of these numbers , there is enormous movement of jobs and workers.  I have posted several times of the enormous job creation and destruction going on each month in California (roughly 220,000-250,000 jobs continue to be created each month and an equal number destroyed, even during the Recession).  Data recently released in the federal  Department of Labor’s Job Openings  and Labor Turnover (JOLTS) report indicate the Brownian motion of workers among existing jobs. Even in the Recession, workers are moving in and out of jobs at a rapid pace. Some of this movement reflects voluntary separations ("quits") , a greater amount of the movement is due to   involuntary separations ( "layoffs/discharges")

The chart below, taken from this JOLTS report, indicates nationwide the number of Separations-quits and layoffs/discharges-both before and during the current Recession, through July of this year. 

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Labor Day 2010 and the Dog that Didn’t Bark

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

As we arrive at Labor Day 2010, the job numbers remain the worst in California since World War II in California, and some of the worst in the nation since World War II. State unemployment is at 12.3%– and would be higher, except that the number of workers counted as seeking work has declined.

Payroll jobs through July 2010 stood at 13,874,900, down slightly more than14,000 jobs from July 2009-and down from a high of 15.2 million jobs in July 2007.

The severe job losses we saw in the first half of 2009 (which topped over 100,000 net jobs lost in January 2009 alone) stopped by last Labor Day, and we have not seen similar losses since. But neither have we seen any significant net job gains. The dog hasn’t barked in the night, and the past year in California employment has been characterized mainly by what has not occurred rather than what has.

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Governors and Jobs

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

Over the past year, I’ve been engaged in a research project on the transformation of employment in California since World War II. The project has involved research on the shifting employment relations in California (particularly the breakdown of the employer-employee relation and rise of contingent employment) as well the ebbs and flows of job creation and employment.

The chart below shows the growth and decline of total payroll jobs in California during the five recent governors, beginning with Jerry Brown.

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