Keep the ‘Affordable Care Act’ affordable

'Made in California' plastic bags mean California jobs

It’s more important than ever that our leaders find ways to help California’s manufacturers grow and compete for our state’s fair share of the nation’s manufacturing renaissance.  What we most certainly do not need at this point are more obstacles and barriers to manufacturing job growth.

And yet, those keep coming.  Consider one current legislative proposal – a bill to ban plastic bags statewide.  While scientists and others may argue about whether this will help or hurt the environment, there is no disagreement about its immediate impact – it will threaten jobs in our manufacturing sector.  And while there may have been a time when legislators could ignore a few hundred jobs here and there as a reasonable trade-off for making a statement, this isn’t that time.

AB 158 by Assemblyman Marc Levine from Marin County would ban single-use plastic grocery bags and mandate that any store with more than $2 million in annual sales provide re-useable bags to all patrons.

Plastic bags are phenomenally strong for their weight and represent a dramatic level of cost-saving for grocers, retailers and, ultimately, consumers.  Despite their status as the favorite target for environmental activists, they boast a number of important advantages over the alternatives.  A 2008 study, for example, found that the reusable shopping bags being all but forced on consumers today often contain considerable bacterial build-up, mold and yeast.

Nobody is saying plastic bags are issue-free.  In fact, California has rightly been a leader in the effort to encourage their re-use and recycling.  Increasingly, shoppers are finding new uses for these bags and giving them much longer lives.  And better recycling processes means these bags are being used to make things like park benches or playground equipment.   These efforts work, and do so while still valuing the needs of our economy and the need for high-paying jobs.

Manufacturing in America is making a comeback.  U.S. manufacturing jobs grew by 4.5 percent from January, 2010 through 2012. This is great news for our entire economy, as it’s well-established that growth in manufacturing drives growth overall and creates high wage jobs.

Unfortunately, the news in California isn’t as good.  Here, manufacturing employment has been stagnant, sitting out the rebound seen in the rest of the country. In the past three years, the top 10 manufacturing states averaged a 6.3 percent growth in manufacturing employment.  In California, we saw less than a half-percentage point of growth.

Sadly, these facts are unlikely to stand in the way of the ongoing demonization of plastic bags. The drive to eliminate them has taken on the feel of a sacred mission among some elected officials. But pursuing this mission requires an ability to ignore some troubling realities.  First, we don’t solve litter problems by banning products; we solve litter problems by better enforcement and better efforts at recycling.  Second, there are more than 2,000 California families who put food on the table each night thanks to jobs associated with manufacturing plastic bags.

Some say California is inhospitable to manufacturing.  Well, it doesn’t have to be that way. Policymakers consistently ask me what they can do to help grow manufacturing jobs. Their efforts to find ways to help us compete are genuine.  But considering our state has the highest unemployment rate in the nation and a manufacturing sector that is missing out on a national rebound, one good way to help is to take a pass on actions that ban useful products, increase costs and eliminate good jobs.

Finance reform without accountability could devastate career tech

Cross-posted on June 3, 2012 at the Silicon Valley Education Foundation

Under the current K-12 public education system in California, programs that are not required, measured, or explicitly funded by the state will disappear from our schools. Elective courses are becoming victims of educational policy that only recognizes “success” as defined by scores on standardized tests in courses mandated for graduation or college admission. Since that’s all that is really measured, that’s all that will really matter.

The ongoing state budget deficit and the lack of financial incentives to support programs outside of the mandated core academics will undoubtedly force districts to abandon such electives with impunity. This is our concern with  the “Weighted Student Formula” (WSF) proposal. Because the latest version of education finance reform doesn’t alter the current approach to accountability, we fear WSF will accelerate an already alarming narrowing of the curriculum.

In areas like career technical education (CTE), the impact of this well-intended reform could be devastating. Without incentives provided to districts to support these elective programs, there is simply no reason for them to do so. If you doubt that scenario, just examine the impact of the “flexibility” provisions granted to districts for programs like ROPs, Adult Education, and others since 2009 under the state budget. Given the unfettered authority to “flex” the use of these funds for any purpose, districts have obliterated Adult Ed throughout the state, and have put undue pressure on the vast majority of ROPs to survive on a starvation diet. Without  appropriate educational policies that hold districts accountable for truly meeting the needs of all students, this scenario will hold true for programs outside of the “required” or “measured” mandate. That’s not a recipe for success.

From a purely budgetary perspective, distributing CTE dollars without any vocational accountability upon schools makes little sense either. The three CTE-related categoricals most at risk under WSF  leverage every dollar the state invests. The Ag Incentive Grant requires local districts to match each state dollar (requiring districts to provide an extensive, annual report on the use of those precious state dollars). Apprenticeships are largely funded by contractors and unions, thereby stretching each state dollar invested in these “learn while you earn” programs. And Partnership Academies require both a local and industry match for each state dollar, magnifying the state’s investment threefold. Simply sending out these dollars on an per-student basis without any vocational strings 0r leveraged match requirements will cause more harm to education under any calculation.

We hope the governor and the Legislature take the time necessary to develop solutions to protect career technical education programs while also achieving education finance reform. Given the challenges facing these programs at the local level, we know our schools will not continue to support career technical education without the incentives to do so.

Two new national surveys = Very bad news for California's unemployed workers

Two national surveys released this week provided very bad news for California’s 2 million unemployed workers.

The first survey, Best/Worst States for Business, was released by CEO Magazine. The survey of 650 Chief Executive Officers (CEOs) found California the worst state in which to do business, a ranking California has held for the past eight years. When America’s CEOs deem California the worst state to do business, there is little chance their companies will be making job creation investments in California.

The following is a representative sample of comments from participating CEOs in the often cited survey:

"California is the worst! They are doing everything possible to drive a business out of their state. If it were not for the climate, they would have lost half their population.

"California regulations, taxes and costs will leave only tech, life sciences and entertainment as viable. If you aren’t an elitist, no room here for the middle or working classes.

"California treats business owners like criminals. California has different overtime policies for its own employees vs. private sector.

"California’s labor regulation is a job killer. We will be moving our business out of the state, which will lose hundreds of jobs simply due to the poor regulatory environment.

"California should secede from the union—it is like doing business in a foreign country, it has its own exchange rate, and its regulation is crazy.

Full List of CEO comments

The second survey, Best Cities for Jobs 2012, was published by Forbes Magazine.  To determine the best cities for jobs, Forbes ranked all 398 U.S. metropolitan statistical areas (MSAs) based on employment data from the Bureau of Labor Statistics (BLS) covering November 2000 through January 2012. Rankings are based on recent growth trends, mid-term growth, long-term growth and the region’s momentum.

The highest ranked California SMA is Hanford-Corcoran as the 36th best city for finding a job.  Three other California SMAs made the top 100; San Jose-Sunnyvale-Santa Clara, Bakersfield-Delano and San Francisco-San Mateo-Redwood City.  On the other hand, Texas had 20 SMAs in the top 100 and 6 in the top 10.

According to the report authors:  “So amidst all the good news, which big cities are still doing badly, or even relatively worse? Sadly, many of the places still declining are located in our home state of California, including Los Angeles (59th place among the biggest metro areas), Sacramento (60th), and just across the Bay from Silicon Valley, Oakland (63rd). Only the old, and to date still not recovering, industrial towns of Providence, R.I. (64th), and Birmingham-Hoover, Ala. (dead last at No. 65), did worse."

Complete ranking of 398 cities

Manufacturing job creation IS a state issue

Cross-posted at Fox and Hounds

A few days ago, Governor Jerry Brown made the surprising statement that our state’s massive loss of manufacturing jobs is not a unique California problem because we have “lost manufacturing at about the same rate as the rest of America.”

While it is true that both the US and California have suffered manufacturing job losses, California’s industrial job loss rate was nearly ten percent higher than the U.S. loss rate.  In real numbers, we’ve lost a staggering 626,000 manufacturing jobs in the past decade.  If California had tracked with the national manufacturing job loss percentage, we would have 55,000 more Californians receiving paychecks than we do today.

More significantly, economists are proclaiming manufacturing growth is leading the national recovery. Bloomberg notes, ”Manufacturing accounts for about 12 percent of the economy and was at the forefront of the recovery that began in June 2009.” Contrary to this national trend, California manufacturing is moving in reverse. During 2011, the U.S. created 227,000 new manufacturing jobs, while California lost an additional 4,000 manufacturing jobs.  These are the middle class jobs that our elected leaders say they covet, but do very little to encourage and protect.

State policy has a tremendous impact on manufacturing job growth. States with a positive business climate (competitive operating costs, a trained workforce and a predictable regulatory climate) outpace states with negative business indicators.  California’s 34 percent manufacturing job loss compares with Texas at 21 percent, Indiana at 29 percent and Louisiana at 19 percent.

Business climate issues also have a direct impact on new investment. From 1977 to 2000, California received 5.6 percent of the nation’s new and expanded industrial facilities.  Since 2001, California’s share of those facilities has plummeted to 1.9 percent.  Industrial investors plan on a 10 to 15 year time horizon when making large investments in land, buildings and equipment.  States with long-term budget deficits, excessive infrastructure needs and aggressive regulatory agendas seldom make the short list of corporate planners.

It’s true that California continues to be the innovation state – we receive a large share of investment capital. But in the past decade, we have lost our ability to both innovate and manufacture new products here.   From 2005 to 2009, California received 48 percent of U.S. venture capital investment, but only 1.3 percent of U.S. industrial investment.

The current model is to innovate in California, manufacture in a more cost-competitive state or country, and market back to California consumers.  Under this scenario, California gets the jobs advantage of small, start-up research and development firms, but loses the enormous jobs benefit when those new products move to the production stage.

California’s modern government grew up of an era of rapid industrial expansion.  During the 1950s, 60s and 70s, California led the nation in industrial growth, becoming the top manufacturing state in 1977.  With that growth came a flood of new tax revenues allowing California to invest in infrastructure, education and new social programs.  California became dependent on the largess of a robust industrial economy.

During the ensuing 40 years, California found pride in implementing “first in the nation” environmental regulations.  Clean air, land and water are laudable goals, but the associated regulatory costs have had an impact.  Four decades of accelerating environmental activism have taken a toll on our ability to attract new investment and jobs.

We’re told by financial analysts that American corporations have $3 to $5 trillion available for investment when the current recession ends and that more and more U.S. manufacturers are re-shoring their overseas operations.  The question is: will California attract a fair share of manufacturing investment, or will investors look for states with a more favorable business climate? Our efforts should be to prove that California is serious about rebuilding a manufacturing economy by acknowledging where we must make improvements, not resting on an assumption that this is simply a national problem.