Jobless victims stagger California

Feb. 21, 2010

By JOHN SEILER

As state legislators and Gov. Arnold Schwarzenegger continue to work on the state budget for fiscal year 2010-11, which begins July 1, they will be looking at how their actions affect the entire state economy, not just that part of it that encompasses the state government. Some analysts have predicted an economic recovery. The Kyser Center for Economic Research at the Los Angeles County Economic Development Corp. on Feb. 17 predicted a modest economic recovery for California, with continuing high unemployment.

On Feb. 19, William Dudley, New York Federal Reserve president William Dudley predicted a modest recovery, but cautioned, “Nonetheless, it’s far too early to pop the champagne corks.”

Malt liquor might be the only drink afforded by many. Confirming Dudley’s statement, California’s unemployment problem is deeper and longer than previously reported, according to preliminary data from the Bureau of Labor Statics that will be updated this summer. The mean duration of those unemployed now is 26.5 weeks in California, fifth worst of the 50 states.

When we look at these numbers, we should realize that each involves a person with a real problem, perhaps a family he needs to support, or a career that needs to get back on track.

And every person unemployed is not paying income taxes, and likely is collecting some form of assistance from the state — worsening the budget crisis two ways.

Jason Clemens, director of research at the Pacific Research Institute – CalWatchDog’s parent foundation – told me that “the really scary part is those who have been out of work for 52 weeks or more,” 375,000 people in 2009. That’s 18 percent out of 2.1 million unemployed. “That’s frightening,” he said. “It means they’ve been unemployed for more than a year” and aren’t just cycling between jobs.

Another scary number, he said, measures several different things combined: 1. total unemployed; 2. all marginally attached workers; 3. total employed part time for economic reasons. That number now is 21.1 percent, second worst in the nation behind Michigan’s 21.5 percent. “Over one in five workers is unemployed or under-employed. That’s serious,” he said.

Clemens warned that “far too many people think the unemployment is cyclical,” that things will get much better once the recession ends. But “California was underperforming before the recession.” That’s shown by the next series of numbers.

For people who have been unemployed in 2009, those jobless for 27 weeks or more were 726,000. That’s an incredible 35 percent of 2.1 million overall unemployed. When people lose their jobs, they’re just not getting them back very fast.

But this particular problem – out of work 27 weeks or more – goes back into California’s past. In 1996, it was 23.4percent, fifth worst among the states. In 2003 it was 23 percent, 10th worst. In 2006, supposedly a boom year for California’s economy, it was 17.6 percent, 15th worst.

Budget cuts hurt

The state government’s failure, again, to prepare for an economic slump is hurting real people. The California Independent Voters Network reported Feb. 19:

Governor Schwarzenegger’s 2010-2011 budget proposes the virtual elimination of critical in-home services to California’s poor and disabled seniors.  The targeted program is known as the In-Home Supportive Services (IHSS), a program that has provided in-home domestic and personal care services to elderly, disabled, and poor Americans who cannot safely live and take care of themselves without assistance for six decades.  The goal of IHSS was, and still is, to provide care while allowing our nation’s most vulnerable people to remain in their homes as opposed to living in an institution such as a nursing home.

Although the article doesn’t state it, the long recession has reduced the ability of private sources – families and charities – to pick up the slack.

Housing crunch continues

Meanwhile, a new report, also out on Feb. 19, found that the crisis in housing continues. The Financial Times reported:

Delinquency and foreclosure rates among U.S. homeowners climbed to their highest levels on record in the fourth quarter of last year, as the Obama administration unveiled its latest effort to aid the housing market’s hardest hit areas.

The Mortgage Bankers Association said that 15 percent of all home loans were either in foreclosure or late on a payment, the highest proportion since the group began surveying the housing market in 1972.

That means the foreclosure or late-payment rate is worse even than any time during the “stagflation” of the 1970s.

Given that it was the government’s artificial stimulation of the housing market that was a major factor behind the boom/bust cycle in housing, it’s unlikely the Obama administration’s new stimulus will help matters.

John Seiler, an editorial writer with The Orange County Register for 19 years, is a reporter and analyst for CalWatchDog.com. His email: [email protected].

5 comments

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  1. EastBayLarry
    EastBayLarry 22 February, 2010, 08:57

    This story feels like it was written for me. Out of work since May 2007, resources exhausted during 2008, home foreclosed 2009 and I still cannot find work.
    For these reasons I believe the ONLY focus of government has to be JOBS, JOBS, JOBS!

    Reply this comment
  2. StevefromSacto
    StevefromSacto 22 February, 2010, 10:35

    Some very good points, John. This one in particular:

    “When we look at these numbers, we should realize that each involves a person with a real problem, perhaps a family he needs to support, or a career that needs to get back on track. And every person unemployed is not paying income taxes, and likely is collecting some form of assistance from the state — worsening the budget crisis two ways.”

    Understand that this is true of public as well as private-sector employees. So the next time you hear the governor propose to throw nearly 400,000 home care providers out of work, or EMeg crow about cutting the state workforce by 40,000, remember this.

    Reply this comment
  3. PRI
    PRI Author 24 February, 2010, 15:05

    I do remember it, StevefromSacto. But there’s just no money any more, so state jobs will have to be cut.

    — John Seiler

    Reply this comment
  4. stevefromsacto
    stevefromsacto 24 February, 2010, 19:53

    “There’s just no money anymore?” And the only solution is to cut state jobs?
    C’mon, John, you know that’s not true. For starters, we could do the same as Texas, Oklahoma, Alaska and every other oil producing state in the country does–tax oil production. How about a deal in which the state allows reasonable, environmentally safe oil drilling off the coast in return for an oil production tax?

    I’m sure there are other creative solutions we could come up with. Throwing people out of work or cutting programs for the elderly, blind and disabled aren’t our only choices.

    Reply this comment
  5. PRI
    PRI Author 27 February, 2010, 11:44

    Prop. 87 back in 2006 would have imposed an extraction tax of a maximum of 6%, gaining $1 billion, according to Michael Hiltzik (at the current price of oil of around $78/bbl; Prop. 87 was to fund alternative fuels, but we can use it to see what a deficit-reduction tax would do). Even if you quadrupled the oil tax, to 24%, you’d still only get $4 billion. And it would raise costs for drivers. The deficit is $20 billion. So you’d still be $16 billion short.

    Everybody is going to be suffering, like during the Great Depression, when states severely cut their budgets and tax increases sparked tax revolts.

    I’m sorry people are going to suffer. But most folks I know already are suffering from the Bush Depression (caused by Bush’s wars, Bush’s inflation, Bush’s wild spending, Bush’s deficits, and Bush’s debt — all passed by the Republican Congress). Suffering is inevitable when you have a decade of bad policies. The money StevefromSacto wants for “people out of work…the elderly, blind, and disabled” was wasted in the sands in Iraq and the mountains of Afghanistan, which wars themselves produced plenty new soldiers “out of work…blind, and disabled.” (Why then, Steve, is Obama continuing Bush’s expensive and deadly follies?)

    Meanwhile, China, India and other new economic powers — even Brazil — are growing because of free-market reforms. The only way we can compete is to cut government spending and reduce tax rates. Let government grow only when the private economy grows — and no faster. Our competitors sure aren’t going to wait.

    — John Seiler

    Hiltzik article: http://articles.latimes.com/2009/jun/15/business/fi-hiltzik15

    Reply this comment

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