Who Lost Those 800,000 Jobs? : Economic malaise demands action from the state’s leadership

Reeling from the worst economic downturn since the Great Depression, California is struggling to remain competitive and improve its image. Help is needed from Sacramento, but is there the political will in the Capitol?

Much debate has centered on whether the state’s economic woes are the result of the recession and defense cutbacks or a business climate that stifles both small and large companies. Clearly, it is a combination of these factors that has contributed to the loss of 800,000 jobs in California since mid-1990.

The latest report on California’s competitiveness was commissioned by the state’s five largest utilities. This study on industry migration, conducted by a private research firm, called for legislative steps, including job training programs and easing the regulatory process, to make California more attractive to business. It warned that even as the economy rebounds, industry migration out of California is not likely to ease as long as business costs remain high and the state’s image as being anti-industry persists.

Even Assembly Democrats, typically viewed with distrust by business leaders, are getting on the bandwagon, advocating partnership and collaboration between business and government. Assemblyman John Vasconcellos (D-Santa Clara) recently unveiled a report whose major finding was that “our old ways of doing business and government can no longer suffice to assure California’s future economic well-being.” The Assembly Democratic Economic Prosperity Team report recommended developing a strategic economic plan, reforming workers’ compensation and streamlining the governmental process.

The Legislature and governor can be part of the problem or the solution. If workers’ compensation is any clue of their willingness to work together, the state is in deep trouble. Political gridlock, despite consensus on the need for reform, has repeatedly blocked overhaul of a system that is bleeding small and large businesses. Sacramento’s failure to handle the problem sends the wrong signal to business in and outside the state.

Business and industry, facing another year of economic uncertainty, are hard-pressed to find new ways to cut costs. Legislative fixes could help reduce costly regulatory red tape and workers’ compensation costs. Sacramento must act.