Gov. Gray Davis’ goal for creating half a million jobs in California over the next four years was the centerpiece of his inaugural address this week. But it wasn’t exactly a stretch. Economists already have projected that California will far exceed that mark over the next few years, regardless of help from Sacramento.
In fact, a gain of 125,000 jobs a year looks anemic considering California’s huge labor force and historical performance in job creation. During the 1990s -- a decade when Southern California endured one of its worst downturns ever -- the state still managed to add more than 200,000 jobs a year on average. In 2000, at the height of the economic boom, the state created nearly half a million jobs in a single 12-month period.
Although economists and business leaders laud the governor’s efforts to focus on job creation, they said his goal is hardly ambitious considering that the state is expected to begin emerging from its doldrums this year.
“We could do that without breaking a sweat,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. “He’s making a promise he can keep.... But it’s definitely a low-ball target.”
To be sure, 125,000 jobs a year would be an improvement at a time when the state isn’t creating any. California’s nonfarm payroll employment is down 82,400 jobs from its January 2001 peak; the unemployment rate has risen to 6.4%, up from 4.7% in February 2001. Through the first 11 months of the year, the state posted a net loss of 9,200 jobs. Many analysts expect 2002 losses to grow when the state performs its annual benchmark revision in February.
Still, in terms of employment, California has held up better than the nation as a whole and is poised to add positions as the economy improves. Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University in Orange, expects California to gain 188,000 nonfarm payroll jobs this year and 340,000 in 2004, irrespective of any stimulus out of Sacramento.
Adibi said California, with a labor force exceeding 17.6 million workers, needs to create at least 180,000 jobs a year just to keep pace with a growing workforce, rendering the governor’s goal of 125,000 new jobs inadequate.
“It’s not enough to keep unemployment from rising,” Adibi said. “We’ll be in trouble if that’s all we get.”
Davis spokesman Steve Maviglio defended the governor’s goals as conservative and achievable, despite economists’ suggestions that he is intentionally setting the bar low.
“The governor likes to under-promise and over-deliver,” Maviglio said, noting that some “economists said we’d be out of recession by now.”
Promoting his economic plan Tuesday, Davis noted that he intends to accelerate job development by boosting spending on school construction and other public works projects through his Build California program.
Davis was asked whether the state would create 500,000 jobs without such assistance.
“They would have been created, yes,” Davis told reporters at a school construction site near Sacramento. “But they would have been created in 2004, 2005, and that means that these schools wouldn’t be ready as early, houses wouldn’t be built as soon, and the voters’ perceived will would not be implemented as quickly.
“So I think it’s a very positive thing that we’re trying to accelerate the flow of money into the economy and create jobs now when we need it as opposed to 2004 and 2005, when everybody tells us the economy will have recovered on its own,” Davis said.
The governor’s Build California initiative hinges on expediting spending on $21.5 billion in voter-approved bonds -- including $11.4 billion for K-12 school construction.
Relevant government departments and agencies will work together in “red teams” to cut the time needed to approve projects, process the funds and get construction underway, Davis administration officials said. As part of that effort, the California Department of Transportation and the Resources Agency are being instructed to cut the environmental permit process by a year, without sacrificing environmental protection, officials said.
The red team approach has been used to accelerate construction of the Caltrans building in downtown Los Angeles, a $190-million project, and was credited with speeding up groundbreaking for the UC campus at Merced by a year.
The Davis administration estimates that the Build California program will generate 68,000 construction jobs in the first year. But that may be one of the few ways the public sector can add significantly to the job tally.
Over the last four years, state government has boosted its payrolls by more than 50,000 jobs, mostly from the hiring of teachers. But with the state facing an estimated $35-billion deficit over 18 months, almost no one expects that to continue.
“It’s certainly not going to be a growth engine like it was,” UCLA economist Tom Lieser said.
Business advocates say the state’s spending binge goes to the heart of the current budget problem. And many are skeptical of Davis’ inaugural pledge to “make California more small-business friendly.”
John Husing, an economist and business consultant in the Inland Empire, said business owners are furious about a wave of perceived anti-business legislation implemented in the last few years. Included are the California Paid Family Leave Act; minimum wage hikes; increases in unemployment insurance and workers’ compensation benefits; and the reinstatement of overtime after eight hours in a single workday instead of after 40 hours worked in a week.
“Being more friendly to small business is a laudable goal,” Husing said. “The governor can start by unwinding some of the bills he has already signed.”
Those expenses -- coupled with rising health insurance premiums, higher electricity rates and expected huge increases in business taxes to close the state’s gaping budget hole -- are making it tough for businesses to remain profitable, much less create the new jobs the governor desires, Husing said.
Jack Stutz, president of Rancho Cucamonga-based Tamco, said California’s deregulation debacle caused his electricity bills to double to $2 million a month. The steel mill, which melts scrap metal for construction use, has laid off 15% of its workforce, which now stands at 350 workers, and he said he is mulling additional job cuts.
“You take away our profits, we can’t create any jobs or pay any taxes,” Stutz said. “That’s what’s happening to manufacturers in California.”
Times staff writers Gregg Jones and Michael Finnegan in Sacramento contributed to this report.