Newsletter: On Labor Day, California workers struggle while unions prepare for major 2020 battle

Conceived by a New York union leader and enshrined into federal law in 1894 after a series of fierce strikes and riots, Labor Day has always been the most political of American holidays. It remains a touchstone for causes and candidates alike, particularly Democrats.

And so in addition to the long weekend getaway or that big backyard barbecue, it’s worth a moment to note two important trend lines in California politics on this Labor Day that have the potential to intersect come election day next year.

One represents the tech-driven forces of economic change, the other a reminder of how those changes have failed to move the needle for millions who struggle to keep up.

40 YEARS OF STAGNATION IN CALIFORNIA

We’ve written recently how there’s not much left to the fabled California dream in many of the state’s inland regions and communities of color. A new report on the state’s workforce provides measurable proof of that troubling reality.

The data released last week show that wages and benefits have “significantly eroded for many Californians in recent decades,” wrote analysts from the California Budget & Policy Center. “Many workers are being paid little more today than workers were in 1979 even as worker productivity has risen.”

The Sacramento-based organization, which advocates for policies aimed at low-income Californians, found that median hourly earnings for workers ages 25 to 64, adjusted for inflation, are just 1% higher than they were in 1979. Those paid the smallest wages did a little better — a 4% boost compared with four decades ago — but that may be mostly thanks to the 2016 law that has been gradually ramping up the state’s minimum wage. (In January, it will rise by a buck to $13 an hour on its way to $15 an hour in 2022.)

Viewed through ethnicity, race and gender, the California quandary on this Labor Day is even more worrisome. The report notes median wages for African Americans are more than $8 an hour less than white workers’. The median for Latino workers is more than $11 an hour less than white Californians’.

And all of this is layered on top of the ever growing cost of living in the Golden State, creating what analysts suggest is a full-blown crisis.

“In just the last decade alone,” wrote the report’s authors, “the increase in the typical household’s rent far outpaced the rise in the typical full-time worker’s annual earnings, suggesting that working families and individuals are finding it increasingly difficult to make ends meet.”

While there are a number of chronic housing problems in the California, there’s new attention on this Labor Day being paid to the cost of rent.

RENT CONTROL COMPROMISE

On Friday, Gov. Gavin Newsom and legislative leaders announced an agreement on legislation to impose a statewide cap on rent increases. The focus of Sacramento negotiations has been deciding how much rents can increase each year and for how many years the cap would be kept in place. The announced deal looks more like an earlier version of the legislation in question, Assembly Bill 1482 — a proposal that was downsized after it met fierce opposition from the California Assn. of Realtors, among others. This is shaping up to be a big test for Newsom in the Legislature’s final two weeks of work for 2019.

(By the way, take a look at this fascinating Times interactive on exactly where rental rates in the state line up with income.)

INEQUALITY, THE FUTURE OF WORK

The new report on the plight of struggling workers also highlights the persistent gap in how much of the state’s gross domestic product comes from those who make money from working and those whose income is based on investments or corporate profits.

The percentage of private-sector GDP from wage earners has fallen since 2001, by an amount that’s almost equal to the rise in percentage of GDP that now comes from capital income. That’s certainly one clear example of how work, as we’ve long known it, is leaving many behind.

California leaders have begun talking, in limited ways, about the changing nature of work. The Times examined the issue in depth during the 2018 governor’s race and on Friday, Newsom appointed 25 members to a “future of work” commission.

“The economy right now isn’t working for workers,” Newsom said in a statement. “While our state is ground zero for the technological and economic transformations that are shaping the future of work, Californians are facing a crisis of opportunity and affordability.”

LABOR, TECH, BUSINESS: THE AB 5 SHOWDOWN

Labor Day arrives at a fascinating moment in California’s eternal political battle between business and labor, with a particular focus this time around on Silicon Valley. The next two weeks will tell us a lot about the relative influence of each, as legislators grapple with Assembly Bill 5 and its attempt to codify a sweeping 2018 ruling by the California Supreme Court.

At issue are the rules for when workers must be provided with employee benefits. The ruling in Dynamex Operations vs. Superior Court was seen as a major setback for companies that have relied heavily on independent contractors, thus avoiding the need to pay for benefits.

AB 5 is easily the marquee fight in the California Legislature with this year’s session ending on Sept. 13. Its impact could be immense.

As Margot Roosevelt, Liam Dillon and Johana Bhuiyan write, “Janitors cleaning downtown office buildings, truckers loading goods at the ports of Los Angeles and Long Beach, construction workers building new homes, manicurists, medical technicians, nightclub strippers and even software coders would be among scores of occupations offered protection against long-documented workplace abuses.”

THE $90-MILLION CAMPAIGN OVER FLEXIBLE WORK

But it’s the sharing economy that has been in the spotlight of this fight. And some of California’s most successful tech companies have now said that they’re ready to take their case for flexible work to the statewide ballot next November.

Uber, Lyft and DoorDash announced on Thursday a commitment to spend a combined $90 million on a to-be-announced ballot measure that would exempt them from the worker rules under the Dynamex decision and, quite possibly, the final version of AB 5.

Some context: That’s a ginormous amount of money in the world of California ballot measures. Let’s assume that paying petition circulators to collect 623,212 valid voter signatures — the minimum needed for an initiative statute — would cost no more than $5 million, using assumptions made from past campaigns. That’s still some $85 million for television commercials or digital and traditional advertising outreach.

And if it’s just the initial investment, those companies could easily surpass the $90 million spent by a labor-led coalition to raise income and sales taxes in 2012; the $91 million spent by doctors and hospitals to kill a medical malpractice measure in 2014; and even the whopping $111.5 million spent by dialysis companies to defeat a ballot measure limiting their profits at treatment clinics in the state.

Organized labor will no doubt wage a fierce opposition campaign should the rideshare companies follow through on their threat. That could tax the unions’ resources if, as expected, they go in big for the campaign to overhaul Proposition 13.

TODAY’S ESSENTIALS

-- A proposal to tax guns and bullets in California has bogged down in the Legislature and is not expected to advance this year, its author said Friday.

-- Warring factions of California’s K-12 education system have reached an agreement on legislation that would place new restrictions on charter schools and pause a long-standing battle at the state Capitol between politically powerful teachers unions and deep-pocketed charter advocates.

-- California lawmakers gave final approval to the use of medical marijuana in K-12 schools. Eight states do so already. The bill is now on Newsom’s desk.

-- California opened another front in its legal battle with President Trump over immigration policies last week as officials filed a federal lawsuit challenging a new rule that allows indefinite detention of migrant children and their families.

-- Long paper receipts, such as those at CVS stores, are here to stay (for now) after California lawmakers rejected a bill to ban them unless a consumer specifically asked for one.

LOGISTICS

Essential Politics is written by Sacramento bureau chief John Myers on Mondays and Washington bureau chief David Lauter on Fridays.

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