Mixed Signals

PERSPECTIVE-On the surface, the employment picture in California improved significantly in April after lackluster performance in March. 56,100 new jobs were created.   

Sounds good until you realize that 13,400 were in the low-paying hospitality sector. According to the Bureau of Labor Statistics, the mean pay for this classification is $25,180 – earnings that will not generate property tax or income tax revenue. Sales tax, for sure, but health care subsidies will be in order. Certainly not the jobs upon which to build a robust and sustainable economy. 

On the plus side, 11,900 high-paying professional services jobs were also added. 

The two statewide extremes fit right into the barbell model presented by the Los Angeles 2020 Commission – very rich and very poor ends bridged by a relatively thin middle class. 

Of course these numbers do not reflect the upcoming loss of 3,000 jobs from Toyota’s move from Torrance to Texas and the recent announcement by aerospace giant Pratt and Whitney to relocate 530 manufacturing jobs from San Diego to facilities in Georgia, Texas, Florida and Canada.  

These job losses are largely solid middle class positions along with a decent share of upper-income management and technical staff. 

Jobs that are either directly or indirectly related to manufacturing are the best kind. They have the potential to sustain generations of middle-income workers. 

It was too late for California to get Toyota or Pratt and Whitney to change their minds – the lack of support by the state legislature and local governments over many years saw to that. There has been no meaningful effort to attract or keep the automotive and aerospace industries. It should be no surprise that Toyota and Pratt and Whitney decided to consolidate operations in states where they have developed facilities – facilities California never sought. 

The loss of aerospace is particularly painful now that we need to wean ourselves off of Russian-made rocket engines due to Putin’s desire to re-create the Soviet empire. Newly combined Aerojet/Rocketdyne is still a player in California along with upstart Space X. Governor Brown should take preemptive action to keep those companies here before Georgia or Texas come calling. 

Will he, or will he prefer to waste up to $100 billion on high-speed rail? 

One thing for certain is our need for better statistical information. Job growth expressed as headcounts is almost meaningless unless you know the corresponding average salary. 

Without that, politicians can spin the numbers…..and most people will fall for it.

 

 (Paul Hatfield is a CPA and former NC Valley Village board member and treasurer.  He blogs at Village to Village and contributes to CityWatch. He can be reached at: [email protected])

–cw

 

 

 

CityWatch

Vol 12 Issue 42

Pub: May 23, 2014