December 2014 – Public Policy Institute of California

What the Unemployment Rate Doesn’t Show Us

California’s unemployment rate is 7.2%, down from 8.4% one year ago and from California’s peak of 12.4% in 2010. California is adding jobs faster than the nation as a whole and now has more jobs than before the recession. Also, the ratio of employment to population is slowly increasing, a sign that more people are reentering the labor force. However, behind these oft-cited statistics, the picture is more complicated.

While California’s economy is improving, the recovery has not been strong or fast enough to keep up with the growth in California’s working-age population. Additionally, the recovery has been uneven across sectors and metro areas, and the unemployment rate is still higher than it was before the recession began. According to the Bureau of Labor Statistics, California has the third-highest unemployment rate in the nation—only Mississippi and the District of Columbia have higher rates. In numerical terms, 1.35 million Californians are looking for work—and more than 35% of them have been looking for at least six months.

High as it is, the unemployment rate does not account for the 7% of California adults who are underemployed—working part-time when they’d rather work full-time. Nor does it count “discouraged and marginally attached” workers—those who have stopped looking for work because, for example, they think there are no jobs available or they don’t have the skills for available jobs. When discouraged and underemployed workers are added to the ranks of unemployed, California’s rate of un- and underemployment (or labor underutilization,” the term used by the Bureau of Labor Statistics) comes to 15.4%—8.2 points higher than the official unemployment rate. In fact, California’s underutilization rate is the second highest in the country (only Nevada’s is higher). Based on underemployment rates, we know that growth is needed not just in the number of jobs but also the number of full-time jobs.

Education is the most important factor in determining who is employed—and fully employed. Workers with college degrees are less likely to be unemployed, underemployed, or to have stopped looking for work. These workers fared better during the recession, an indication that education can be a buffer against the bust cycles of our economy. And education is likely to be increasingly relevant in our future economy: more than two-thirds of new jobs over the next 10 years or so will require at least some college training.

State and federal policymakers are making some investments in training resources for California’s workforce—the California Career Pathways Trust and the federal Workforce Innovation and Opportunity Act are two good examples. The challenge is to do more to ensure that current and future workers are trained for the jobs of both today and tomorrow.

Undocumented Immigrants and Health Care

On the heels of President Obama’s recent executive actions on immigration, state senator Ricardo Lara has reintroduced legislation (SB 4) to provide access to affordable health coverage and care to all Californians, regardless of immigration status. The details of SB 4 have not been spelled out, but Senator Lara’s previous bill called for the state to offer the coverage available under the Affordable Care Act (ACA) to undocumented immigrants: Medi-Cal coverage to those below 138% of the federal poverty level (annual income of about $16,000 for a single person) and subsidies to purchase coverage to individuals earning up to 400% of the poverty level (about $46,700 annually).

As PPIC pointed out in a recent blog post, while the ACA excludes undocumented immigrants from the coverage expansions, President Obama’s executive order could pave the way for immigrants in California who are eligible for the Deferred Action for Parental Accountability program (and who meet income eligibility requirements) to get Medi-Cal coverage. Under current Medi-Cal eligibility rules, immigrants with deferred action status—meaning that their presence is known to the government and there are no plans to deport them—can receive full coverage under a benefit category known as PRUCOL (Persons Residing Under Color of Law). Some states, including California and New York, provide full Medicaid coverage for the PRUCOL group. This coverage is financed entirely by the states—the federal government funds only emergency medical treatment for undocumented immigrants.

The president’s action could also have implications for county programs that are required by state law to provide medical care to indigent residents. Currently, counties have considerable latitude in determining eligibility criteria for their indigent care programs, and many exclude undocumented immigrants. When state officials decided to expand Medi-Cal eligibility under the ACA, they reduced the funding provided to county indigent care programs because many of the people served by these programs would become eligible for Medi-Cal. The legislation (AB 85) that redirected state funds for county health programs included a provision to review this funding shift if there was federal action on immigration reform, but it’s not clear if that will happen in this case.

What is clear is that options for providing access to insurance coverage and health care for the more than 2.5 million undocumented immigrants in the state is a policy topic under consideration by policymakers at local and state levels.

Are Some Counties Bucking the Low-Turnout Trend?

A record-low 31% of Californians eligible to vote cast ballots in the November election, according to data finalized by the secretary of state Friday. (I prefer to use the share of residents eligible to register rather than the share of registered voters because it better captures the true potential electorate. But my use of this share does not affect the conclusions I draw here.)

But turnout was not so low everywhere. In fully 35 of California’s 58 counties, turnout was above the previous statewide low (36%, in 2002). And in two very small counties—Alpine and Sierra—turnout was actually higher than 50%.

The high-turnout counties were generally rural. Total turnout in the 20 smallest counties in the state was 39%, compared to just 27% in the 5 largest. Also, turnout tended to be lower in Southern California and the Central Valley. All 12 counties with turnout below the statewide average—Fresno, Imperial, Kern, Kings, Los Angeles, Merced, Riverside, San Bernardino, San Joaquin, Stanislaus, Tulare, and Yuba—are in one of those two areas.

All the same, it would be a mistake to see low turnout as a regional problem. In every single county, turnout was at least 4 and as many as 17 percentage points lower in 2014 than in 2010. In fact, since 1990, turnout in gubernatorial elections has declined in every county except those same two outliers, Alpine and Sierra.

In short, whatever has been depressing turnout in California’s gubernatorial elections seems to have a fairly broad geographic scope. Participation is better in some counties than others, but turnout has been sliding in all areas of the state.

Drought Watch: Is This the End of Our Dry Spell?

This is part of a continuing series on the impact of the drought.

This morning, the Bay Area and the Central Valley began to assess the mess created by Thursday’s big storm. And a big storm it was, with 50+ mph winds, torrential rains (more than 10 inches in some places, with blizzards in the Sierra), widespread flooding of streets, long power outages, and rivers and creeks that overtopped their banks.

This was an unusually powerful “atmospheric river” storm—California’s version of a hurricane—unmatched in intensity since January 2008. A deep low-pressure system came ashore in northern California and southern Oregon, generating violent winds throughout these regions. Spinning counterclockwise like a top, this system dragged warm, moist air into California from as far away as west of Hawaii—in satellite photos, this stream of moisture resembles a river, thus the name. All this activity led to prodigious amounts of rain in a very short period of time. And as cold air came in with the low pressure center, it produced abundant snow at higher elevations.

Beneath every headline about the intensity of the storm will be the question: Is the drought over? The answer: Not even close. It is important to remember that the state has been in severe rainfall deficit for three continuous years. One storm rarely busts a drought.

After the storm totals are added up, we will be at or slightly above average for this time of the year, and this is just the beginning of our wet season. At the same time, it has been so warm this season that total snowpack is likely to be below average, even with this big boost. The California Department of Water Resources has stated that we will need 150% of average precipitation this rainy season to recover from the drought. To have that kind of year, we need four or more additional atmospheric rivers (although not necessarily as strong as this one).

Indeed, history shows that as much as half of our annual rainfall is packed into just five to seven days of intense rainfall, highlighting the fine line between a wet year and dry one. And storms like this do little to address the problem of years of groundwater depletion. For that, we need many rainy days.

Still, despite the damage and inconvenience, this storm produced significant good. The state’s reservoirs are so depleted that there will be no trouble capturing this storm’s runoff. Small reservoirs, such as those serving Santa Cruz and other coastal communities hard hit by drought, will show dramatic improvements. The large reservoirs that rim the Central Valley—supplying water to 25 million people and more than seven million acres of farms—will get a good bump from this storm. Sometime this month, Folsom Reservoir, which does double duty by providing water and reducing Sacramento’s flood risk, is likely to encroach on the space it sets aside for flood control. (That Folsom Dam will be releasing water to protect against floods during a drought is testament to the difficulties the state faces in managing reservoirs for multiple, often conflicting needs).

This storm also was great for the environment. Native plants and animals are well-adapted to these kinds of events, and the physical changes that high flows bring to rivers and floodplains are needed to sustain habitat. One of the most important and stressed ecosystems in the state—the Sacramento–San Joaquin Delta—received a welcome flush of fresh water. During drought, the Delta becomes increasingly saline, harming habitat as well as the ability to export clean water to cities and farms. Bursts of fresh water reduce salinity and improve water quality for humans as well as the ecosystem (this is often lost on those who complain that this is water “wasted to the sea”).

In sum, this was an unusually powerful storm that caused damage, snarled traffic, and was a general nuisance for most northern Californians. Although it didn’t end the drought, this storm sure helped a lot.

California–State of Change

As leaders from government, business, and philanthropy gathered last week to discuss California’s future, we were reminded once again that these are exciting times in our state. The discussions were part of PPIC’s full-day conference, California—State of Change, and they highlighted both the advantages our state enjoys and the major challenges ahead.

Speakers noted that the recovering state economy, newly elected state leaders, a richly diverse population, and a history of innovation provide much to build on—as well as a lot of building to do. For example, California has recently enacted sweeping changes in corrections and education finance. But, as the governor’s chief aide, Nancy McFadden, emphasized in her keynote address, most of the hard work of implementing these policies lies ahead.

Among other challenges noted in the subsequent panel discussions: a state tax structure that leads to extreme revenue volatility, a need for public employee pension reform, an uneven economic recovery that has left many Californians behind, government institutions that do not provide the tools for managing in the 21st century, and an electorate that is disengaged from the political process.

But, as other speakers reminded us, Californians are living in a time of reform. A change in term limits may lead to more stability in the legislature and result in more long-term policymaking. Recent initiatives to shift many school decisions from the state to the district level and to move state corrections responsibilities to the counties could make local governments labs for innovation—but only if we have the will and the data to evaluate the results.

Our final panel demonstrated that California still knows how to dream big. The discussion focused on three projects: a historic effort to combat climate change, the construction of high-speed rail, and the advancement of stem cell research. All have been controversial, but they show that California voters and elected officials embrace innovation, as they have throughout the state’s history.

We invite you to watch the videos of each session. We hope you find the conversations as thought-provoking as we did.

California Politics and the Future

Jim Brulte, chair of the California Republican Party, says Governor Brown is “clearly the master of Sacramento.”

Jennifer Medina, national correspondent for the New York Times, says the governor hasn’t talked much about poverty or income inequality— an issue his Republican opponent used in the election this year.

And Garry South, longtime Democratic strategist, says the governor needs to take on the tough issue of fiscal reform because this can only be done by a Democrat.

These are a sample of comments from a panel of experts speaking at a briefing hosted by PPIC in Sacramento this week. The discussion focused on the challenges and opportunities ahead for the governor and legislature. The event began with a presentation of the results of the new PPIC Statewide Survey by Dean Bonner, associate survey director. The survey included a wide range of topics, including tax reform, health care, climate change, and the approval ratings of state leaders.

California’s Future Challenges and Opportunities

PPIC hosted a day-long series of conversations this week about creating a better future for our state and highlighting the choices we need to make today to do so. After a keynote address by Nancy McFadden from the governor’s office, panelists from government, business, and philanthropy discussed California’s challenges and opportunities before a large audience in Sacramento and online. They tackled difficult topics, such as improving economic opportunity and increasing citizen engagement in government. And they discussed ways the state can build on its strengths—an improving economy, a diverse population, and a history of reform and innovation.

We will post videos of all of the sessions soon. In the meantime, we want to share the opening remarks prepared by PPIC researchers. They set the context each session:

We hope their insights will pique your interest and inspire you to watch the conference videos when they become available.

Timely Talk About California’s Future

Californians are feeling more optimistic about the state’s immediate economic future than they have in years, our December PPIC Statewide Survey shows. Today, 52 percent expect California to have good times financially for the next year. The last time more than half of residents expressed this view was in January 2001. But when Californians are asked to take the longer view, worries about their own economic futures emerge. Most residents—55 percent—think that when California’s children grow up they will be worse off financially than their parents.

The time is right to both build on Californians’ new optimism and address the nagging concerns about the future. After years of economic turmoil, the state has entered a period of reform and reinvention. How can we Californians ensure that the changes will bring about a better future for the state?

With the new legislature sworn in and state leaders developing policy agendas for the months ahead, PPIC is hosting a wide-ranging conversation tomorrow about the choices we need to make today to create a future that benefits all Californians. Registration for the conference, California—State of Change, is closed, but I invite you to watch the live webcast of this full-day event.

Event panels will cover a variety of topics, including the economic, political, and demographic trends driving change in the state; how leaders can best respond to them; and how government can be a partner in the kind of innovation that has made our state a leader in so many areas.

Please join us for a series of timely discussions about our future.