Category: Economy

Video: Travis Allen’s Priorities

Mark Baldassare, PPIC president and CEO, asked Assemblymember Travis Allen, candidate for governor in 2018, to name the top three issues with major consequences for the state’s future—a question Baldassare has asked of all gubernatorial candidates appearing before PPIC audiences. Allen said his top priorities would be

  • Cutting taxes
  • Getting tough on crime, and
  • Fixing roads and expanding freeways

Allen, who is campaigning to repeal the state gas tax increase passed last year, said California is already collecting enough tax revenue to improve roads and unclog the freeways.

“We can fix our roads, we can expand our freeways, we don’t need to raise taxes further to do it,” he said. He added that voters should be the ones to decide if they want to raise taxes.

The conversation with Allen is part of the PPIC Speaker Series on California’s Future. PPIC is inviting all major candidates for governor to participate if they reach a certain threshold in the polls. The goal is to give Californians a better understanding of how the candidates intend to address the challenges facing our state.

Watch all candidate videos

Legislative District Data Offers Close-Up View of Poverty

Poverty varies widely across California’s 58 counties—from 13.1% in Placer County to 24.9% in Los Angeles County—according to data from the California Poverty Measure (CPM). The CPM is an ongoing collaboration between PPIC and the Stanford Center on Poverty and Inequality that adjusts for differing housing costs across counties and incorporates major social safety net programs like CalFresh food assistance and the Earned Income Tax Credit (EITC).

For the first time, PPIC recently released CPM data showing poverty rates and the effects of safety net programs not just for counties, but also for state assembly and senate districts and US congressional districts.

Congressional districts provide a more detailed view of densely populated areas. While counties have static geographic boundaries, California’s congressional districts are adjusted after every decennial census to equalize their populations (in 2010, each of the 53 districts contained 702,905 people). This means that Los Angeles County’s 9.9 million residents, for example, vote in 18 different congressional districts. The county’s average poverty rate of 24.9% reflects both the 13.4% in poverty in District 33 and the 37.0% in District 40, a stark difference illustrated in the map below.

As might be expected, district-level data show even wider geographic variations in poverty than county-level data, from 12.4% in District 15, which includes parts of Alameda and Contra Costa Counties, to 37.0% in District 40, in Los Angeles County. The CPM also shows that without safety net programs, the variation would be even more extreme, ranging from 16.2% in District 33 to 50.3% in District 40.

While counties often take the lead in implementing programs that mitigate poverty, many funding decisions related to social safety net programs are made at the state and federal levels. Understanding the distribution of poverty can help policymakers at all levels develop short- and long-run strategies to alleviate it in every area of the state.

California’s Brain Gain

Recently released data from the US Census Bureau show that even as California continues to experience large net losses of residents moving out of state, the state is still a net importer of college graduates from other states. This interstate migration pattern—gaining large numbers of college graduates while losing large numbers of less educated adults—is unique among the states. Over the past five years, California has attracted 137,000 more college graduates (adults with at least a bachelor’s degree) from other states than it has sent to those states. For comparison purposes, the University of California (UC) awarded about 250,000 bachelor’s degrees at its nine undergraduate campuses over this same time period. In other words, interstate migration provides California with half as many college graduates as the entire UC system.

College graduates come to California from all over, but seven states send California substantially more college graduates than they get in return. Between 2011 and 2016, net gains of college graduates from New York (45,000), Illinois (32,000), New Jersey (20,000), Pennsylvania (17,000), Michigan (15,000), Florida (14,000), and Massachusetts (14,000) totaled more than 150,000. California experienced sizable net losses of college graduates to just four states: Texas (-26,000), Oregon (-20,000), Nevada (-14,000), and Arizona (-11,000).

The new migrants to California tend to be quite young. Indeed, college graduates age 20–29 account for almost all of the net gains. (In contrast, California experiences small net losses of older college graduates.) From a labor market perspective, attracting young college graduates is especially advantageous. Young adults with college degrees are at the start of their careers and provide the state with much-needed highly educated workers. The largest gains are in majors that are in relatively high demand in the labor market, including engineering (22,000), social sciences (19,000; mostly economics and political science), computer science (17,000), communications (17,000), biology and health sciences (14,000), and business (13,000).

The migration of young college graduates to California is a consequence of the state’s growing demand for highly skilled and highly educated workers. But the numbers are not high enough to meet the state’s changing needs. PPIC’s research has shown that by 2030 California will face a shortfall of 1.1 million college graduates. Failing to keep up with the demand for skilled workers could curtail economic growth and limit economic mobility—resulting in a less productive economy, lower incomes, less tax revenue, and increased dependence on the social safety net. Although many college graduates move to California from other states, the most important source of highly educated workers in California are the state’s colleges and universities. Policies and practices to improve college access and completion in the state will ensure that more Californians are able to help create and benefit from a strong economy.

Commentary: Will California’s Pot Law Limit Illegal Marijuana Sales?

This commentary was published in Newsweek on January 2, 2018.

The new year brings with it a new age of legal marijuana: As of Monday, the growing, sale and use of recreational cannabis in California is now legal for individuals over the age of 21. But will it change much in the state?

Read the full commentary on newsweek.com.

High Housing Costs Hurt College Affordability

A majority of Californians say affordability is a problem in the state’s public colleges and universities, according to the PPIC Statewide Survey. In addition, three-quarters of residents in the survey agree that the price of college prevents students who are qualified and motivated from going to college. Not surprisingly, state leaders are exploring new strategies to help students and families better cope with college costs. Most current approaches, such as state and institutional financial aid, focus primarily on tuition relief. This makes sense, as tuition more than doubled at California universities from 2006 to 2012—and is on the rise again.

However, housing costs also play a significant role in the total cost of attending college. Californians are well aware of the issue: 85% of residents in the PPIC survey say colleges and universities should do more to make sure that all students have affordable housing options. Indeed, even with the rapid increases in tuition, living costs for many students exceed tuition at California’s public institutions—the state’s community colleges, California State University (CSU), and the University of California (UC). Average room and board costs also differ substantially across the three systems, from $8,509 per year at the community colleges to $13,774 at UC.

These differences in costs are related to whether students live on campus, off campus on their own, or off campus with family. Estimated average costs of housing and food for students living on campus top $13,000 per year, and those living off campus pay an average of $10,000 to $13,000 in room and board. The costs associated with living with family are not estimated in the available federal data, but most college websites suggest these costs range from $5,000 to $6,000—about half the cost of living on or off campus.

Students’ housing choices also partially depend on where they go to school. Only nine cities in California have UC campuses (excluding UCSF which only enrolls graduate students), and most UC freshmen live on campus in their first year. Historically, the 113 community colleges and 23 CSU campuses have been seen as local and low-cost options. Indeed, both systems show about 30% or more of freshmen living with their families, which helps keep average room and board costs lower than at UC. But it is worth noting that the share of CSU freshmen living on campus may grow. More dorms are being built on CSU campuses as administrators see on-campus housing as a strategy to increase graduation rates. Data on students’ living arrangements are based on institutional reporting on freshmen who receive some sort of federal financial aid, which includes more than 60% of students at most institutions.

As state leaders reexamine the goals in the 1960 Master Plan for Higher Education and consider changes to financial aid, they should take into account the role that living costs play in the total cost of education.

Learn moreRead the PPIC Statewide Survey: Californians and Higher Education
Visit the PPIC Higher Education Center

Video: John Cox’s Priorities

Businessman John Cox, candidate for governor in 2018, was asked in a San Francisco forum last week to name the top three issues that will have major consequences in California’s future. Mark Baldassare, PPIC president and CEO, posed the question, which has been answered by all gubernatorial candidates appearing before PPIC audiences.

Cox said his top priorities are:

  • Removing the “corruptive” influence of special interest money. “The idea that special interests fund the campaigns of people they are looking to to get things done—it’s an indefensible system,” he said. “I don’t necessarily think that we send a whole bunch of corrupt people to Sacramento,” he said. “The trouble is, it’s a corrupt structure.” Legislators, he said, “are almost required to be professional fundraisers.”
  • Making the state more affordable and improving the business climate. The cost of housing, electricity, gasoline—the essentials to quality of life—are pushing the middle class into “almost-poverty situations,” Cox said, adding that improving the business climate is also essential so that the state can grow.
  • Addressing state employee pension debt. Cox said an overly generous legislature as well as governors and special interests have created a “debt bomb.” Our unfounded pension debt is a “sword of Damocles hanging over our economy,” he said.

How would Cox diminish the influence of special interests? He is sponsoring the Neighborhood Legislature Reform Act, which he hopes to qualify for the statewide ballot. The initiative calls for carving up each assembly and state senate district into 100 neighborhoods, each with its own representative. The 100 representatives in each neighborhood district would meet to choose one to go to Sacramento. In other words, there would still be just 120 legislators meeting in the Capitol. With districts that number just a few thousand households, candidates could run campaigns with a few hundred dollars, Cox said. The idea, he said, is that “you don’t need money to run a race.”

The conversation with Cox is part of the PPIC Speaker Series on California’s Future. PPIC is inviting all major candidates for governor to participate if they reach a certain threshold in the polls. The goal is to give Californians a better understanding of how the candidates intend to address the challenges facing our state.

Watch all candidate videos.

Video: Strategies for Reducing Child Poverty

High housing costs and low-wage work make it hard for low-income Californians to meet their basic needs. The result? Nearly a quarter of California’s youngest residents live in poverty—a fact with profound educational, health, and economic repercussions now and in the future. Social safety net benefits help low-income families supplement their incomes but do not reach the working poor in high-cost areas and the very poor across the state.

A new PPIC report examines how high housing costs and low wages contribute to child poverty. It also looks at additional policy approaches: an expansion of the Earned Income Tax Credit, establishment of a state child credit, and an overhaul of the state renter’s credit. Each approach holds promise, and each involves trade-offs.

Researcher Caroline Danielson presented the report in Sacramento last week. She also demonstrated an interactive tool that allows for a deeper exploration of how policy changes could affect California’s diverse counties. It underscores the need for policymakers to be strategic in determining how best to help families in need throughout the state.

Explore the accompanying tool Interactive: Reducing Child Poverty in California.

College Graduates and California’s Future

The University of California Board of Regents invited Mark Baldassare, PPIC president and CEO, and Hans Johnson, PPIC senior fellow and director of the PPIC Higher Education Center, to present their perspectives on the role of higher education in California’s future, November 16, 2017. Here are their prepared remarks:

Good morning, I am Mark Baldassare, president and CEO of the Public Policy Institute of California (PPIC). I am here with my colleague and PPIC’s higher education center director Hans Johnson to present the institute’s research findings on the need for college graduates in California’s future economy. To kick off this session, I am going to make a few remarks about public opinion to place this issue in perspective.

The November PPIC Statewide Survey points to the importance of this topic for most Californians. Eighty percent of California adults say that the state’s higher education system is very important to the quality of life and economic vitality of the state, and another 14% say it is somewhat important. Strong majorities across political, regional, racial/ethnic, and demographic groups say that the state’s higher education system is very important. In fact, strong majorities of Californians have been saying that higher education is very important to the state’s future since we first asked this question in 2007.

In the context of the 2018 governor’s race, 63% of California adults say that candidate positions on higher education are very important, and another 28% say they are somewhat important to them. Majorities across political, regional, racial/ethnic, and demographic groups hold this view.

When asked about the current workforce, 83% of Californians say that a four-year degree from a college and university prepares someone very well (30%) and somewhat well (53%) for a well-paying job in today’s economy. Fifty percent of Californians think that a college education is necessary for a person to be successful in today’s work world, with majorities of Latinos (67%), Asian Americans (54%), and African Americans (51%) and fewer whites (35%) holding this view. Moreover, about half of Californians, with pluralities across the state’s major regions, say that California will not have the college-educated residents needed for the jobs and skills likely to be in demand 20 years from now.

In sum, the importance of a higher education and the need for college graduates are issues on the minds of many residents today. Hans will provide the demographic and workforce analysis that demonstrates why the state’s higher education system is essential for a better future for all Californians.

PPIC has produced a series of reports on California’s future population and economy. Our report Will California Run Out of College Graduates? provides projections of the demand for and supply of workers across all levels of educational attainment to 2030. Our primary finding is that California faces a shortage of highly educated workers. Specifically, economic projections to 2030 show that about two in five jobs will require at least a bachelor’s degree, while demographic projections suggest only about one in three Californians will have at least a bachelor’s degree. This shortfall equates to 1.1 million workers.


In this presentation, I first describe how California’s population and economy are changing and then identify how the state and its higher education institutions can increase college enrollment and completion to produce more college graduates.

California’s economy increasingly demands highly educated workers

To develop our economic projections, we apply trends in educational attainment levels to occupational projections developed by the California Employment Development Department. We examine changes in labor market demand that are occurring due to shifts both in occupational structure and changes in educational attainment within occupations. Our primary finding is that the state’s economy will continue along a well-established trajectory, with a growing share of jobs requiring at least a bachelor’s degree.


There are two key drivers of increasing demand for college graduates: (1) faster growth in occupations that commonly require a college degree (e.g., computer technology), and (2) increases in demand for highly educated workers within occupations (e.g., nursing). In recent years, most (74%) of the increased demand for highly educated workers has occurred because of faster job growth in occupations that commonly require a college degree. Among occupations with at least 100,000 full-time year-round workers, there have been especially rapid growth rates for software developers (56% increase between 2010 and 2015), computer scientists and systems analysts (42% increase), and managers (35% increase). These and other highly skilled occupations have experienced faster growth than most occupations that require lower levels of education.


That said, the increase in educational attainment within occupations has been significant. For example, the share of registered nurses with a bachelor’s degree has grown from 57% in 2000 to 68% in 2015. From 2010 to 2015, about 26% of the increase in jobs for college graduates was attributable to growing demand for highly educated workers within specific occupations.

Are college degrees really necessary for these jobs? To answer this question, we examined a number of labor market outcomes. Within and across occupations, we find that workers with bachelor’s degrees have higher labor force participation rates, lower unemployment rates, and higher wages than those without—and that, in general, as educational attainment increases, wages also increase. Overall, the wage premium for college graduates relative to less-educated workers has grown. By 2015, the average annual wage for full-time year-round workers was more than twice as high for workers with a bachelor’s degree than for those with only a high school diploma.

Within each of 51 occupational groupings we see higher wages for college graduates than for high school graduates. Among registered nurses, for example, those with a bachelor’s degree earned 12% more than those with an associate degree.

California’s educational institutions are not keeping up with demand

Too few Californians are graduating from college. At current college enrollment and completion rates, only 30.5% of 9th graders in California will eventually earn a bachelor’s degree either in California or elsewhere in the United States. Among all states, California ranks 47th in the share of high school graduates who enroll in four-year colleges and 5th in the share who go to community colleges. Low rates of transfer from community colleges to four-year colleges exacerbate the problem.


A critical challenge is the retirement of the baby boom generation. Called the “silver tsunami” by some, this is the first time in California’s history that such a large and well-educated group is exiting the labor force. In contrast, the number of young adults in California is projected to increase only modestly.


Not all degrees are equal

On average, college graduates have very strong labor market outcomes. At any point in time, some college graduates are working in jobs that do not necessarily require a college degree, but over the course of their careers the vast majority of college graduates will move into occupations that reward their educational training. Our estimates show that students who earn bachelor’s degrees in engineering and computer science fare very well in the labor market, but even those with less remunerative majors, such as education and the liberal arts, will earn far more in wages than less-educated workers, even after taking into account all the costs of going to college.


How to close the degree gap

To close the degree gap, California and its higher education institutions need to establish new policies and practices to enroll more students, especially in our four-year colleges and universities, and improve graduation rates among students already in college. In previous testimony, PPIC has identified targets for each of the state’s public systems with respect to admission, transfer (from community colleges to four-year colleges), and improved graduation rates.

The University of California (UC) will play a central role. In our scenario, UC would need to award approximately one-quarter of the additional degrees necessary to close the gap. This is an ambitious target, but the increase over current levels (and over the baseline projection) would not be without precedent. For example, between the 1999–2000 and 2016–17 academic years, the number of bachelor’s degrees awarded by UC increased 62% (from slightly more than 33,000 to almost 54,000). Our closing-the-gap scenario would require UC to award about 81,000 degrees by 2029–30, a 51% increase over current levels.


Improving access and success among groups historically underrepresented in higher education—including low-income students, first-generation college students, Latinos, and African Americans—is essential if we are to close the degree gap. Compared to other public research universities, UC has an impressive record in enrolling low-income and first-generation students.

The California State University (CSU) system and the California Community College system have adopted new goals that are entirely consistent with PPIC’s targets. New initiatives, including remediation reform at the community colleges and at CSU, have the potential to substantially improve student success rates. CSU’s new graduation initiative aims to increase graduation rates and eliminate gaps between groups of students. College preparation among the state’s high school graduates has also increased, with the share of students completing the college preparatory requirements of UC and CSU reaching an all-time high. Strong demand for UC is likely to continue as college preparation continues to improve and the transfer pathway is better articulated. UC has seen consistent increases in graduation rates for many years, and new efforts to improve on-time graduation are likely to continue this trend.

Finding ways to accommodate all these students remains a central challenge, but one we must meet in order to ensure a better future for all Californians.

Video: Gavin Newsom’s Priorities

Gavin Newsom, California’s lieutenant governor and a candidate for governor in 2018, was asked in a San Francisco forum last week to name the three issues that will make the biggest difference in California’s future. Newsom, who is also a former mayor of San Francisco, predicted that both California and the nation will be grappling with these issues over the next ten years:

  • Debt and demographics. With California’s population aging rapidly, the state and its cities face growing public employee pension and health care liabilities. “As a progressive Democrat, I’m not naïve about the commitments we’ve made and the commitments we must fulfill,” Newsom said. “Nor am I naïve, as a former mayor, about the challenge of meeting those commitments . . . Cities like Richmond are facing the prospect that by 2021, by one estimate, upwards of 40% of their general fund will go to retiree contributions.”
  • Energy and climate change. The state has set ambitious goals to reduce greenhouse gas emissions and increase energy efficiency. “The next governor has to deliver,” he said.
  • Information technology and globalization. “The issue that animates my anxiety: work, the future of work.” The days of having a job or career have given way to something radically different, forcing us to think in terms of portable benefits and retirement security, he said. Further, workers in retail, food and beverage, and clerical jobs—the top employment categories—are on the “edge of automation.” Displacement of these workers will require us to have a different conversation about skills, education, and social mobility, Newsom said.

The conversation with Newsom was part of the PPIC Speaker Series on California’s Future. PPIC is inviting all major candidates for governor to participate in a public event if they reach a certain threshold in the polls. The goal is to give Californians a better understanding of how the candidates intend to address the challenges facing our state.

Watch all candidate videos.

Video: Californians Concerned about Cost but Give State’s Colleges Good Grades

Many Californians say the state’s public higher education system is going in the wrong direction, a new PPIC Statewide Survey shows. But they are more likely to say they are concerned about affordability than about the quality of the state’s colleges and universities. Just 18% of all adults say quality is a big problem, compared to 56% who call affordability a big problem.

Researcher Lunna Lopes presented the findings of PPIC’s annual survey on higher education to a Sacramento audience last week.

Among the survey findings underscoring Californians’ concerns about college affordability: 75% say the cost of college keeps students who are qualified and motivated from attending, 79% say students have to borrow too much money to pay for college, and 85% say colleges and universities should do more to make sure that all students have affordable housing options.

In contrast to Californians’ views on costs, solid majorities of residents give excellent or good ratings to the state’s community colleges, California State University, and the University of California.

Californians are divided on whether a college education is necessary to succeed in today’s work world, with half saying it is and 48% saying there are many ways to succeed without college. There are strong differences among demographic groups on this question. Two-thirds of Latinos say college is necessary, compared to just 35 percent of whites. And 59% of Californians with household incomes of $40,000 or less say college is necessary, compared to 42% of those whose incomes are $80,000 or more.

Despite this divide over whether college is necessary for success, 80% of Californians say the public higher education system is very important to the future quality of life and economic vitality of the state.