Building a durable political consensus in favor of growth is crucial if California is to generate sufficient economic opportunities in the future. Anti-development fashion now holds sway among the state's most privileged, well-organized communities. That's why even Depression-level job losses in the Bay Area have been met with indifference, if not secret glee. Should these perspectives continue to gain traction in Sacramento, they will choke off the remarkable economic performance achieved by California's fast-growth regions.
But convincing key political interest groups that growth is a major priority may be harder in California than elsewhere. In contrast with core, wealthy anti-growth constituencies, for example, labor has an obvious and significant stake in new jobs and upward mobility. Yet California's most influential union leadership has, if anything, become less inclined to support economic development as the state's economy has lagged.
This posture is different than in much of the rest of the country. In most of the U.S., despite long-term manufacturing and other employment declines, private sector unions are still larger than government employee unions. Historically, private sector unions have long understood that without steel, auto, energy, construction and similar private sector expansion they would be unable to recruit new members and secure better wages and benefits. Most temper their social activism with a keen desire to promote the private sector expansion on which their members depend.
But government unions, which rely on public funding and negotiate with a "management" -- including city councils and legislators they often help to elect -- in a manner that is sharply distinct from the experience of their private sector counterparts, dominate organized labor in California. Nearly 54% of all public employees are unionized in the state, compared with just 38% nationwide. Their total numbers are larger than the state's private sector union membership. As a result, while government accounts for less than 20% of total California jobs, public sector perspectives tend to overwhelm what might otherwise be more balanced views of the state's economic imperatives within organized labor.
Since late 2000, for example, when state tax revenues fell due to a weak economy and the end of the "new economy" bubble, statewide unions have been almost completely transfixed with protecting public sector jobs and revenues. Few seem to believe that spurring private sector investment and employment growth is nearly as important as raising taxes or eliminating economic development incentives. Reflecting their public sector insularity, many tend to support anti-business candidates and policies.
Needless to say, California's economic vitality is at risk if politically influential groups like organized labor fail to recognize the importance of private sector expansion. History has not been kind to communities in which those with the most at stake in fostering growth failed to counter elite anti-development movements. In places like the northeast, for instance, the resulting economic stagnation, inequality, and the loss of key blue collar sectors like manufacturing and wholesale trade has proved catastrophic for the middle and working classes.
Can the Golden State avoid the same fate?
A pro-growth governor might start by showing that government employment expands far more rapidly in the same areas that also sustain a strong private economy. From 1990 to 2003, employment fell by 1.1% in "slow growth California," the Pennsylvania-sized economy that includes Los Angeles County and most of the Bay Area, the most intensely urban parts of the state. Despite this dismal performance, the government sector expanded by 8%, adding 59,000 new workers within those same urban areas. Yet, over the same period, the rest of California's workforce (outside L.A. County and the Bay Area) rose by an astounding 30%, nearly double the national average, and added over 235,000 new government employees at nearly triple the rate of the state's slow-growth regions.
So it turns out that the best way for California's public sector unions to expand their ranks is to spur private sector growth and boost overall employment, all of which will stimulate new government jobs. When people have steady jobs, they demand and can afford such government services as education, roads, water and power. Indeed, tax revenues only expand when the number of income-earning taxpayers also increases. On this record it's clear that economic growth should be an indispensable priority for organized labor.
If there is to be a silver lining to the recall process, it may be the chance to reestablish economic development as a top public policy objective in the state. Whoever leads California after the election must convince groups like labor that fostering a vibrant private sector is just as essential as expanding government. If such a case is not or cannot be made, chances are the state's slow-growth regional malaise will spread throughout California.
Copyright 2003, Los Angeles Downtown News
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