Uneven economic recovery was state’s biggest political story of 2013 

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The biggest political story in California this year didn’t happen in the Capitol or other political arenas.

Rather, it was the state’s very uneven and somewhat uncertain recovery from the worst recession since the Great Depression.

It’s a political story because economic activity underlies the tax revenue estimates that, in turn, fuel the annual process of fashioning state and local government budgets.

And it’s a political story because of the ongoing debate over whether California has lost its mojo as a powerful economic generator by becoming hostile to business.

The latest data are, for the most part, positive. A few years ago, the state’s unemployment rate was well over 12 percent, one of the highest in the nation, and it had lost more than a million jobs. But through November, the state Department of Employment Development reported, it had regained more than 900,000 jobs, and its jobless rate had dropped to 8.5 percent.

The darker side of the data, however, is that California still has more than 1.5 million unemployed workers and the gains have been pretty much confined to a few coastal enclaves, particularly those in the immediate Bay Area.

Double-digit unemployment is still common in inland counties, particularly agricultural areas and those where the housing meltdown hit the hardest.

While wealthy, mostly white Marin County enjoys an unemployment rate of under 5 percent, for example, in impoverished and mostly Latino Imperial County, nearly a quarter of workers lacked jobs in November.

Another troubling bit of data is that when unemployment is combined with involuntary part-time work and those working below their skill levels, California’s economic distress rate climbs to nearly 20 percent, according to the federal government. And due to its high cost of living, close to a quarter of Californians are impoverished — the highest level of any state — under an alternative method of calculating poverty by the U.S. Census Bureau.

These seemingly disparate economic trends generate no small amount of heated debate among economists who study California. They range from Steve Levy of the Center for the Continuing Study of the California Economy, who sees a bright future for California in the new numbers, to Bill Watkins at California Lutheran University, who sees an exodus from California to other states as a harbinger of darker times to come.

Among politicians, from Gov. Jerry Brown downward, the tendency is to side with the optimists such as Levy and dismiss the naysayers such as Watkins as “declinists.”

Why? Because if things are turning up on their own, politicians not only have more money to spend, but also needn’t deal with the structural impediments to economic growth that Watkins and others cite, such as taxes and regulatory overkill.

Dan Walters covers state politics for the Sacramento Bee.

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Dan Walters

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