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Thread: California leads nation in job creation

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    Default California leads nation in job creation

    California's Job Growth Outpaces Texas's

    In April 2011, a group of 11 California state officials traveled to Austin to see what they could learn from Texas. The state had added 100,000 more jobs than California during the previous 12 months, and its 8 percent unemployment rate was nearly 4 percentage points lower than California’s.

    Less than a year and a half later, the Golden State is ahead. California added 365,100 nonfarm jobs in the year ending in July, a 2.6 percent increase and the state’s largest 12-month gain since 2000. That beats every other state, including Texas, which added 222,500 jobs over the past year.

    Read more:
    http://www.businessweek.com/articles...utpaces-texass

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    Default Re: California leads nation in job creation

    ^^^ this is, as clearly admitted by your article's author, a straight-up comparison of California's Keynesian policy of the state borrowing yet more money in order to continue to employ and hire even more gov't workers, and California's borrowing yet more money to fund ( gov't subsidized ) construction projects, plus California raising taxes on their citizens, --- versus Texas' Austerian policy of the state not borrowing additional money, permanently firing gov't workers, keeping taxes low, and allowing non gov't subsidized private sector business growth to drive the state's econonomy. Indeed California did add jobs ... for the year 2011 ( actually it's fiscal year mid 2011 to mid 2012, which the article refers to as 'the last 12 months' ). This is the absolute certain result of the state borrowing / taxing additional money, and in turn spending that money on the paychecks of additional gov't workers and gov't contractors !!!

    But, as is the case with all such examples of different long term strategies, it will take a number of years to see the after-effects and consequences. As I pointed out in a different thread, California is now beginning to see private sector reactions to these 2011 changes ... with announcements of major 2013 private sector California business operation closures / relocations ( i.e. ComCast, Campbell's Soup ), with emigration of a significant number of California's higher earning citizens, with documented major shortfalls in California 2012 tax revenues etc. And, as the result of 2011 and previous year borrowing which funded the headline 2011 growth in California overall employment / jobs creation, a larger share of California tax revenues must now be allocated towards servicing the higher bond debt on the money the state has borrowed and already spent. Several California cities have recently been forced to file for bankruptcy due to their shortfall in tax revenues, plus their risng cost of servicing high existing bond debt and inability to sell additional bonds, not leaving enough for city gov'ts to cover their costs of gov't worker payroll and benefits.

    We'll see where California winds up versus Texas a year from now !!!
    Last edited by Melonie; 10-01-2012 at 02:51 AM.

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    Default Re: California leads nation in job creation

    Quote Originally Posted by Melonie View Post
    ^^^ this is, as clearly admitted by your article's author, a straight-up comparison of California's Keynesian policy of the state borrowing yet more money in order to continue to employ and hire even more gov't workers, and California's borrowing yet more money to fund ( gov't subsidized ) construction projects, plus California raising taxes on their citizens
    From the article:

    -snip-
    The bulk of California’s new jobs came from its traditional sources: construction, information technology, entertainment. Robust exports led to hiring at ports in the Bay Area and Southern California.
    -snip-

    The article doesn't say anything about construction jobs being subsidized by the government.

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    Default Re: California leads nation in job creation

    3.2 million people have left California over the last two decades.

    Governor Brown has admitted that California's "revenue volatility" is getting worse i.e. the state is overly relying on a small and SHRINKING population of "rich" people ( Congrats to anyone making more than $250,000 - You are "rich" ) to pay the bulk of its income taxes. It already has the nation's highest sales tax.

    From 1991 to 2009 , state spending grew an average of 5.37 % which is roughly double the rate of inflation. Brown's latest budget is 7 % higher than last year's. His budget is also dependent on $1.5 billion in capital gains taxes from the Facebook IPO which is ephemeral to put it mildly as the stock price is down 40%.

    Brown is pushing ahead with his $68 billion ( the estimated cost keeps going UP ) HSR train to nowhere which btw will NOT be high speed.

    California has the highest population of any state. So 365,000 "new" jobs aren't really that many. It hasn't put much of a dent in California's unemployment rate.
    Last edited by Eric Stoner; 10-02-2012 at 09:25 AM.

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    Default Re: California leads nation in job creation

    Quote Originally Posted by eagle2 View Post
    The article doesn't say anything about construction jobs being subsidized by the government.
    Furthermore, there would be nothing wrong with government funded construction jobs. Those jobs build capacity that will be needed in the future while providing employment now. Two good things.

    Z

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    Default Re: California leads nation in job creation

    Quote Originally Posted by Eric Stoner View Post
    California has the highest population of any state. So 365,000 "new" jobs aren't really that many. It hasn't put much of a dent in California's unemployment rate.
    Even if you take population into consideration, California created more jobs than Texas. California has 46% more people, but created 64% more jobs.

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    Default Re: California leads nation in job creation

    ^^^ again, the missing hard data is the number of 'new' California jobs which are self-sustaining via private sector profits, versus the number of 'new' California jobs which were directly or indirectly funded by increased federal or state borrowing and spending. Per the bar chart at your linked story, nearly half of the 'new' California jobs are the result of the state gov't hiring additional gov't workers ... which by definition are a 'drain' on the state economy since every dollar of their paychecks is a dollar that was ( or will be ) taken away from another California worker or business. Beyond that, a second category of 'new' jobs were 'professionals' ... with no published data as to how many of these jobs are private sector funded versus taxpayer funded ( i.e. how many engineers and accountants were hired as a result of the so-called high speed rail project being financed by both federal and state tax money ? ). A third category of 'new' jobs were construction related ... with no published data as to how many of these jobs are private sector funded versus taxpayer funded ( i.e. Solyndra's factory construction wound up being funded by taxpayers after they filed for bankruptcy on their unpaid gov't guaranteed loans ).

    However, on the basis of documented 'new' California gov't employees alone, Texas in fact created more new private sector jobs than California did on a per capita basis. Private sector jobs increase net state economic activity and contribute positive tax revenues to the state gov't. Gov't jobs do not.
    Last edited by Melonie; 10-02-2012 at 02:53 AM.

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    Default Re: California leads nation in job creation

    some new California economic info ... from


    (snip)"California’s Ballyhooed Recovery? Oh Dude!
    Tuesday, October 2, 2012 at 4:09PM

    There’d been some excitement on Monday about manufacturing data in the US. The Purchasing Managers’ Index (PMI) had edged up to 51.5, from 49.6 in August. The first month above 50, indication of growth in US manufacturing, however feeble, after three consecutive months of declines. Halleluiah. But in California, despite the current hype, the manufacturing index suddenly collapsed.

    “Manufacturing” in California is to be taken with a grain of salt. Much of it migrated to low-wage countries like China and Mexico. In Silicon Valley, once the center of high-tech manufacturing, chip startups are “fabless”; they design chips and outsource manufacturing to foundries in China. The iPhone and similar devices have never been manufactured in the US. Computers are manufactured worldwide, not in California. The big thing these days is software in all its forms, from run-of-the-mill photo-sharing apps to “Big Data.” And everyone wants to create “the next Facebook.” Um, well, minus the IPO fiasco. Biotech research outfits are sprouting up. And then there is Tesla, the electric-car startup, trying to make a go of it at a plant where GM and Toyota had thrown in the towel. It’s burning through hundreds of millions of dollars in investor money, taxpayer money, and customer deposits, and it hasn’t manufactured very much yet. So “manufacturing” in California needs quotation marks.

    But even the VC-funded bonanza in the Bay Area appears to be drying up. VCs are still making deals at a good clip: $4.16 billion in the second quarter, up from $4.04 billion for the same period last year. But the Facebook IPO fiasco—you still can’t have a conversation around here without it—and other IPO fiascos have weaned limited partners off their wildest dreams. And they’re having an impact.... on fundraising. Ever more VCs are chasing down fewer and more skeptical investors who, inexplicably, have become reluctant to part with their money. It has been a “dismal fundraising climate.”

    The trend has been going on for several years, as investments by VCs have outpaced their ability to raise funds. At some point, these funds will be drawn down, and investments in startups will wither. We’ve been through this before. And it might be at the cusp of happening again. It will take the sheen off the Bay Area. Meanwhile, manufacturing in Southern California, where this exotic activity is still practiced, is leading the way.

    California has its own manufacturing PMI, the Inland Empire Report on Business, sponsored by San Bernardino and Riverside Counties in Southern California, commonly called the Inland Manufacturing Index. After the recent high of 60.8 in March—above 50 indicating growth—it zigzagged down to 52 in August, and then in September, it crashed to 43.4—the lowest level since September 2009.

    All five key components were weak. And three fell off a cliff: Production tumbled from 55 in August to 37.5 in September; New Orders—a harbinger of pain to come—fell from 52 to 37, and Exports fell from 51.1 to 35.7. “Disturbing,” the report called it.

    So, with orders, production, and exports going south, the employment index sank to 44.6, indicating declining employment in manufacturing for the first time since December 2011. But thanks to the serial and now infinite QE, the Bernanke effect has kicked in: one component actually rose to 64.1, namely commodity prices. These higher input costs are adding to the pressures that businesses face."(snip)

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    Default Re: California leads nation in job creation

    Quote Originally Posted by Melonie View Post
    ^^^ again, the missing hard data is the number of 'new' California jobs which are self-sustaining via private sector profits, versus the number of 'new' California jobs which were directly or indirectly funded by increased federal or state borrowing and spending. Per the bar chart at your linked story, nearly half of the 'new' California jobs are the result of the state gov't hiring additional gov't workers ... which by definition are a 'drain' on the state economy since every dollar of their paychecks is a dollar that was ( or will be ) taken away from another California worker or business.
    It is not "by definition" that state workers are a drain on the economy. It is just something that you made up. If what you made up were true, which it isn't, than Texas, which reduced the number of government workers, should have added more jobs than California, which increased the number of government workers, since the "drain on the economy" would have resulted in a greater number of job losses than the increase in government workers, while reducing the "drain on the economy" would have resulted in a greater number of job gains for non-government workers. Again, the facts contradict your ideology.

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    Default Re: California leads nation in job creation

    ^^^ the facts are that California is continuing to build a huge pile of debt ... which, after some amount of time lag, will eventually result in even higher tax rates, or bankruptcy, or a federal bailout of California. Yes, things look better than they really are before the time lag expires, in exactly the same way that things look better for an individual who continues to spend more money than he earns every week via running up ever higher credit card balances. But in both cases, eventually it becomes a practical impossibility to borrow yet more money, and eventually creditors demand repayment ( or bankruptcy ).

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    Default Re: California leads nation in job creation

    Quote Originally Posted by Melonie View Post
    nearly half of the 'new' California jobs are the result of the state gov't hiring additional gov't workers ... which by definition are a 'drain' on the state economy since every dollar of their paychecks is a dollar that was ( or will be ) taken away from another California worker or business.
    That is where Austrian economic theory is just simply wrong. Not every state worker is a drain on the economy. State employees who do things we want done are not a drain on productive workers. They are doing something we productive workers want done and don't want to do for ourselves. For example, I do not want to spend my time teaching my child at home. (Homeschooling.) I make a lot more money than a school teacher ever will, so why would I give up the money I make so I can stay home and educate my child? I don't. Instead, I pay people to do that. It so happens that I live in an excellent school district and more important, I live in the attendance zone for one of the best elementary schools in the state. So, I am more than happy to pay some school teachers, principals, janitors and cooks to educate, feed, and clean up after my child. That frees me to do what I do, which is make money.

    The Austrian theory would have all us who are high income earners and thus job creators give up our work to do things like fixing potholes in the streets or teaching children to read because they think that street workers and school teachers are a drag on society. How foolish.

    Z

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    Default Re: California leads nation in job creation

    Quote Originally Posted by Melonie View Post
    ^^^ the facts are that California is continuing to build a huge pile of debt ... which, after some amount of time lag, will eventually result in even higher tax rates, or bankruptcy, or a federal bailout of California. Yes, things look better than they really are before the time lag expires, in exactly the same way that things look better for an individual who continues to spend more money than he earns every week via running up ever higher credit card balances. But in both cases, eventually it becomes a practical impossibility to borrow yet more money, and eventually creditors demand repayment ( or bankruptcy ).
    http://sunshinereview.org/index.php/Texas_state_budget
    -snip-
    The state (Texas) faces a structural deficit in its budget, meaning that a $10 billion budget shortfall will reappear in each future fiscal year until lawmakers align revenues and expenditures, according to John Heleman, chief revenue estimator for Comptroller Susan Combs
    -snip-

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    Default Re: California leads nation in job creation

    ^^^ it might help to read the 'fine print' of your link. Texas' tax revenues are rising ... mostly from the energy industry and increased sales tax collections. California's tax revenues are falling. In real world terms, this means that any texas 'structural deficit' is narrowing, while any similar California 'structural deficit' is widening.

    Also, the Texas 'structural deficit' you reference is the result of a Texas Supreme Court decision forcing Texas school budgets to be increased to the point of being able to provide full educational services to 'disadvantaged' students ( with 'disadvantaged' meaning not being fully competent in the English language !!! ).

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    Default Re: California leads nation in job creation

    Quote Originally Posted by Zofia View Post
    That is where Austrian economic theory is just simply wrong. Not every state worker is a drain on the economy. State employees who do things we want done are not a drain on productive workers. They are doing something we productive workers want done and don't want to do for ourselves. For example, I do not want to spend my time teaching my child at home. (Homeschooling.) I make a lot more money than a school teacher ever will, so why would I give up the money I make so I can stay home and educate my child? I don't. Instead, I pay people to do that. It so happens that I live in an excellent school district and more important, I live in the attendance zone for one of the best elementary schools in the state. So, I am more than happy to pay some school teachers, principals, janitors and cooks to educate, feed, and clean up after my child. That frees me to do what I do, which is make money.

    The Austrian theory would have all us who are high income earners and thus job creators give up our work to do things like fixing potholes in the streets or teaching children to read because they think that street workers and school teachers are a drag on society. How foolish.

    Z
    First of all there is nothing in Austrian theory that does not have room for state workers. We all want police and fire protection ; our garbage picked up ; our streets cleaned; our children taught etc. Obviously, such people have to be paid for.

    The "old" model that we used to have was that public sector workers would get paid LESS than their private sector counterparts or equivalents in exchange for job security and good benefits. California and many other states, along with the Federal government, have created a system where civil servants are paid more than the private sector. A LOT more. They also retire earlier with larger pensions and great health benefits. All of which has to be paid for. Often for decades.
    Last edited by Eric Stoner; 10-10-2012 at 07:44 AM.

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    Default Re: California leads nation in job creation

    Eric, Melonie's the one who says state workers are, by definition, a drain on the state economy.

    HTH
    Z

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    Default Re: California leads nation in job creation

    ^^^ and by the classic definition, they ARE ! There are extremely few public sector worker positions in the USA where worker efforts result in a net increase in revenue ( such as a researcher at a gov't run institution being responsible for a patent which in turn accrues royalty payments to a gov't entity, or a technician at a gov't owned hydroelectric plant producing electricity which can be sold at a profit, or the universally despised public road / bridge / tunnel toll collectors ).

    However, the vast majority of public sector workers draw 100% of their paychecks from the public treasury, their work product contributes zero additional dollars back into that public treasury, and the net tax money collected back from said public sector workers ( via income taxes, sales taxes etc. ) is by definition smaller than the tax money comprising their paycheck . Outside of the handful of exceptions noted above, some portion of their paycheck dollars must be continuously taxed away from private sector businesses and individuals ... a fact which constitutes a financial drain.

    Are some public sector jobs absolutely necessary ? ... yes - military, police and arguably emergency services. Are many public sector jobs done equally well or better by the private sector ? ... yes - teaching, mail ( package ) delivery, health care, prisons, and a long list of other occupations ...
    Last edited by Melonie; 10-09-2012 at 02:42 PM.

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    Default Re: California leads nation in job creation

    Quote Originally Posted by Melonie View Post
    ^^^ and by the classic definition, they ARE ! There are extremely few public sector worker positions in the USA where worker efforts result in a net increase in revenue ( such as a researcher at a gov't run institution being responsible for a patent which in turn accrues royalty payments to a gov't entity, or a technician at a gov't owned hydroelectric plant producing electricity which can be sold at a profit, or the universally despised public road / bridge / tunnel toll collectors ).

    However, the vast majority of public sector workers draw 100% of their paychecks from the public treasury, their work product contributes zero additional dollars back into that public treasury, and the net tax money collected back from said public sector workers ( via income taxes, sales taxes etc. ) is by definition smaller than the tax money comprising their paycheck . Outside of the handful of exceptions noted above, some portion of their paycheck dollars must be continuously taxed away from private sector businesses and individuals ... a fact which constitutes a financial drain.

    Are some public sector jobs absolutely necessary ? ... yes - military, police and arguably emergency services. Are many public sector jobs done equally well or better by the private sector ? ... yes - teaching, mail ( package ) delivery, health care, prisons, and a long list of other occupations ...
    Let's be careful here. Privatization helps but it is not a cure all. With things like prisons the jury is out as to whether privatization works better. What REALLY works is competition between the public sector and private alternatives. Especially in education. What works is breaking the monopoly that the public sector all too often has. For instance, I'd love to see UPS and Federal Express compete against the Postal Service in delivering private mail. There must be money to be made because the CEO's of both companies have said that they could deliver private mail and make a profit.

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    Default Re: California leads nation in job creation

    here's some 'hard dollar' statistics ... from


    (snip)"California was once the land of opportunity, but it is going down the tubes.

    Several of California's prominent cities have declared bankruptcy, such as Vallejo, Stockton, Mammoth Lakes and San Bernardino. Others are on the precipice, and that includes Los Angeles, California's largest city.

    California's 2012 budget deficit is expected to top $28 billion, and its state debt is $618 billion. That's more than twice the size of New York's state debt, which itself is the second-highest in the nation.

    Democrats control California's Legislature, and its governor, Jerry Brown, is a Democrat. California is home to some of America's richest people and companies.

    It would then appear that the liberals' solution to deficit and debt would be easy. They need only to raise taxes on California's rich to balance the budget and pay down the debt — or, as President Barack Obama would say, make the rich pay their fair share.

    The downside to such a tax strategy is the fact that people are already leaving California in great numbers. According to a Manhattan Institute study, "The Great California Exodus: A Closer Look," by Thomas Gray and Robert Scardamalia (October 2012), roughly 225,000 residents leave California each year — and have done so for the past 10 years.

    They take their money with them. Using census and Internal Revenue Service data, Gray and Scardamalia estimate that California's outmigration results in large shares of income going to other states, mostly to Nevada ($5.67 billion), Arizona ($4.96 billion), Texas ($4.07 billion) and Oregon ($3.85 billion).

    That's the problem. California politicians can fleece people in 2012, but there's no guarantee that they can do the same in 2013 and later years; people can leave. Also, keep in mind that rich people didn't become rich by being stupid. They have ingenious ways to hide their money.

    California has one-eighth of the nation's population but one-third of its welfare recipients. According to BusinessWeek, "it is one of the few states that continue to provide welfare checks for children once their parents are no longer eligible."

    There's nothing new about the handout strategy. As far back as 140 B.C., Roman politicians found that the way to win votes is to give out cheap food and entertainment, what came to be known as "bread and circuses."

    Given the widespread contempt for personal liberty and constitutional values, there might be a way for California politicians to solve their fiscal mess. They can simply stop wealthy people from leaving the state or, alternatively, like some Third World nations, set limits on the amount of assets a resident can take out of the state.

    This would surely be within their jurisdiction and would not raise any constitutional issues, because it would serve a compelling state purpose.

    In other words, if California were to set up border controls to stop people, as East Germans did at Checkpoint Charlie, before they cross the state line, such action would be protected by the 10th Amendment.

    The fact that many Californians have managed to get their assets out of the state complicates the issue. Article 1, Section 8 of the United States Constitution authorizes Congress "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."

    This is known as the commerce clause. There's no question that people who pull up stakes and leave California affect interstate commerce; California has less tax revenue, and recipient states have more.

    What California Attorney General Kamala D. Harris might do is sue Nevada, Arizona, Texas and Oregon in the federal courts for enticing, through lower taxes and less onerous regulations, wealthy California taxpayers."(snip)


    Thus the economic fact is staring everyone in the face that California is losing some $18 billion dollars worth of private sector income each year via the emigration of high earning California residents to other states. This is money that will no longer provide tax revenues to California gov't coffers. This is money that will no longer be spent into the California economy, which in turn negatively impacts remaining private sector California businesses and private sector California jobs.

    On the other side of the equation, California goes out and borrows $28 billion dollars to cover this year's budget deficit. Part of that borrowed money is used to offset the lost private sector tax revenues needed to service money California already borrowed and already spent in previous years. Another part of that money is used to 'stimulate' the creation of new California jobs, via public sector spending. However, at some point, with California's huge existing debt and limited tax revenues, it will no longer be possible for the state of California to continue its borrowing and spending policies. At that point, how many of those public sector funded 'new' jobs will still exist ? For that answer you can look to San Bernardino, Stockton etc. and soon Los Angeles !
    Last edited by Melonie; 10-13-2012 at 07:28 AM.

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    Default Re: California leads nation in job creation

    And New York is following California's lead but with a twist. The cities of Yonkers , Syracuse and Rochester have made their annual "hat in hand" trek to Albany seeking bailout money. Governor Cuomo has told them that they can longer expect an annual bailout. All three must now consider bankruptcy and the cities of Albany and Buffalo are not far behind. Albany would be the second state capital ( after Harrisburg, Pa. ) to effectively go bankrupt.

    Let's see if Andy has the guts to follow through on his get tough message to New York's cities.
    Last edited by Eric Stoner; 10-16-2012 at 07:43 AM.

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    Default Re: California leads nation in job creation

    ^^^ well, arguably, New York has followed California's lead in a number of areas ... most notably in increasing state income tax rates on businesses and individuals, while at the same time failing to cut gov't spending significantly. However, one must give New York credit for enacting some truly creative 'revenue enhancers' which penalize rich and poor alike ... such as the state's 'stealth gross receipts tax' which adds 8% to the cost of every New Yorker's electric bill ( well, not so much for low income New Yorkers whose electric bills are subsidized by direct state social welfare benefit payments to New York utilities )

    As a result, New York has claimed this year's award for the 'worst business climate in the USA' i.e. #50 out of the 50 states. New Jersey ranks 49th, and California 'improves' to #48 !!! See . Not surprisingly, New York and New Jersey continue to see emigration of some number of their higher earning citizens ... who of course take their taxable incomes and consumer spending dollars with them when they leave !

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