Politics and economic analysis are a bad mix. Take the debate over Californias budget.
On one side of the aisle, we hear boasts of turning a huge budget deficit from fiscal 2011-12 into a huge surplus for 2018-19. The other side complains the government is still spending too much, too fast.
Whats seemingly lost in the dialogue is why theres this pot of gold to fight over in the first place.
Lets give credit where its due: Californias private-sector employers. While politicos and pundits alike were bickering, bosses have been hiring at a top-of-the-charts pace. Overall economic performance has largely powered the reversal in the government budget.
Lets look at what my trusty spreadsheet has to say about Californias private sector hiring — jobs and pay, comparing the fourth quarters of 2011 and 2017 using federal employment data.
1. Hiring: 2.36 million workers hired statewide from 2011 to 2017, the most workers added among the states. Its also equal to 17 percent of all new U.S. workers. (Californias 14.8 million workers are 12 percent of all U.S. jobs )
2. Job growth: Californias hiring spree equaled a 19 percent growth rate in 2011-17, No. 7 nationally (Utah was No. 1 by this metric) and outpacing the average 12 percent hiring pace among all other states.
3. Salaries: Private employers in the state paid an average $1,354 weekly wage in 2017s fourth quarter — 26 percent higher than other states. California wages rose 23 percent in 2011-17, the No. 2 hike nationally (Washington state was No. 1) and larger than the average 15 percent growth in other states.
4. Payrolls: The growing number of jobs and rising wages adds up to 47 percent growth in what private bosses collectively paid Californians in 2011-17. Thats your growing base for income taxes and consumption-based levies like sales tax. (And this helps explain a 60 percent home-price increase in this period!) That payroll growth is second-largest, again behind Washington. Nationwide, total pay grew by only 29 percent.
5. Gross Domestic Product: This broadest measure of business output confirms Californias economic oomph. From 2011 to 2017, the states GDP grew 22 percent after inflation, fourth best among the states.
Look, this employment growth doesnt justify all spending decisions or tax policy. But it certainly suggests one reason why the government has extra opportunities to spend. Note that private industry payroll expansion is not the only fattened target for taxation. Dont forget about government worker pay, capital gains and property values, to name a few.
Plus, this economic rebound was from an ugly bottom. Californias economy — and state coffers — were hammered by the Great Recession.
For example, private employers cut 891,000 workers from 2007 to 2011– a 7 percent drop that was 10th worst in the nation. Californias GDP contracted 2 percent.At the same time, state government spending fell 9 percent in those four years.
I will let others debate state spending priorities, the funding choices made, who should pay and how much — no less do we get “value” out of our tax dollars.
But lets not forget the backdrop of this current political debate: Noteworthy California wealth created by the economic recovery.
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