News & Updates - The Numbers Crunch: A ‘two-tier economy’ shadows California’s future

The Numbers Crunch: A ‘two-tier economy’ shadows California’s future

The Sacramento Bee, May 1, 2015

Even without “Six Californias” or other harebrained schemes to divide the Golden State, it’s already happening before our eyes.

Nearly six years into the recovery from the Great Recession, it’s becoming painfully clear that California has two economies – the booming big-city coast, especially Silicon Valley, and vast swaths of inland California.

Several coastal counties are basking in jobless rates below 4 percent – what many economists consider “full employment.” In March, unemployment was 3.6 percent in San Francisco and 4.1 percent in Santa Clara County.

At the other extreme, many inland counties are laboring under horrendous unemployment. In March, the jobless rate was 20.5 percent in Colusa County, 12.9 percent in Merced and 11.2 percent in Fresno County.

In all, 16 of California’s 58 counties still had double-digit unemployment in March, even as the statewide average dropped to 6.5 percent, the lowest in seven years.

While it’s unrealistic to expect the jobs picture to be equal across the entire state, the gap between unemployment rates is disturbingly high.

We have a “two-tier economy,” says the California Business Roundtable, which represents many of the state’s largest employers. It points out that the Bay Area, with less than 20 percent of the state’s population, is accounting for 60 percent of new jobs since 2007.

Even if people in search of work want to move there, they can’t afford the superheated housing costs. And we don’t want to see cities in inland California hollowed out.

Kirk Clark, vice president of the Business Roundtable, says the “amazing success story” of Silicon Valley is dominating the dialogue in Sacramento, so his group is trying to raise awareness that many parts of the state are struggling.

The uneven recovery is worsening the gaps in wealth and inequality, and the prospects of children based on where they happen to be born. That feeds the resentment that leads to movements such as Silicon Valley venture capitalist Tim Draper’s failed Six Californias, or the State of Jefferson secession movement in Northern California.

To counter those voices, we need more leaders to speak up for creating jobs and prosperity in needier parts of the state.

“Not all of us can be the Silicon Valley, but there can be much higher growth,” Clark told me.

While there’s no silver bullet, he says, there are promising efforts underway, including local businesses and community colleges collaborating to find job sectors with the highest potential and to quickly train workers in that sector.

California boosters like to brag about being the seventh-largest economy in the world.

But unless that economy starts working better for all Californians – whether they live in Silicon Valley or the Central Valley – that boast will be awfully empty.

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