Opinion

Dan Walters: Would new bills help or hurt California economy?

dwalters@sacbee.comSeptember 19, 2013 

California is recovering from the worst recession since the Great Depression, but as a new report from UCLA’s Anderson School of Management points out, that recovery is slow and very uneven.

Meanwhile, attitudinal polls have found that Californians remain very concerned about whether recovery will be complete.

Gov. Jerry Brown and other politicians have been touting recovery of late, but they cannot ignore the public’s angst. Often, therefore, when bills were traveling through the legislative process this year, their economic effects – positive or negative – became debating points.

So did what happened this year really impact California’s economy?

One example was Senate President Pro Tem Darrell Steinberg’s high-profile measure to fast-track environmental reviews of his pet project, a new basketball arena in Sacramento.

Steinberg portrayed the project as an economic catalyst for his hometown, particularly its moribund downtown, but many studies of sports venue projects have thrown cold water on that hoary theory and it’s difficult to see how 40 games a year would do the trick.

Steinberg, et al., claim that other events, such as rock concerts, would make the arena an economic powerhouse, but to the extent such events occurred, they would shift entertainment dollars from other local venues – including the city’s own convention center/theater complex – without net economic benefit to the region.

Economic impact was the chief focus of two other major bills, one to regulate but not ban “fracking” of potentially huge shale oil deposits, and another to raise the minimum wage from $8 per hour to $10.

Exploiting shale oil could be a major economic boost – if it happens. Unique geologic factors would make extraction very difficult and very expensive, the new rules may retard development and the economic impact, if any, will be way in the future.

Advocates of the minimum wage boost said it would lift the economy by putting more money in the hands of low-income consumers, while opponents said it would discourage hiring by raising small employers’ costs.

The Bee’s data reporter, Phillip Reese, has calculated from census data that about 1.5 million full-time California workers now earn minimum wages, so a $2 boost would mean about $6 billion a year in extra income for them. Adding part-time workers to the equation might make the impact around $10 billion.

That’s a lot of money, but would represent just 1 percent of the state’s $1 trillion in annual wage and salary payments, so despite the bill’s impacts on individual workers and employers, it would not be anything more than a drop in the state’s economic bucket.

Whatever else they may have done this year, legislators – despite their rhetoric – probably had very little impact on California’s unsettled economic future.

Call The Bee’s Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters. Follow him on Twitter@WaltersBee.

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