Monday, September 16, 2013

Californians have to wait again

The 2013 state legislative session concluded last Friday with the Legislature scheduled to reconvene January 6, 2014. Generally, the state government has once again failed to pass legislation that will allow the private sector to improve the state's market economy and the state's spending spree under the will of labor groups continues. Between the state and local governments, Californians owe nearly $850 billion in debt, and that figure will likely top $1 trillion according to a report by The California Public Policy Center if the public wage and pension madness continues in the state.

That debt can never be paid off or controlled under the current economic and political climate no matter how high taxes are increased. In August, we've called for the state to take action on this spending fiasco problem by passing fair and sound legislation. Trivial regulations have sapped marketplace economic expansion. Government misspending and high public employee salaries have led to overpriced and delayed transportation infrastructure and operations. Both controversies place heavy obstructions on getting Southern California moving with a first-rate transit system. So what kinds of bills did the Legislature actually send to Governor Jerry Brown? How did the lawmakers fare in solving our transportation problems from the state level? Let's take a look at few:

CEQA Reform - Under current law, loopholes in the landmark legislation allow just about anybody with a lawyer to send any major development project to court whether or not such development would actually negate the environment. This undoubtedly inflates costs.

Guess what? Significant reform will have to wait until 2014. Instead, the state approved special favor legislation that would speed up the judicial review process of any lawsuits filed specifically against the replacement of an NBA sports arena in Sacramento. To be fair, the new arena will serve as a replacement venue from the existing Sleep Train Arena and the facility will be developed in the downtown area. We'll take a closer look at this project before making a judgment, but granting special favors and exemptions in general is certainly not fair public policy. By the way, local officials in Riverside County requested a similar favor when the Metrolink Perris Valley Line was stalled in court; that never became law. 

Wage Reform and California's Market Economy - We've called on the state to seriously reform public employee wages and pensions to match salaries offered in the marketplace. We've pushed for the state to support legislation that would allow the private sector to invest in the state's economy without directly dumping any public money into the marketplace. That would have increased the value of worker wages and benefits. A strong labor workforce fuels our transportation systems with the resources needed to operate. Such policy would be a win-win for both businesses and their workers. Did the state and unions propose productive legislation like that?

Nope. Instead, the state approved a bill that would hike California's minimum wage to $10 per hour by 2016 in a vain attempt to prop up the economy. Brown reported that he would sign the bill into law. To be fair, many working Californians will see an increase in take home pay and may be inclined to spend more. Although it looks fine on the surface, the value of the wage dollar will only go up under a robust economy and the abundance of marketplace jobs. Under the current political climate and job market, that's not going to happen. Instead, Californians are going to see the dollar further inflated and devalued if nothing is done to improve the state economy.

To make up for the losses, businesses are going to have to increase their prices or cut positions. That's a reality. Just wait and see how much you'll be paying for a Big Mac a few years from now. Also, with the devalued dollar in the state, fed up Californians and businesses may simply move out.

The state had better whip up some plans to make California a better place to do business and fast. The state needs to cut out trivial state regulations so that the wage hike doesn't worsen a soft state economy nor cause a cost hike of already overpriced transportation infrastructure projects. Specifically, California will need to get its economic level to match the robust economic times of 1968 where the value of a $2-per-hour federal minimum wage spiked over $10 in today's currency. This must be done without inducing pollution, urban sprawl, traffic congestion, or corporate corruption. You want a high minimum wage? That's how it's going to work for the economy. In fairness, the state did pass modest public pension reforms last year and is fighting to keep the legislation active in federal court. However, much more must be done to get California's economy back to a robust state. 

Clean Air - On the pollution front, things aren't so bad. China's top climate negotiator and Brown signed a Memorandum of Understanding on Friday to combat dirty Chinese air. The MOU does reference heavily on global warming, still a debatable topic, but the fact is that China's pollution remains at disastrous and unhealthful levels and must be controlled. The focus certainly should be about protecting the lives and the health of the Chinese with clean air, especially given that much of our consumables are manufactured there. We'll see if this MOU does anything to clean up China's disgraceful air quality.

We'll continue to analyze what's happening up in Sacramento and see how the proposed laws will impact the future of Inland Empire mass transit. However, it generally looks like fair and sound legislation to fix California's transportation system with a strong and productive marketplace labor workforce is going to have to wait again.

2 comments:

  1. Raising the minimum wage to $10 an hour was long overdue. It is strange how those who are making well above the minimum wage feel that others don't at least deserve $10 an hour. Even at $10 an hour one is barely above the poverty level unless living alone. As for McDonald's raiding their prices as a result, they make so much money as it is and on top of that they are sitting on huge amounts of valuable land purchased many, many years ago. They have been increasing their dividends regularly. It is time the worker's get at least a minor share int heir prosperity.

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    1. Wrestlersandiego, nobody is forced to work in an entry level position for minimum wage for life. Entry level jobs are there to gain workplace experience and the skills necessary to compete in the American marketplace. As one gains experience, performs well, and learns new skills such as using a computer, he/she either advances through the company or moves on to another job. Those who put forth no effort to perform well or learn new skills are not going to advance. The notion of the state government guaranteeing high wages and jobs is simply not compatible in the U.S. market economy. Under a free market economy, McD's is free to make as much profit as it can and how it pays its hourly crew members. When wages are artificially set high by the state, business profits go down with the inflated dollar; thus, they hire fewer workers and hike menu prices. Our costs all throughout the retail market go up, thus exacerbating the problem. Lastly, what actually drives the value of the wage dollar up is more private sector job opportunities; the more jobs there are, the higher the salary because businesses actually need to hire workers to make money.

      Under a robust economy, the United States offers plenty of job opportunities. Therefore, we want these entry-level workers to be able to advance through in the marketplace, have opportunities to learn skills, become part of a productive labor workforce and make livable salaries. Those who are willing to perform well at their jobs, sacrifice and learn will not be making minimum wage for life.

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