Dan Walters

Dan Walters: California’s uneven recovery shrinks middle class even more

Dan Walters
Dan Walters

California’s economy is recovering from its worst recession since the Great Depression – no doubt about that.

But its recovery is very slow, very geographically and socioeconomically uneven, and exacerbates the decline of a once-vibrant middle class and the evolution of a distinctly two-tiered society.

Sure, there is plenty of opportunity for those with the educations, creativity or technical skills that the post-industrial economy rewards handsomely and their success spawns demands for low-skill, low-pay service workers.

But what about the middle class? What about aerospace craftsmen, automobile assemblers, petrochemical plant operators, movie industry technicians and myriad other well-paying occupations that accompanied California’s rise as a major economic power in the 20th century?

Those jobs have vanished by the millions and continue to disappear, leaving behind a state marked by high poverty rates and pockets of sybaritic excess.

Two recent examples illustrate the trend.

Tesla Motors, which makes battery-powered luxury cars, has benefited greatly from California’s subsidies, a virtual mandate to build electric cars, and pollution credits it sells to other companies.

But when it came to locating a $2 billion plant with thousands of jobs to build lithium-ion batteries for itself and other automakers, the California-based company bypassed California. It’s chosen four other Western states, including arch rival Texas, as finalists.

Tesla isn’t saying why it shuns California, but efforts by Gov. Jerry Brown’s business development office, GO-Biz, clearly fell short.

It’s another example of high-technology companies keeping management and research operations in California, but looking elsewhere to locate plants that build their devices. Intel, for instance, has publicly declared that it would build no more plants in California.

The second example comes from FilmLA, the organization that encourages film and television production in the industry birthplace.

It issued a report this month that California had fallen to fourth behind Louisiana, Canada and Britain in production activity.

The report noted that 15 years ago, California had 64 percent of the production activity on the top 25 live-action films, but it was just 8 percent in 2013.

Once again, while film’s elites live in California, blue-collar jobs go elsewhere – except, ironically, those in pornography, still centered in Southern California.

Other examples of economic bifurcation abound, leaving ever-fewer generators of middle-class employment – and uncertain ones at that, such as a volatile construction industry or government.

Whatever the cause – taxes, regulatory density, high utility costs, workforce training deficiencies – it’s an unhealthy trend that politicians ignore at our peril.