Craig DeLuz: False Reality Revealed: CA’s Growing Dependence on Government Jobs Threatens Long-Term Economic Stability

Can California survive if its businesses continue to decline?

Project 21 Ambassador Craig DeLuz analyzes California’s grim economic statistics in a commentary published at RedState:

While the public sector has seen an increase in jobs supported by tax dollars, the private industry — the backbone of any strong economy — has experienced a significant decline…. The tech and finance sectors, which were once major drivers of the state’s economy, have been hit particularly hard. …

With the state facing budget deficits and an increasingly dependent economy on the stock market, these job trends are concerning.

Read Craig’s entire commentary below.

In the ongoing debate over government spending and its impact on job growth, the latest news from California reveals a harsh reality. While the public sector has seen an increase in jobs supported by tax dollars, the private industry — the backbone of any strong economy — has experienced a significant decline.

Craig DeLuz

According to a recent analysis by the state Legislative Analyst’s Office, private-sector industries in California have lost a staggering 340,000 jobs since their peak a couple of years ago. The tech and finance sectors, which were once major drivers of the state’s economy, have been hit particularly hard. The information sector, home to tech giants like Google, Apple, Intuit, and Facebook, has experienced a 16 percent decline in jobs, while the financial sector has lost 8 percent of its workforce.

Meanwhile, the health care and social-service industries, which are largely funded by the government, have seen a gain of 240,000 jobs. However, as principal fiscal and policy analyst Chas Alamo points out, these industries are heavily dependent on government spending, blurring the line between public and private-sector jobs. In total, the private sector has 12.5 million jobs, while the public and publicly supported sectors have a combined total of 5.5 million jobs.

This stark contrast in job growth raises important questions for the future of California’s economy. With a current unemployment rate of 5.2 percent, the highest in the nation, it is clear that the state’s reliance on revenue from personal income taxes is not sustainable. As Brooke Armour, president of The California Center for Jobs and the Economy, points out, the state is losing high-wage, middle-class jobs and replacing them with low-wage hospitality and service jobs. This not only affects individuals’ financial stability but also has a significant impact on the state’s budget.

The California Business Roundtable, a group of top executives from the state’s major employers, echoes this sentiment in their analysis of employment data. While they note the state’s high costs of doing business, they also acknowledge the impact of the pandemic on the tech industry’s job losses. However, the question remains: Is the trend of tech companies investing and growing outside of California a temporary correction or a more permanent shift?

With the state facing budget deficits and an increasingly dependent economy on the stock market, these job trends are concerning. And while Alamo points out that the public sector includes jobs supported by the federal government, it is unclear if this will continue to offset the state’s budget challenges in the long term.

In the end, as much as we may strive for equality and job growth in all sectors, the reality is that the private industry is the engine that drives economic growth. Ignoring the decline in this sector and its impact on the state’s budget and job market would be a grave mistake. As economist Thomas Sowell reminds us, “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it.” And in California’s case, the scarcity of private-sector jobs may have serious consequences for its future.

Photo by Denys Nevozhai on Unsplash