Out of Control Policy Blog

California Still Hiring, Despite Epic Fiscal Crunch

Only in a fiscal Bizarro World like California would you see state hiring increase at a time of epic budget deficits, but according to the San Jose Mercury News, that's exactly what's happening. Prepare to shake your head:

California's state government has managed to add thousands of jobs during this past year, defying a mammoth budget deficit and a brutal recession. The job growth for state workers contrasts with the loss of 759,000 jobs in California's private industry in the past 12 months.

"I don't know how this can happen," said David Kline, a spokesman for the California Taxpayers Association. "A lot of people are having trouble keeping their jobs, paying their bills, and feeding their families. Most taxpayers would be incredulous if they see these numbers."

During the 12 months that ended in June, state government added 3,600 jobs in California, a 0.7 percent gain. [...]

Taxpayers groups believe cutting jobs, not hiring thousands, should have been the answer to the recession. "When there is no money left in the till, you should economize and cut back on spending," Kline said.

That's the approach of the vast array of small, medium and large businesses and other operations that constitute California's industry. Private industry chopped 759,000 jobs statewide over the past year, a 6 percent decrease in its job base, Employment Development Department figures show. [...]

It appears the pace of state government hiring has accelerated during 2009 compared with 2008. Over the year that ended in June, the state added 3,600 workers, and in the year ending in May, state government added 4,300 workers. In 2008, the state added 3,100 employees, the EDD reported.

"It's amazing that California, with all its budget problems, can hire more people," said Brian Wesbury, chief economist with First Trust Advisors. "Every dollar the government spends is a dollar the private sector can't spend. The government must borrow or tax to get the money."

The debate over state government spending, revenue and job cuts could return to the front burner in the first half of 2010 despite the recent months of wrangling and budget disputes. "We will have a deficit of $20 billion in 11 months," [Beacon Economics economist Christopher] Thornberg said. "We'll be back to where we started. They haven't done a damn thing about the state deficit."

To reiterate the score here, over the last year in California:

  • Private sector jobs: down 759,000
  • California public employees: up 3,600

There's something seriously wrong with this picture. The wealth-generating sector is hemmoraging while the (broke) wealth-sponging sector is expanding. Not a viable or sustainable model for future prosperity.

At least government somewhere in California shrank:

Local government — including schools — shrank during the year that ended in June. "A lot of the pain that state government causes occurs at the local level," said Christopher Thornberg, an economist with Beacon Economics. "The state takes local funds, sale taxes, property taxes." Local government agencies shed 27,600 jobs in California, 8,100 jobs in the Bay Area and 2,900 jobs in the East Bay over the most recent 12 months.

» Reason Foundation's Privatization Research and Commentary
» Reason Foundation's California Budget Research and Commentary

Leonard Gilroy is Director of Government Reform


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