Recession Recovery?

Has California recovered from the recession? Good question. If you listen to federal and state politicians, you would believe it has. Look a little deeper, though, and you will begin to question their veracity.

Let’s look at the issue from various levels, beginning with the personal outlook:

Just ask my neighbors and friends if they have recovered from the burdens and deprivation of the recession. I’m certain the answer would be a distinct no. Some are still without jobs, others have far lower paying jobs, a few lost their homes and businesses, and others lost everything and have moved out of the area. Many in my neighborhood are merely waiting for the housing prices to reach parity with their mortgage so they can sell out and leave the state.

Then we have the county level. The recent county budget reveals a deficit of $376.2 million (FY 15/16 Adopted Budget page 1, table 1). The Press-Enterprise recently reported the county supervisors struggling to make up a $100 million shortfall. They hired outside consultants from KPMG to advise ways to fix this gap.

Regardless of the discrepancy in math, does this sound like a recession recovery? The county spending far exceeds its revenue. Am I mistaken to think that when county revenues exceed the spending, we could call that a recovery? This hasn’t happened for the last two budgets either.

Now comes the state level. Halleluiah, we have a budget surplus – nearly a billion dollar surplus! Does that indicate a recovery? Well, probably not. See, the voters approved prop 30 in 2012, which increased taxes on the “rich.” This additional tax finally puts the state in the black for this budget. Does the surplus mean the end of the prop 30 taxes? Dream on. Once a politician gets hold of a dime, you can be assured you will never see it again – and before long, he will want more.

Certainly, there has been recovery at the federal level, right? Well, if you can call a $19,211,342,727,725 debt (as of February 2016) a recovered economy, then yeah. But I doubt our creditors see it that way. The measure of a country’s productivity is the GDP (Gross Domestic Product). If you look at a chart of US GDP from 1969 to mid-2010, you will see a distinct decline. And the trend is not going up even after that. Why? Manufacturers are leaving the country in droves.

And where are the jobs we all lost in the recession? China, Vietnam, Mexico? Yes to all of the above and even other countries. Now we see living wage manufacturing jobs being replaced by low wage, entry level, service industry jobs feeding off the government job creation programs funded by the national debt.

So, what is the government answer to those low wage jobs? Raise the minimum wage. It’s obvious these people can’t survive on the low wages and part-time jobs that replaced their well paying manufacturing jobs. In typical government fashion, their solution has nothing to do with recovering the lost jobs, merely require employers to pay more for the menial level jobs they now have. Problem solved.

But does that solve the problem? Suddenly McDonalds’ happy meal doesn’t look so jovial when you have to pay 200 percent more for it. And the workers are they better off? For a short while they may find a few extra bucks in the pay envelope, but eventually even that job will go away. To hold the costs to something manageable, employers will need to find ways to keep their prices appealing without going in the red. That will mean fewer employees and possibly even automation. Bye-bye service jobs. Now what?

We’re not recovering. We are digging the hole deeper! But then, isn’t that what government does? As a great man, Ronald Reagan, once said, “government isn’t the solution to the problem, government is the problem.”

And California government is the very worst. According to a report by Joseph Vranich of Spectrum Location Solutions in Irvine, California, from 2008 to 2015 the state lost 1687 business due to the hostile business environment in this state. And those are only the ones reported publicly. Some experts put the figure at 10, 000 for that period.

Why the exodus? The reasons most sighted were taxes and regulations. Where did they go? Many went off shore others went to Texas and other states with a more business friendly environment.

So, I ask you, do you really see an improvement in your life due to recovery from the recession? If you can honestly answer yes to that question, I suggest you hide. The government is sure to find out. And when they do, you will be paying the bill for the rest of us who have not felt the recovery.