ARTICLE
August and the last month of summer is here and we begin to look at the toward the fall season. Reading the headlines across America news outlets, startling news reports of labor strikes with the Writers and Actors, Hotel Workers and an array of labor concerns through out California and the nation. The demand for fair labor contracts or fair wage levels for workers is a constant for every industry, but when there is an avalanche of labor market disputes, this leads to the likelihood of meaningful increases in wages and ultimately prices of everyday goods which collectively make every purchase more expensive. Amid rising labor costs, employers seek ways to reduce staffing, typically through automation. The onset of ChatGPT, other “generative AI” software for transforming the workplace, and robots will enable firms to ultimately displace workers in many fields, including the ones now in labor disputes seeking higher levels of remuneration. The unemployment rate for our region is a tad higher than the state and nation. The June figures are here from the California Employment Development Department (EDD) County Labor Force Employment Unemployment % SANTA CRUZ 135,500 128,400 7,100 5.3% MONTEREY 236,800 223,800 13,000 5.5 By comparison, the employment rates in Santa Clara County are 3.6% despite the linger layoffs in the tech sector. Overall, Californians continues to stay employed and the drop of available jobs doesn’t seem to hinder the over all economy, yet. The monthly frequency of workers quitting their jobs in California has lessened over the last year, but at 350,000 per month, it’s still quite high. Total separations from work which include people quitting, retiring, or getting laid off is over 500,000 per month. And there are still over 1 million job openings in the state that remain unfilled. The high frequency of labor turnover increases recruiting and labor costs for businesses, which contributes to higher wage and product price inflation. Wage inflation is especially high for workers who quit to accept a new job. However, in the months ahead, there is deep concern about the raising debt that is tied to the State of California’s budget. As we reported in June the anticipated deficit is $37.8 billion in a $310 billion dollar spending plan. Next week the state legislature will reconvene and rumor has it there will negotiations between the Democratic leadership and the Governor. (the Minority party in Sacramento has no seat at the negotiation table. According to long time journalist and CalMatters reporter, Dan Walters, “California’s state budget is under stress from stagnating tax revenues, leading Gov. Gavin Newsom and legislators to make some hard choices about priorities and enticing them to adopt alternative strategies to maintain spending. The recently adopted 2023-24 budget contains examples of both and as the income/outgo squeeze continues, as a recent Department of Finance projection indicates, the search for new strategies will become more intense. The 2023-24 budget includes several examples, including directly tapping the state’s special funds for loans and indirectly borrowing from employers by forcing them to repay the state’s $18 billion debt to the federal government for unemployment insurance benefits during the COVID-19 pandemic. When the Legislature returns to the Capitol in mid-August for the last month of its 2023 session, one of its unfinished chores is to decide how many bond issues to place on the ballot for two 2024 elections. Collectively, there is discussion of bond measures up to $100 billion, but the Governor wants to put a cap on the bond amount to $26 billion. Some of the proposals are for things that have traditionally been financed with borrowed money, such as school construction and water projects. But there’s a disturbing trend in other proposals – using borrowed bond money to operate programs and services that are usually backed by budget appropriations. We see will where the compromise lands. I call the end of legislative session budget to be an artificial one. The Legislature will recess and the Governor will look to sign or veto hundreds of bill, all before some Californians have filed their 2022 tax returns.
August and the last month of summer is here and we begin to look at the toward the fall season. Reading the headlines across America news outlets, startling news reports of labor strikes with the Writers and Actors, Hotel Workers and an array of labor concerns through out California and the nation.
The demand for fair labor contracts or fair wage levels for workers is a constant for every industry, but when there is an avalanche of labor market disputes, this leads to the likelihood of meaningful increases in wages and ultimately prices of everyday goods which collectively make every purchase more expensive.
Amid rising labor costs, employers seek ways to reduce staffing, typically through automation.
The onset of ChatGPT, other “generative AI” software for transforming the workplace, and robots will enable firms to ultimately displace workers in many fields, including the ones now in labor disputes seeking higher levels of remuneration.
The unemployment rate for our region is a tad higher than the state and nation. The June figures are here from the California Employment Development Department (EDD)
County
Labor Force
Employment
Unemployment
%
SANTA CRUZ
135,500
128,400
7,100
5.3%
MONTEREY
236,800
223,800
13,000
5.5
By comparison, the employment rates in Santa Clara County are 3.6% despite the linger layoffs in the tech sector. Overall, Californians continues to stay employed and the drop of available jobs doesn’t seem to hinder the over all economy, yet. The monthly frequency of workers quitting their jobs in California has lessened over the last year, but at 350,000 per month, it’s still quite high. Total separations from work which include people quitting, retiring, or getting laid off is over 500,000 per month. And there are still over 1 million job openings in the state that remain unfilled. The high frequency of labor turnover increases recruiting and labor costs for businesses, which contributes to higher wage and product price inflation. Wage inflation is especially high for workers who quit to accept a new job.
However, in the months ahead, there is deep concern about the raising debt that is tied to the State of California’s budget. As we reported in June the anticipated deficit is $37.8 billion in a $310 billion dollar spending plan.
Next week the state legislature will reconvene and rumor has it there will negotiations between the Democratic leadership and the Governor. (the Minority party in Sacramento has no seat at the negotiation table.
According to long time journalist and CalMatters reporter, Dan Walters, “California’s state budget is under stress from stagnating tax revenues, leading Gov. Gavin Newsom and legislators to make some hard choices about priorities and enticing them to adopt alternative strategies to maintain spending. The recently adopted 2023-24 budget contains examples of both and as the income/outgo squeeze continues, as a recent Department of Finance projection indicates, the search for new strategies will become more intense.
The 2023-24 budget includes several examples, including directly tapping the state’s special funds for loans and indirectly borrowing from employers by forcing them to repay the state’s $18 billion debt to the federal government for unemployment insurance benefits during the COVID-19 pandemic.
When the Legislature returns to the Capitol in mid-August for the last month of its 2023 session, one of its unfinished chores is to decide how many bond issues to place on the ballot for two 2024 elections. Collectively, there is discussion of bond measures up to $100 billion, but the Governor wants to put a cap on the bond amount to $26 billion. Some of the proposals are for things that have traditionally been financed with borrowed money, such as school construction and water projects. But there’s a disturbing trend in other proposals – using borrowed bond money to operate programs and services that are usually backed by budget appropriations.
We see will where the compromise lands. I call the end of legislative session budget to be an artificial one. The Legislature will recess and the Governor will look to sign or veto hundreds of bill, all before some Californians have filed their 2022 tax returns.