Inflation threatens California’s economic recovery

By Greg Hartmann Last updated Mar 14, 2022

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Good morning, California. It’s Monday, March 14. Happy Pi Day!

Unemployment static, gas prices up

A 76 gas station in Sacramento on March 10, 2022. Photo by Miguel Gutierrez Jr., CalMatters

California’s economic recovery from the devastations of the pandemic was stronger than previously estimated — but skyrocketing inflation could rob the state of its hard-earned gains.

Those were the main takeaways from a Friday report from the state Employment Development Department, which pinpointed California’s January unemployment rate at 5.8% — the same as its December rate, which was revised down from 6.5% due to updated figures showing sizable job gains that month. Other key takeaways:

California saw a 7.4% increase in job gains from January 2021 to January 2022, compared to 4.6% nationally.
The state has regained approximately 82% of the nearly 2.8 million jobs lost in the first two months of the pandemic — more than previously projected.

Gov. Gavin Newsom, who lauded California’s economic prowess in last week’s State of the State speech, said the report was evidence that the state’s COVID-19 restrictions worked.

Newsom: “Our approach has been to follow the science while supporting those hardest hit by the pandemic, and it not only saved tens of thousands of lives — it got our state back to work faster and better than the rest of the country.”

But there’s still a long way to go: California tied with Nevada for the nation’s highest unemployment rate in December, the last month for which federal statistics are available. The Golden State’s civilian labor force is still down by 452,000 workers compared to pre-pandemic levels, according to Michael Bernick, a former EDD director and attorney at Duane Morris. And inflation rose 7.9% nationwide in the yearlong period that ended in February, the U.S. Bureau of Labor Statistics reported last week — the highest rate in 40 years.

Bernick: “Inflation has already cut into wage gains in California, particularly the wage gains of lower income workers, and threatens to significantly slow growth.”
Soaring inflation, plus Russia’s war on Ukraine, have contributed to eye-popping gas prices: The average price in California for a regular gallon was $5.74 on Sunday, compared to $5.29 a week ago, according to the American Automobile Association.

Today, Republican state lawmakers are expected to force a vote on a bill to eliminate California’s 51-cent gas excise tax for six months — one of several ideas Newsom and legislators have proposed to help people hurting at the pump. (Another bill, introduced Friday by Democratic state Sen. Ben Allen of Santa Monica, would require oil refiners to disclose their profit margins on each barrel of gasoline sold.)

But tinkering with the gas tax appears to be increasingly politically unappealing for California’s supermajority-Democratic Legislature. “We need to just leave the gas tax alone and focus on other forms of tax rebates or other supports for working families,” state Sen. Scott Wiener, a San Francisco Democrat, told the Los Angeles Times.
Still, some question whether rebates — potentially similar to the Golden State stimulus checks sent last year to millions of Californians — could worsen runaway inflation. “We have an overheated economy,” Republican political consultant Rob Stutzman told the Sacramento Bee. “Does it really make sense to dump money back in?”

The coronavirus bottom line: As of Saturday, California had 8,426,700 confirmed cases (+0.05% from previous day) and 86,387 deaths (+0.2% from previous day), according to state data. CalMatters is also tracking coronavirus hospitalizations by county.

California has administered 72,110,744 vaccine doses, and 74.1% of eligible Californians are fully vaccinated.

Other stories you should know

1. Restoring UC Berkeley’s enrollment?

Students sit on the lawn at UC Berkeley on March 12, 2020. Photo by Anne Wernikoff for CalMatters

As soon as today, state lawmakers could send bills to Newsom’s desk that would allow UC Berkeley to avoid a court order to cap its in-person enrollment for the upcoming academic year — the result of a package of proposals introduced Friday that, if signed by the governor, would take effect immediately and apply retroactively. The bills would:

Give California’s public colleges and universities 18 months to complete court-ordered environmental reviews before being forced to limit their campus population. UC Berkeley had been ordered to cap its in-person enrollment by a judge who agreed with a Berkeley neighborhood group’s argument that the university had violated CEQA, California’s landmark environmental law, by failing to adequately account for the impact of its growing student body on housing, homelessness and noise.
Block student enrollment from being considered as a separate project under CEQA. Instead, universities would be required to consider the environmental impact of the overall campus population. “It was never the intent of the Legislature for students to be viewed as environmental pollutants,” said state Sen. Nancy Skinner, a Berkeley Democrat who leads the Senate budget committee.
Give $50,000 to the Regents of the University of California — allowing the bills to be classified as part of the budget and take effect immediately.

In other higher-education news: The California State University system since 2015 has paid more than $4 million in salary and benefits to 11 former top officials as part of an executive transition program — but there are no records showing how many hours they worked or what they did, a Los Angeles Times investigation found. Among those participating: former CSU Chancellor Joseph Castro, who recently resigned amid criticism that he mishandled sexual assault and workplace intimidation allegations against a colleague while president of Fresno State University.

2. Schools confront pandemic fallout

The San Francisco Unified School District building in San Francisco on Dec. 2, 2021. Photo by Nina Riggio for CalMatters

Today, many California schools and child care centers will permit kids to forgo masks for the first time in two years — but the pandemic’s political and educational reverberations are from over. Here’s a look at a few key fronts:

School boards: San Francisco Mayor London Breed on Friday unveiled her replacements for the three school board members recalled last month: Entrepreneur and recall organizer Ann Hsu, government policy analyst Lainie Motamedi and Stanford University law professor Lisa Weissman-Ward. Meanwhile, a conservative political action committee called Reform California is recruiting school board candidates in San Diego County. “The school boards don’t respect parents,” said Reform California founder and former San Diego City Councilman Carl DeMaio. “The only way to get those changes is to completely shake up leadership in each of the school districts.”
COVID-19 vaccine mandates: Under California’s student vaccine mandate, kids in grades 7-12 must be inoculated by July 1. But state lawmakers are considering a bill that would require all children attending schools or child care in person to be vaccinated by Jan. 1, 2023 — and eliminate personal belief exemptions. In a preview of how the proposal could divide Democrats, state Sen. Connie Levya of Chino told advocates over the weekend that she plans to vote against it. “I think this bill is just too divisive,” she said. Advocates are also concerned vaccine mandates could force kids of color into distance learning: Among San Francisco kids ages 5 to 11, for example, 81% of Asian and 64% of white children are vaccinated, compared to 48% of Latino, 34% of Pacific Islander, 29% of Black and African American, and 22% of American Indian and Alaska Native children.
Grades: San Diego Unified expects to have a 95% graduation rate this year — its highest under a state calculation system that debuted in 2017 — partly due to the district’s relaxed grading system for summer classes and partly due to a state law that temporarily loosened graduation requirements amid the pandemic. But such policies have concerned some Californians: “The goal needs to be to bring the kids up to the level of competence, not to lower the bar,” said Kwesi Edwards, the father of two San Francisco Unified students.

3. Law enforcement’s staffing problem

A Los Angeles police officer stands watch outside of City Hall on May 1, 2020. Photo via iStock

As elected officials continue to debate the best way to address voter concerns about rising crime — even as statistics paint a more complicated picture — law enforcement agencies across California are confronting challenges that they say could hamper their ability to improve public safety, including:

A dwindling number of officers. The Los Angeles Police Department is hundreds of officers short of its authorized force of 9,700, and due to administrative backlogs at the city’s Personnel Department, police officials say new recruitment this year will “at best” match attrition from retirements and other departures, the Los Angeles Times reports. In San Diego County, meanwhile, the sheriff’s office is losing officers faster than it can hire them. “The impacts on public safety can be very problematic,” David Leonhardi, president of the Deputy Sheriffs’ Association of San Diego County, told the San Diego Union-Tribune.
Inadequate training — and discipline. A state audit found that thousands of Los Angeles County sheriff’s deputies, supervisors and dispatchers haven’t completed required training courses on firearms competency, use of force, arrest tactics, de-escalation and other topics. Meanwhile, a new report from the Los Angeles Police Department’s inspector general found that most of the officers determined to have wrongly used deadly force in recent years weren’t disciplined — sometimes against the recommendations of top police officials.
Lack of trust with the community. Less than a year after San Jose Unified School District voted to phase out campus police officers, the school board moved Thursday to add more cops to the budget — angering community members who called the board’s actions “shameful,” the Mercury News reports.

CalMatters columnist Dan Walters: Without a reading renaissance, California’s already shameful level of literacy will continue to wreak untold human and societal damage.

Proposal would harm working class musicians: Lawmakers are considering a bill to rewrite the rules for recording contracts, which could destroy California’s creative legacy and stack the deck against new acts and voices, argues Mike Montgomery, executive director of CALinnovates.

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Abandon arcane foster care policy: Many California parents have to pay for their children’s stay in foster care, but evidence shows the law should be repealed, writes Jill Duerr Berrick, a distinguished professor of social welfare at UC Berkeley.

Other things worth your time

How liberal is California? The answer matters to Democrats everywhere. // New York Times

Democratic Assemblymember Mark Stone is latest lawmaker to not seek reelection. // CalMatters

Prosecutor races test California’s patience for crime policies. // Politico

Del Norte sheriff charged with voter fraud, perjury. // Sacramento Bee

Board of Equalization member admits filing false endorsement from Newsom. // Sacto Politico

California mayor takes on big oil and political propaganda. // Los Angeles Times

Grassley privately investigating Garcetti, wants ambassador nomination held. // Politico

Judge grants restraining order against California union president. // Sacramento Bee

San Diego lobbyist emerges as key figure in effort to settle Ash St. litigation. // San Diego Union-Tribune

Hundreds of S.F. teachers unpaid, underpaid in payroll glitch. // Mission Local

Teachers, school employees may be paying thousands in extra fees on retirement accounts. // Orange County Register

California’s ambitious high-speed rail at a crossroads. // New York Times

Judicial Council votes to rescind COVID orders for California courts. // Courthouse News

The housing crisis is pushing both Bay Area landlords and tenants to the financial brink. // San Francisco Chronicle

Marin races to distribute rental aid before evictions resume. // Marin Independent Journal

Judge halts 3,000-home project in Santee over wildfire concerns. // San Diego Union-Tribune

California’s hottest real estate ZIP codes: What it’s like to live in the High Desert. // San Francisco Chronicle

Homeless people paid $2 per bag to keep their encampments clean in downtown San Diego. // San Diego Union-Tribune

Porter-backed bill seeks to restore federal SALT deductions capped under 2017 tax act. // Mercury News

California backs syringe programs. But they’re nowhere to be found in Orange County. // Los Angeles Times

California health bureaucracy prevails in nursing home dumping suit. // Courthouse News

Ships are killing whales off the California coast. Here’s what experts say will save them. // San Francisco Chronicle

Wolves returned to California. So did ‘crazy’ rumors. // New York Times

‘French Laundry’ restaurant founder Sally Schmitt dies at 90. // Associated Press