California's economic evolution

By C.J. Barbre

Dan Walters has been in the journalism trenches for more than 40 years, virtually all of it in the Central Valley. From the Hanford Sentinel to the Sacramento Bee he's seen and written about it all.

Walters addressed the Training and Employment Association (TEA) Summit meeting at the Holiday Inn in Visalia on Oct. 14.

He laid out the state's evolving economy, which began as a resource economy, extracting raw materials from the ground including water, agricultural products, trees, minerals, etc. But the state did not manufacture finished products until World War II when we started turning raw materials into war machinery, followed by a post war industrial expansion. California had aircraft and automobile plants and steel mills. There was the post war baby boom and building boom.

Walters said by the mid 1970s manufacturing was starting to shut down because of global competition. Two major auto plants shut down in Southern California and finally aerospace downsized which caused the deep recession in the early 1990s.

But as the industrial economy began to fade, the post industrial economy took off. "It happened rather dramatically - Silicon Valley." Walters noted that prior to this the area's largest employer was a tannery of cow hides. "Virtually all of the net growth in the last quarter century is in the new economy. Silicon Valley is an economic powerhouse, a technology juggernaut," he said. "Ag employs no more people today than it did in 1980. The manufacturing sector has also become new technology, not in theory, but in reality."

Walters said those who banked on an industrial economy had to change plans. He said the new economy is portable - that it can be located anywhere. It's just a matter of getting satellite connections for computers and one is in business. This has turned old suburbs into new post industrial employment centers. And that pushes the commute envelope further out, to "edge cities" such as Modesto, formerly a farm town. He said two and one half hours is considered a reasonable commute, driven primarily by housing prices that are roughly half of what they are over the Coast Range.

"Want your own piece of dirt, your piece of the American dream, a house and mortgage and two car garage?" He said it's the same in Orange County where commuters now live way out in the desert.

But creating a town of commuters from a farm town creates conflict. People are no longer willing to live next to a dairy. He said that's what happened in Chino from which a number of Tulare County dairy farmers have migrated.

Walters said this impacts education, that job training should reflect this. "The largest single segment of this post industrial age emblematic of change in the economy is health care which is bigger than tourism." He said health care represents 10 percent of California's economy, a $150 billion a year industry. He noted that in many areas, the hospital is the largest single employer, and there is a shortage of health care workers, especially nurses.

Walters said that in the 1970s the state reached an economic plateau and immigration had slowed down to a trickle. School districts were shutting down. He said a fundamental decision was made that this was the new paradigm, the new normal and we didn't need all of those things we had planned for an expanding population. At the time there were only 20,000 people in California prisons. Today there are 160,000.

We shut down state water projects and didn't expand infrastructure. "Once it's shut down, it's kind of hard to restart." But Walters said that was just a lull before a new storm, the evolution of the new post industrial economy with new, distinct tiers and a great demand for low wage/low skill workers such as hotel and construction workers. This attracted about 300,000 people a year from Mexico, China, South East Asia and even Russia, about two-thirds of whom were legal and one-third illegal. They were predominantly young people who produced lots of babies, one every minute. This is creating a population growth in California of 5-6 million per decade.

Walters said the population will be up to 40 million by the end of this decade. "We need 250,000 jobs every year." He said last year we created 275,000 jobs, so we are keeping up. We are also building the requisite 200,000 housing units per year, one for every 2.75 people. "We add 1,350 cars to our roads and streets every 24 hours! Driving Highway 99 is like playing Russian roulette."

Walters said the private sector is doing its job, but the public sector is not. He said Sacramento is static while the state is extremely dynamic, "the most complex, convoluted, segmented society on the globe, probably in humankind." He said Minnesota had Jessy "the Body" Ventura for governor and California had Gray (like his personality) Davis, which created a cosmic imbalance. "Minnesota got rid of Jessy and we got Arnold."

Walters said we got rid of Davis because we started sensing all these changes were somehow not penetrating the capitol. "We were seeing all these very powerful social and economic trends and Sacramento was seemingly oblivious." He said they didn't deal with water, power, transportation or education, but passed bills on ferrets.

"All these accumulated issues were humongous." He said the capitol is not made up of people, but of interests."Legislators come and go." He said there are 2,000 lobbyists in the entire country, and 1,200 of those are in Sacramento, "because that's where the money is. The very conditions that spawn the need for policy change are the very impediments to change. We don't know what we want."

Walters said we used to be very good at building new highways, now we're dead last per capita in highway spending. "We're totally ripped off by the state for the budget." He said the only roads being built are being built locally by local sales tax, that struggling communities are in large measure on their own.

"We're borrowing money to pay the state's pension obligation so at the exact moment in time when we need to be building highways to improve traffic flow and provide jobs, the bank is busted. We're bonded up to our eyeballs."

He said meanwhile the Border Patrol has been beefed up, so more illegals are staying in California year round.

Walters said there is an auto mechanic shortage and the whole county is pleading for carpenters. He said we should be undertaking a massive job training program, but we're shutting down vocational schools all over the state. "It's out of wack. In Sacramento they want to put every kind on a college track, while many are dropping out of high school. Somebody has got to ring the bell. If Arnold cannot govern effectively with all of his advantages, we have to wonder if we are governable. So far the jury is out."

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