The sharing economy has been under continuous attack since it started to gain traction among consumers. And for one simple reason: it challenges the status quo, which regulators and bureaucrats do not like.
On the macro level, California is finally coming out of the Great Recession, but on a micro level, this recovery is precariously balanced on the shoulders of one region. If something were to happen to the Silicon Valley-Bay Area region, the Golden State currently has no Plan B. This isn’t meant as a critique of the other regions of California, but rather a critique of how Sacramento has largely been blinded by the macro-level data to the detriment of exploring ways to spur growth in a more diversified manner.
Silicon Valley-Bay Area’s strong post-recession economic growth is the reason California has had a recovery; hence, the recovery shouldn’t be cause for celebration among the state’s leaders. California’s economic recovery is occurring on the shoulders of just one region. This lack of economic diversification puts the Golden State in a precarious position. And yet, Sacramento continues to pretend everything is just okay.
Taking the Silicon Valley-Bay Area region out of the picture would have devastating effects, essentially eliminating the recovery, while removing Greater Los Angeles actually improves California’s labor market recovery. For instance, in aggregate, California’s employment grew by 7.5% between 2009 and 2014. However, if the Silicon Valley-Bay Area region were to be removed, this growth rate falls to just 5.7%. Moreover, removing Greater Los Angeles actually increases California’s employment growth to 8.1%. In term of the unemployment rate, removing the Silicon Valley-Bay Area versus removing Greater Los Angeles, on net, increases California’s average unemployment rate between 2009 and 2014 by roughly a half-percentage point. Simply put, without the Silicon Valley-Bay Area, California’s post-recession recovery becomes sluggish (at best), but without Great Los Angeles, it improves.
What struck me as noteworthy wasn’t the LAO’s California share of monthly growth chart, but rather the analysis’ first California map, which depicts a stark and concerning reality about the state’s job market; it is perilously reliant on one region: the Bay Area/Silicon Valley. This is concerning because it’s a relatively recent reality.
California has many built-in advantages – including but not limited to its climate, natural resources, diverse population, and university system, but California’s setbacks, such as its high tax regime, its volatile budget, its high cost of living, and its burdensome regulatory environment, are increasingly overshadowing them. When Californians celebrate the overall rising of the tide, they ignore the boats left behind. It is time for Governor Brown and other California leaders to start pushing a growth agenda to ensure JFK’s words hold true.
Simply stating that legislation is pro-job in a legislative floor speech or opening a Governor’s Office of Business and Economic Development isn’t sufficient to creating a pro-growth business environment. If Sacramento seriously wants to foster a robust job market, the state needs strong economic growth, which requires nurturing, consistently and vigorously, a healthy business climate.