Californians have had a tough past two years. While facing an economic crisis whose ramifications have sent their unemployment rates spiraling to their highest levels since the 1940’s, they have had to simultaneously cut vital social services because of an out of control state budget.
According to the Bureau of Labor Statistics, California has the U.S.’ fourth highest unemployment rate, at 12.2%. The statistic, however, does not include either marginally attached or under employed workers, which would put the actual unemployment rate at over 21%.
The out of control unemployment rates in California are the results of a double whammy – not only were Californians highly exposed to the 2008 foreclosure crisis, but they also suffered a massive slowdown in construction as demand for new homes radically dropped.
Total building demand in California has fallen from $63 billion to a mere $23 billion, with home building this year a mere 1/4 of what it was in 2005. Approximately 500,000 of the state’s layoffs have been in industries related to construction.
On top of a drop in construction, farm workers have been laid off by the tens of thousands because of a severe draught throughout the state. According to the Department of Water Resources, water contractors in California may only receive 15% of the supply traditionally allocated them. The consequences of this drought are already showing in San Joaquin, where lost farm revenue will top $900 million in 2009, said UC Davis economist Richard Howitt.
Reports of the crisis in some communities is breath-taking. “Desperation is rippling through agricultural communities such as Mendota, 35 miles west of Fresno,” writes L.A. Times journalist Alana Semuels, “where an estimated 39% of the labor force is jobless.”
State workers have fared little better, taking cuts from the Democratic controlled legislature in the 2008 budget. Cuts included forced furloughs equivalent to a 5% pay cut, the elimination of certain overtime pay, and loss of two paid holidays.
When labor organizations protested additional furloughs the Governor had heaped upon them, the courts ruled that he had “emergency furlough powers,” and denied the workers any appeal.
But even this wasn’t enough, and in July of 2009 the Governor announced that the State would begin issuing IOU’s to its workers instead of paychecks.
2. California’s food crisis:
Unemployment has many ugly features. It can very easily force families out of their homes, deprive them of basic necessities and cause severe emotional stress. In California, perhaps one of the most telling stories is the effect unemployment has had on a system already making cuts in social services – food programs.
The Food Resource and Action Center recently reported that nearly 20% of Californians cannot afford basic food items for themselves or their families, a percentage roughly equal to the number of unemployed workers in the state. The match in rates makes sense if you consider that individuals in households that experience an increase in earnings are about 75 percent more likely to exit food stamp programs.
Sue Sigler of the California Association of Food Banks confirms that “every day in food banks across the state, we see the effects this economy is having on Californians, as more and more people show up at our doors… California food banks have experienced a sudden, unprecedented, skyrocketing increase in requests for food assistance, beyond anything that’s been seen in the last 20 years.”
The total number of Californians using food stamps in 2009 hit 2.9 million, according to the U.S. Department of Social Services. 76% of households receiving aid had children, and over 93% lived below the poverty line of $16,000 for a family of three.
This no doubt has contributed to the U.S.’ high childhood malnutrition rate, which was at nearly 17% even before the economic crises.
The skyrocketing use of food stamps is telling in a state whose obstacles to accessing food benefits rank them second to last in the nation. Although California “still has many policies in place that impede access” to its food programs, according to senior California Budget Policy analyst Scott Graves, more and more people are signing up to receive aid.
3. Budget Crisis:
Californians are feeling the sting of budget cuts across the state in a time when demand for aid is skyrocketing. “We are looking at the data and seeing an increase in demand and a change in the type of families that apply,” said Jean Ross, executive director of the California Budget Project. They are finding that more and more new applicants for aid are families who previously would not have qualified.
California’s budget has steadily grown out of proportion since 2003, culminating in a $10.2 billion deficit in 2008.
Republicans and Democrats have shown their true colors throughout – and there’s hardly a discernible difference. Where Republicans call for a $1 billion dollar restriction in access to social services, Democrats counter propose a $100 million cut in welfare benefits. Conservatives have predictably outdone their liberal counter-parts in proposing the privatization of prisons and schools, with liberals feebly defending California’s ability to manage public services.
Whatever the debates may look like in legislature for the months to come, one things certain – when the chips are down, politicians are expecting working class and impoverished citizens of California to take on the burden of capitalism’s failures. In posts to come, we will take a look at the peoples’ resistance to worsening economic hardships.