California Jobs Initiati
Editor's note:  Just before press time Assemblyman Logue contacted the Prospect with an offer of "studies".  We've decided to run this story and then if Assemblyman Logue's data is compelling, to eat crow.  We'll report when we've analyzed the new information.

McClintock, Logue and Edward "Ted" J. Costa present the "California Jobs Initiative"

Our local representatives have sent a proposal to the Attorney General for review with an eye towards becoming a proposition, probably for the November 2, 2010 election.

Called the "California Jobs Initiative" the proposition says practically nothing about jobs; instead, it prevents AB 32 from becoming functioning law.

Green Costs

Here is the meat of the proposed law:
A. In 2006, the Legislature and Governor enacted a sweeping law designed to combat
Global Warming, also known as "AB 32." At the time the bill was signed, the unemployment rate in California was 4.8%.

B. Since its adoption, California has been hit by a global recession and California's unemployment rate has now surpassed 12%.

C. Several studies predict that AB 32 will cost small businesses billions of dollars with massive increases in the price of gasoline, electricity, food and water, thereby slowing economic recovery and job creation.

D. AB 32 contains a provision that would allow the Governor to delay implementation in the event of "extraordinary circumstances, including "significant economic harm." Unfortunately, the Governor has not agreed that a global recession and massive unemployment should give way to an untested environmental law.

Readers of the Prospect likely know that AB 32 was the gargantuan law passed in 2006 to green California. It is the legacy of Arnold Schwarzenegger and the model for state and provincial governments to take control of the coming green economy.

Republicans have never cared for the law, and it contains a great many unnecessary concessions to existing means of power, and spends much of its effort in rehabilitating current energy and manufacturing systems instead of addressing new ones. Still, something about the idea of "green" deeply offends many Republicans, and it would be quite a coup if conservatives could upset the green apple cart.

Legitimate Doubts

Which is not to say that there isn’t a great deal in AB32 to be concerned over. The bill is far reaching, and there is no doubt that some small businesses will suffer even as others bloom. There are legitimate concerns that AB32 deepens state intrusion into counties through land use "assistance". Few people doubt that we are being over-regulated by nanny government, but few people want to return to the pollution and poor land use decisions of the past, either. Environmentalists became a problem to Sierra County back in 1884 when the U.S. Supreme Court decided it was a bad thing that hydraulic mining was washing the hills into the rivers. The Feather, which had once allowed shallow draft craft up river to Marysville, was choked with rock and silt. Every major environmental law was a response to industry excess; Clean Air, Clean Water, most Federal regulation was the result of local under regulation. It isn’t a question of government intervention, it’s a question of where to draw the line between future public good and present public good.

That’s what the California Jobs Initiative proposes to do. The Prospect tends to want to support this initiative, because the cost of greening California could fall most heavily on those of us in rural areas.

However, it isn’t clear that the initiatives would actually create jobs; it might simply postpone the inevitable pain of switching to more green economies, as most long term projections show green is inevitable.

What Studies Show

The text of the proposed initiative refers to "several studies" (section C., above). Inquiries to McClintock and Logue’s offices didn’t reveal all those studies, but to be fair, the staff has not had time to respond before we published. When staff reply, the Prospect will analyze those several studies and do an addendum.

California 3rd district Assemblyperson Dan Logue’s office did refer the Prospect to a study available on Logue’s site, here.

This study does not specifically analyze or project AB 32 costs, but only addresses primary and secondary costs of regulation. It reports:The study finds that the total cost of regulation to the State of California is $492.994 billion which is almost five times the State’s general fund budget, and almost a third of the State’s gross product. The cost of regulation results in an employment loss of 3.8 million jobs which is a tenth of the State’s population. Since small business constitute 99.2% of all employer businesses in California, and all of non-employer business, the regulatory cost is borne almost completely by small business. The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $4,359.55 per small business, indirect business taxes not generated or lost were $57,260.15 per small business, and finally roughly one job lost per small business.

Also featured in the report are other reports describing how California is among the most regulated and among the most taxed of the states, and among the least friendly to businesses.

The report was prepared by Sanjay B. Varshney, Ph.D., CFA, Professor of Finance and Dean - College of Business Administration at California State University, Sacramento. The Prospect has analyzed the study, and actually contacted Dr. Sanjay. He was very clear, as is represented in the abstract of the study, that the possible benefits of regulation were not tallied in the study.

What Didn’t Show

This report lost track of the $493 billion dollars spent because of regulation; it never intended to show where they went.

But we know where those dollars are: they are creating jobs. In other words, money spent on regulation doesn’t simply vanish into space like some NASA project, it gets spent right here in California.

Most of those jobs are either in government or are small businesses which produce reports, do tests and monitoring, make products for containment, recycling or mediating regulated projects, and indeed these jobs are creating niches for people with degrees and certifications. In short, an industry has grown around the regulations, that is where the money is going. Specifically, the report did not address that.

What Other Studies Show

Next 10 published a report outlining how greening has been good for California (read it here). Here are some of their findings:

  • From 2002-07, California led all states in patent registrations for green technologies, increasing the state’s total number by 70 percent over a similar period in the early nineties. (page 31)
  • Despite slowing in overall venture capital investment, clean technology investment in California hit an all-time high in 2008 of $3.3 billion, increasing nearly $1.5 billion over 2007 and over seven times total clean tech investment in 2005. (page 28)
  • Since 2005, green job growth has grown by 10 percent, while statewide jobs have increased by only 1 percent. By green segment, job growth has been strongest in Advanced Materials (28 percent) followed by Transportation (23 percent), Air & Environment (22 percent), and Green Building (20 percent), with 20 percent of those jobs generated in manufacturing. (pages 70 and 71)
  • Over 1.5 million jobs have been created as a result of energy efficiency policies forged by California over the last 35 years, generating $45 billion in payroll. (page 66)
  • California’s energy productivity is 68 percent higher than that of the rest of the country. Measured as the ratio of energy consumed (inputs) to GDP (economic output), growth in energy productivity equates to more dollars of GDP generated per unit of energy consumed. (page 21)
  • Power generation from renewable sources increased by 19 percent in California from 2002-2007, while total energy generation grew by only 11 percent. Since 2003, the wind power generated for California increased 95 percent. (pages 52 and 53)
  • Since 2001, vehicle miles traveled (VMT) per capita in California dropped 2 percent with half of this progress achieved between 2006 and 2007 alone. During this same time period, VMT per capita in the rest of the nation increased 3 percent. Relative to 2002, while gasoline prices in 2008 climbed 92 percent higher, total California sales dropped back to 2002 levels and gasoline sales per capita dropped 10 percent. (page 39)
  • California increased grid-connected photovoltaic (PV) solar capacity by 41 percent from 2006 to 2007. (page 55)

Trends identified in the 2008 Index that continued in the 2009 Index include:

  • Californians, per capita, pay lower utility bills and spend billions less of their state economy as a whole on electricity than the rest of the country due to energy efficiency innovation.
  • California’s Carbon Economy continues a gradual downward trend in the direction of a carbon-free economy, delinking economic growth from GHG emissions. While GDP per capita has increased by 28 percent in 16 years (1990-2006) gross emission per capita are 10 percent lower than in 1990.
  • The average monthly residential electricity bill in California is less than half of the average monthly bill in Texas, representing a total savings for Californians of nearly $25 billion in 2007. As a fraction of the state economy, Texas’ overall electricity bill is almost double California’s bill.

Next 10 also quotes these numbers:

  • Between 1995-2008, green businesses increased 45%, green jobs grew 36% while total jobs in the state grew only 13%.
  • Even in rural areas with a smaller economic base, green jobs are growing faster than the overall economy.
  • Between 2007-2008, green jobs grew 5% while total jobs dropped 1%.
  • Services accounted for 45% of all California green jobs, the largest portion in Environmental Consulting.
  • Manufacturing represents 21% of all green jobs, and grew 19% between 1995 and 2008. Half of all manufacturing jobs are split between Energy Efficiency and Energy Generation.
  • With nearly 43,000 jobs in 2008, Air & Environment is the largest of California’s green segments. While this segment’s jobs remained steady, hovering around 35,000 from 1995-2005, since 2005 the number of green jobs in this segment increased 24%.
  • From 1995-2008, Energy Generation employment expanded 61% by nearly 10,000 jobs. Solar makes up the largest portion, and strongest growth (63%.)
  • Employment in Energy Efficiency increased 63% from 1995-2008.
  • Employment in Green Transportation has increased 152% since 1995. Green Transportation Jobs are primarily in Motor Vehicles & Equipment and Alternative Fuels, with the latter growing faster at 201%, and representing 48% of all jobs in this segment. Green Logistics is an emerging field, only in the Bay Area at present, with employment growing by 1,144% since 1995.


Green Pays

Over all, AB 32 and the greening of California is likely to create jobs, not cost jobs.

But, what about rural jobs?

Green electricity is a focus of the Green California. Money is being spent on compressing air in caverns and whirling giant flywheels as ways of storing excess electricity; new ways of generating power from the ocean and winds are being explored; probably there is money for the development of biomass as green, renewable energy, despite the many problems the industry now faces.

Indeed, it was green jobs we lost at the Loyalton Cogen plant, and they were not lost to regulation but to lack of infrastructure and fee regulation.

If that is true, then AB 32 will benefit us, too.

In fact, it looks, barring "several studies" from McClintock or Logue, like they’ve actually created an un-job bill. Perhaps it should be entitled "California Jobs Discouragement Initiative".

We’ll keep you posted.  (Again we'll do an update when we've received and analyzed Assemblyman Logue's information.)

Read more on AB 32 Here.

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