California: The Post-COVID Future of Work

Event Context and Objectives

• Hosts: The event was co-hosted by CalMatters (a nonpartisan nonprofit news organization) and the Milken Institute's California Center.
• Moderator: Jackie Botts, an economy and inequality reporter for CalMatters.
• Goal: To examine the post-pandemic economic landscape, specifically focusing on equity, the "future of work," and strategies to prevent low-wage workers and marginalized communities from being left behind.
• Economic Context: California currently holds a projected budget surplus of $75.7 billion driven by wealth gains among top earners, alongside billions in federal relief funds, creating a window for structural reform.

Pre-Pandemic Economic Baseline (2019)

• Unemployment vs. Poverty: While the unemployment rate hit historic lows of 4%, poverty rates remained persistently high, masking deep inequality.
• Income Disparity: The income gap between the top 20% of families (earning $200,000+) and the bottom 20% (earning ≤$40,000 for a family of four) was approximately 5-to-1.
• Regional Divergence: Bay Area families recovered from the Great Recession in roughly half the time it took Central Valley families.
• Demographic Inequality: Black and Latino families were disproportionately represented in the bottom income quintile, while white families dominated the top quintile.
• Job Polarization: The economy was characterized by a "two-tier" system with growth in low-wage service roles and high-wage tech/healthcare roles, while the middle-class, blue-collar sector shrank.
• Legislative Priorities: Pre-pandemic bills focused on minimum wage increases, paid sick days, and the "gig worker" classification law (AB5) to ensure employee benefits.

Pandemic Impact (2020–2021)

• Job Losses: As of March 2021, California retained 1.5 million fewer jobs than in February 2020, with the lowest-paying sectors hardest hit.
• Demographic Disproportionality: Black and Latino workers, particularly women, faced significantly higher unemployment rates and slower recovery trajectories.
• Single-Parent Strain: Single mothers, often primary earners, faced severe income loss due to school closures eliminating childcare support, leading to higher workforce exit rates among women.
• Small Business Pivot: Many low-wage workers pivoted to gig work or entrepreneurship (e.g., selling online goods) to survive, with some adopting a cross-border model (e.g., living part-time in Mexico to reduce costs).
• Safety Net Failures: The Employment Development Department (EDD) experienced massive bottlenecks; the fraud surge occurred primarily in the Pandemic Unemployment Assistance (PUA) program, not the traditional system.
• Excess Deaths: Over 1,000 extra deaths occurred in culinary professions (chefs, cooks, bakers), depleting the low-wage service workforce.
• Immigration Withdrawal: Undocumented workers, ineligible for standard unemployment benefits, often left the state or returned to home countries due to lack of safety nets.
• Telework Inequality: Access to remote work remained highly unequal, exacerbating the divide between knowledge workers and essential service workers.

Legislative and Policy Responses

• EDD Reform: Assemblymember Lorena Gonzalez highlighted that outsourcing EDD services to private contractors (e.g., Deloitte) led to high costs and poor service quality, advocating for a robust, stable public sector workforce.
• Child Care as Infrastructure: Policymakers identified child care as a critical infrastructure issue; previous investments led to the first-time unionization of childcare workers to improve wages and stability.
• Fraud Mitigation: Data showed that the majority of EDD fraud stemmed from the lack of pre-existing data on gig workers, necessitating better integration of employer and employee data reporting.
• Federal Reliance: Legislators noted a reliance on federal stimulus to fund unemployment benefits, a cost employers should have covered through their own insurance contributions.

Future of Work: Strategic Recommendations

• Education Reform:
  • Curriculum Changes: Panelists argued for teaching practical skills in high schools, including financial literacy, labor rights, business formation, and navigating government benefits (EDD, taxes).
  • Alternative Pathways: Assemblymember Gonzalez emphasized that trade apprenticeships (e.g., electricians) should be valued as highly as four-year degrees, noting that a journeyman can earn more than a degree-holding parent.
  • Entrepreneurship: Small business owners advocated for teaching youth how to start businesses, access capital, and understand regulatory systems before entering the workforce.
• Workforce and Labor Laws:
  • Telework Modernization: The California Business Roundtable urged updates to labor laws to formalize remote work, addressing issues like meal breaks, liability, and infrastructure (broadband).
  • Unionization: Assemblymember Gonzalez stated that unionization is essential for creating equitable, high-paying jobs for workers of color in the service and healthcare sectors.
  • Apprenticeships: Experts identified registered apprenticeship programs as a primary vehicle for delivering equity and middle-class wages to diverse populations.
• Safety Net Expansion:
  • Housing: Panelists called for stronger eviction protections and rent control, noting that rent hikes during the pandemic devastated low-income families.
  • Child Care: Proposals included treating child care as a public good, offering paid leave, and creating flexible, affordable options to keep parents in the workforce.
  • Full Employment: A radical proposal was discussed to redirect social services into a "full employment" model, paying family members to care for young children and incentivizing school attendance.
• Infrastructure and Investment:
  • Equitable Spending: Future infrastructure spending must mandate high wages and union standards to prevent the devaluation of service sector jobs.
  • Public Transit: Investment in public transit is critical for connecting housing to jobs and reducing carbon emissions.
  • College Affordability: High tuition costs were cited as a barrier to entry for young adults, with some families unable to afford college or basic independent living.

Key Disagreements and Debates

• Unemployment Benefits and Labor Return: While some politicians suggested excess benefits discourage work return, business leaders and panelists argued the labor shortage is driven by childcare gaps, safety concerns, and a depleted workforce (due to illness and immigration), not benefit dependency.
• Government Intervention: Assemblymember Gonzalez argued that relying on a "handout" economy is unsustainable; the goal is to ensure one full-time job provides a living wage, reducing reliance on safety nets.
• Telework Applicability: Panelists noted that telework cannot solve the crisis for agricultural, construction, and service workers, requiring separate, direct policy support for these essential sectors.

Forward-Looking Statements

• 2030 Vision: The panelists envision a 2030 economy where middle-class careers exist without college degrees, child care is a unionized, high-wage profession, and the gender wage gap for Latinas is significantly narrowed.
• Housing and Jobs: A circular relationship was identified between the lack of construction workers and the housing crisis; resolving labor shortages in trades is necessary to increase housing supply.
• Policy Continuity: There is a consensus that pandemic-era expansions to the safety net (e.g., unemployment eligibility) must be preserved and expanded to handle future economic shocks.
• Infrastructure Timing: A clear mandate was issued for school systems to commit to in-person learning by June to signal stability for parents to return to the workforce.