Should We Really Need a License to Work in California?

April 25, 2018 By Kerry Jackson 1 Comment

JobsTaking a job as a manicurist in California requires more than filling out an application and receiving an offer from an employer. Manicurists have to have at least 400 hours of training, which can cost thousands of dollars. They must also take a written and practical exam.

The government-created barrier to a career in hair care and makeup application is even higher. A cosmetologist needs 1,600 hours of state-approved training. A barber has to have 1,500 hours, according to the California Department of Consumer Affairs.

Meanwhile, a mortgage originator, who must already be a licensed broker, or salesperson, needs only 20 hours of pre-licensing education, an emergency medical technician requires 160 hours, and a crane operator doesn’t have to have any at all, according to the Hoover Institution’s David Crane. Even tree trimmers are compelled to put in more training hours than EMTs, says Dick Carpenter from the Institute of Justice.

Though occupational licenses are purported to be protections for consumers, Crane points out that “studies have consistently found that licensing laws produce no better or safer services for consumers than do less protectionist and less costly alternatives.”

Instead, an occupational license is, as the Institute for Justice has straightforwardly explained, simply “government permission to work in a particular field.” And that permission is harder to come by in California, where more than one in five workers needs a government-issued license to hold a job, than in any other state but one.

There more than 200 jobs, and maybe as many as 250, in California that require an occupational license. The National Conference of State Legislatures has said that “the tangle of laws has become so thick that a commission in California recently admitted that the state has no way of knowing how many occupations it licenses.” Whatever the number, the Goldwater Institute says it is the most of any state. Mississippi has the fewest licensed jobs, a mere 40.

Overall, California was next to last in the overall burden on the workforce by the Institute for Justice’s License to Work rankings. Those rankings considered the “number and burden of licensing requirements combined.” Only Arizona has a higher burden.

Occupational licensing has been called a “protection racket” for good reason. It shields established workers from competition from newcomers. Morris Kleiner, a University of Minnesota professor who has researched the economic consequences of occupational licensing, told the Goldwater Institute that barring competition through government licensing allows existing practitioners to charge about 15 percent more for their services.

Kleiner has also said that “the cost of licensing nationally in the form of lost jobs” is 0.5 percent to 1 percent. This would mean an additional 39,000 to 78,000 jobs in California if licensing were reduced “relative to certification or other less restrictive forms of regulation.”

An alternative to the current regime would be a policy of reciprocity. Rather than forcing workers moving in from other states to go through California’s stiff licensing requirements, the state would instead recognize those workers’ permits if California has recognized their previous state’s requirements as appropriate. Under this arrangement, “the suppliers of a licensed service can adjust to changes in demand more quickly, limiting any surges in pricing, or delays in service provision,” Pacific Research Institute fellow Wayne Winegarden wrote in “Breaking Down Barriers: How Occupational Licensing Reform Can Improve The Insurance Markets, Benefit Consumers, and Expand Job Opportunities.”

Reciprocity would also encourage, Winegarden adds, “more competitors to enter the state” which “would also benefit consumers through lower prices and higher quality.”

“In the longer-term, reciprocity and/or recognition of other states’ licenses enables states to learn from one another,” says Winegarden. “Specifically, the competitive process of suppliers from different states competing with one another will enable states to discover how to better implement the desired licensing regulations.”

This should result in lighter restrictions all around.

Furthermore, says Winegarden, “reduced licensing regulations can also remove barriers to innovation,” a benefit that would be particularly useful in California, where much of the economy depends on innovation.

There are a couple bills in the current legislative session that were written to lower the job hurdles created by occupational licensing: Assembly Bill 2483, introduced by Assemblyman Randy Voepel, and Assembly Bill 2409, introduced by Assemblyman Kevin Kiley. These should be of particular interest to those who are having a hard time making a living because they’ve been shut out by California’s existing system and want no more than to complete on a level playing field.

Kerry Jackson is a Fellow at the California Center for Reform at the Pacific Research Institute.

This article was originally published by Fox and Hounds Daily

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Pothole Coast Highway: California Faces an Infrastructure Crisis

March 31, 2017 By Kerry Jackson 10 Comments

Pot hole in residential road surface

The Pacific Coast Highway stretch between Dana Point in Orange County, Calif., at the southern end, and Fort Bragg in Mendocino on the northern end, “is a bucket-list trip,” the New York Daily News enthused two years ago. “Stretching 650 curve-hugging, jaw-dropping miles along the ruggedly beautiful central coast of California, Highway 1 is one of the most scenic roads in the country.”

What the newspaper didn’t mention is that anyone winding along California roads might think that the Big One has already hit. Streets and highways across the state are in awful shape: a cracked, crumbling mess pock-marked with potholes, which tend to grow larger due to time, weather, and government negligence.

Some potholes grew so monstrous after recent heavy winter rains that California Highway Patrol officers in Oakland actually named one — “Steve.” They should have called it “Jerry,” after Governor Brown, who has done little about the state’s failing infrastructure except talk about it, while continuing to seek funding for a costly and unnecessary high-speed rail system. A bit of help for the weary motorist who’s thinking about making a justifiable claim against Caltrans for the damage it’s done to his car? Not in Brown’s California. Chapman University professor and City Journal contributing editor Joel Kotkin wrote last year in the Orange County Register that Brown’s goal “is to make congestion so terrible that people will be forced out of their cars and onto transit.”

Not all of California’s infrastructure problems can be blamed on the winter weather. In 2015, in the midst of a withering drought, the Mercury News reported that a family’s car hit a “killer pothole” near Sacramento with such force that its airbags inflated. Repairs would have cost nearly $15,000, so the insurance company wrote if off as a total loss. Though that might sound like a one-off event, California roads are indeed wrecking cars. “Deficient roads” in the Los Angeles area cost motorists an average $2,800 in annual repair costs. The state implicitly admits that its roads are a mess through a law that enables car owners who feel they’ve “lost money or property as a result of any action or inaction by Caltrans” to make five-figure claims against the agency.

The Reason Foundation, which for decades has rated road conditions across the country, ranked California roads 42nd in the nation in its 22nd Annual Highway Report. The state is 45th in rural-interstate pavement condition, 48th in urban-interstate pavement condition, and 48th in congestion in urbanized areas, the study says. “Half of the nation’s rural interstate mileage in poor condition is located in just five states,” says Reason’s Adrian Moore, and California is one of them. Media reports say that nearly 60 percent of the roads need repair. Will Kempton, a former Caltrans director, told the Los Angeles Times in February that road conditions were the worst he’d ever seen.

Roads aren’t the only infrastructure breaking down in California; its dams are no longer trustworthy. The Oroville Dam in the Sierra Nevada foothills almost failed this winter when its main spillway fell apart. It didn’t, but its near-collapse was a warning, as the New York Times reported, that the state’s “network of dams and waterways is suffering from age and stress.” The San Francisco Chronicle said a year ago that “there are 200 dams in California that are at least partially filled with mud and are approaching the end of their working lives.”

This isn’t a surprise to policymakers, who’ve been on notice for some time. According to the Association of Dam Safety Officials, California had 334 “high-hazard potential” dams in 2005; by 2015, 678 earned that designation. Officials were told in 2005 that the emergency spillway at the Oroville Dam posed a serious risk.

Also vulnerable are the state’s levees, especially those in the Sacramento-San Joaquin River Delta network. Problems in this patchwork of largely muddy banks, built by farmers rather than civil engineers, put much of the state’s water supply at grave risk.

Rather than fix the state’s vital artery system and shore up its dams and levees, Brown and other policymakers prefer to focus on the shiny bauble of high-speed rail and a fanciful mixture of mass transit and bike lanes in an effort to move Californians out of their cars and into forms of transportation favored by Sacramento’s political bosses. Those who resist the agenda because they want to maintain the freedom facilitated by cars are likely to be hit with a new fuel-tax hike (in a state that already has some of the highest fuel taxes in the country).

More taxes, tolls, or user fees might be tolerable if the additional dollars improved the roads. But California has a history of taxing motorists to pay for pet projects that have zero connection with improved street and highway conditions. The Golden State’s existing patterns of density and sprawl have made reliance on car travel a necessity for most residents. Mass-transit advocates can wish for magical people-moving networks that will make cars obsolete, but the state’s planners need to focus on repairing the infrastructure we already have before they start implementing their dreams of a shining California future.

Kerry Jackson is the Pacific Research Institute’s fellow in California studies.

This piece was originally published by City Journal Online

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Suffocating Regulations Driving California’s Housing Crisis to the Brink

March 25, 2017 By Kerry Jackson 4 Comments

urban-housing-sprawl-366c0Stories about the desperate living arrangements of highly compensated California tech workers sound like tales of Third World misery. One newspaper reports that a Silicon Valley engineer pays $1,400 a month just to live in a closet. He’s squeezing his wallet for the privilege of having a “private room” in a house where five adults live in bunk beds in a single bedroom. Another media outlet reported that a Google engineer moved into a “128-square-foot truck — in the company’s parking lot” because the cost of living in a real house was just too much.

Housing is so expensive across California that Joel Singer, CEO of the California Association of Realtors, said last fall that “only about one-third of our fellow citizens can afford to buy a median-priced home in the Golden State, down from a peak of 56 percent just four years ago.” Californians who own their homes spend more than a quarter of their total income on housing, the highest ratio in the nation. In 2014, Golden State renters paid 33.6 percent of their income on housing — third-highest in the nation. Despite rent-control laws — actually, in part due to those laws — San Francisco has the most unaffordable rental costs in the world, according to Nested, an international real estate service. Los Angeles is tenth on the list. Three of the five costliest housing markets in North America are found in California: San Francisco, San Jose and Los Angeles.

The housing crisis isn’t confined to the state’s elite coastal enclaves. In Riverside County, part of a region east of Los Angeles known as the Inland Empire, only 39 percent of households “are able to purchase a median-priced home, which in February was $334,440 for a single-family home,” the Desert Sun reported last March. The national average is 58 percent.

The California housing crunch is the product of a dire shortage of homes. Over the last decade, developers have built an average of 80,000 homes each year. But that number is about 100,000 units short of what’s needed to keep up with demand. According to the California Department of Housing and Community Development, the state will need to build roughly 1.8 million units between 2015 and 2025 “to meet projected population and household growth.” That would be like building more than 10 new Oaklands or nearly six new San Joses over that time.

Developers aren’t fools. They know that there is a great demand for housing in California. The profit motive would make them happy to build all those additional Oaklands. But California’s regulatory climate and development policies have eaten away at that incentive. The hurdles to building homes are high and solidly rooted: the most imposing is the California Environmental Quality Act (CEQA), which allows opponents of development to shut down projects in the courts, often with no environmental basis. But because the lawsuits can disrupt and suppress projects, the law has become, as the Hoover Institution’s Loren Kaye says, a “tool for abuse.”

Other barriers include the steepest impact fees in the nation, in some cases nearly $25,000 per unit; affordable-housing mandates in more than 170 jurisdictions that require developers either to choose between building units at below-market value or face government fines; local anti-growth policies; and rent control.

The regulatory regime even includes parking mandates that require, for example, a development to have at least one parking space for every bedroom in the project — a formula that absurdly still applies when only one driver lives in a three-bedroom apartment housing five people. A Southern California Association of Governments report says that sometimes housing units are removed from a project just to accommodate these local minimum-parking mandates.

Californians have raised NIMBYism virtually to a level of first principles. Golden Staters don’t mind housing development, as long as it’s “not in my backyard.” The state has an ugly history of established residents pressuring local officials to build policy walls that make development too costly to pursue. The result of all this government is a shortage that has produced the most distorted housing market in the country. It’s so warped and battered that it can hardly be called a market.

Layers of government housing policy have been settling on top of one another for decades, creating a deep regulatory bog that is exceedingly difficult to dredge. So it’s reasonable to ask if California will ever become livable again. And with state and local policymakers seemingly less attached to reality every year, it’s reasonable to give up and move, as many have already done.

Kerry Jackson is the Pacific Research Institute’s fellow in California studies.

This piece was originally published by City Journal Online.

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GOP Gains in California May Not Be as Implausible as Commonly Believed

March 19, 2017 By Kerry Jackson 13 Comments
CA GOP

Chairman Jim Brulte leads a meeting at the California Republican Party convention.

It almost qualifies as one of the more unexpected headlines in recent memory. “CAN THE CALIFORNIA REPUBLICAN PARTY BOUNCE BACK IN 2018?” asked the Los Angeles Times in late February. Who would expect the GOP ever to re-emerge in California? Yet that such a question was even asked by a member of the state’s single-party media is meaningful. Maybe something is stirring within this seemingly permanent minority.

A mere stir won’t be enough, though: the political equivalent of a Home Depot paint mixer will be required. The Golden State is the deepest blue of the 20 states that Hillary Clinton won: 62 percent of California voters cast their ballots for her, the highest percentage of any state. Using data from the IBD/TIPP poll, Investor’s Business Daily’s John Merline wrote in December that “if you take California out of the popular vote equation, then (Donald) Trump wins the rest of the country by 1.4 million votes. And if California voted like every other Democratic state — where Clinton averaged 53.5 percent wins — Clinton and Trump end up in a virtual popular vote tie.”

Not that this outcome was any great surprise. California has been a one-party state for what seems like a geologic era. The only chamber of the state Legislature that hasn’t been under Democratic Party control in the last four decades is the Senate. The GOP held it by a slim two seats in 1995–1996. The last time the Republicans held at least one chamber before that was in 1969–1970, when Ronald Reagan was governor and the GOP had two-seat majorities in both the Assembly and Senate. Since Reagan’s stint in Sacramento, there have been three Republican governors (and was Arnold Schwarzenegger truly a Republican?) and three Democratic governors (including Jerry Brown twice). Only six Republicans, one of them Schwarzenegger, have held statewide seats since 1998. Democrats have held 23.

It’s a similar story with California’s representation in Congress. The House of Representatives has been prime Democratic property since the late 1950s, with a 26-26 tie in the state’s congressional delegation in 1995–1996 being the only exception. Since then, the spread has increased steadily to reach 38 Democrats, 14 Republicans, and one vacant seat — that of Xavier Becerra, now the state’s attorney general — though some might say that the real attorney general is Eric Holder, the former Obama AG hired by the Legislature to lead the state’s Trump resistance. California has not sent a Republican to the Senate since Pete Wilson, having won the governorship, appointed John Seymour to serve the final two years (1991-1992) of his term in Washington.

Only 27.3 percent of California voters are registered as Republicans. That’s the smallest sliver for the GOP since 1980, the year of the Reagan revolution. Republicans have even lost San Bernardino County, a longtime GOP stronghold in California’s flyover country, with registered Democrats there now outnumbering Republicans.

Republicans deserve a healthy portion of the blame for their marginalization. In the early 2000s, they colluded with Democrats to redraw districts in a scheme that ensures that few seats are competitive and for the most part gives both parties perpetual possession of the seats they hold. This makes it nigh-on impossible for Republicans to unseat Democratic politicians.

And too often, Republicans are hard to distinguish from Democrats anyway. Stephen Frank, an editor for the California Political Review, complained a few years ago that the GOP establishment has “run candidates without serious ideology — except the desire to win election,” and recalled a 2013 legislative surrender in which Democrats got the votes they needed in Sacramento from the GOP to extend $2.3 billion a year in vehicle taxes. More recently, Frank said that if “you stand for nothing” as a party, “you’ll cease to exist.”

Democrats have the state sewn up not only through their safe districts but also through a constituent bloc that will vote them back into office again and again. Those on the lower end of the economic ladder tend to support Democrats and their redistributionist agenda. In 2014, Pew Research showed that 51 percent of Californians earning less than $30,000 a year are Democrats or lean toward the party (22 percent are Republicans/leans); 53 percent earning between $30,000 and $49,999 a year are Democrats/leans (30 percent are Republicans/leans). In return for their party loyalty, the poor Californians who vote Democratic are robbed of economic opportunities by Blue State public policy.

Those at the top also have a role in perpetuating Democratic power. Pew says that 49 percent of Californians earning more than $100,000 annually are Democrats or lean that way, while only 39 percent identify with the GOP. According to Political Data Inc., the gap closes somewhat for those earning more than $500,000 a year. But Democrats still hold a 38-33 edge there.

Given these facts, it’s baffling why anyone, even the most optimistic Republican operative, could imagine that the party might “bounce back” in California. The reason for many is simple: Donald Trump. These Republicans believe that they can emulate on the state level what Trump achieved nationally. One key to the GOP’s resurgence lies in between the economic extremes that support the Democrats and is primarily inland from the posh coastal districts. It’s a shrinking middle class at odds with the ruling party over water, climate, energy production, immigration, infrastructure priorities, housing, economic policies and the environment. Enough polarization exists to lead some to believe that the state needs to be split — not in two parts but in six.

Frank believes that the state’s minorities can also play a role if the Republican Party has the courage to show them how Democrats have “destroyed their hopes” and condemned them to “poverty and dependence.”

Some Democrats are considering the possibility that the Trump phenomena could carry over to California. “If we didn’t get a wake-up call from what happened in the rest of the country, then shame on us,” David Townsend, a Democratic strategist, told Los Angeles Times columnist George Skelton after the election. Skelton, no Republican apologist, acknowledged that Democrats have been “paying little attention to the middle class.”

So maybe there is an opening. As GOP consultant Ray McNally told Skelton, “power really does corrupt,” which could mean that the Democrats, with all their raw political muscle in California, are vulnerable to making the fatal mistakes that can happen when politicians believe they’ve become too powerful to pay for the consequences of their actions.

Kerry Jackson is the Pacific Research Institute’s fellow in California studies.

This piece was originally published by City Journal Online. 

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