Too few enjoy the fruits of California's economic boom

Too few enjoy the fruits of California's economic boom
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In California, we like to think big and then act. As the fifth-largest economy in the world, we act like a country more than a state.

Over a decade ago, it was generally conceded that California’s government was a close to becoming a failed state; “ungovernable” as one leading magazine proclaimed. California business and civic leaders, government officials, community-based organizations and good government groups pooled their energy to address the problem.

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A series of reforms, including the California Citizens Redistricting Commission, the top-two primary, legislative term limits, the Rainy-Day Fund and other good government reforms were proposed and passed by the voters. Many now see the state government as a model of governance.

It’s time to act again — and this time the challenge is even greater. The California economy is humming along at a record clip and creating wealth for millions of Californians. Yet, it’s not working for everyone; not nearly so.

California has the highest poverty rate in the nation when cost of living is taken into consideration. The Stanford Institute for Poverty and Inequality and the Public Policy Institute of California tell us nearly 40 percent of Californians are poor or near-poor either living in poverty or unable to cover the cost of an emergency.

Another compelling statistic to ponder is that California has 11 percent of the nation’s population but nearly one-third of its population is on government assistance.

How do we lift those 18 million Californians who live in or near poverty and ensure that California works for everyone, not just the wealthy?

The answer is we need more middle-income jobs, more skilled workers, more affordable housing, an investment in a long-neglected infrastructure, a better connection between our regional economies and a revamped safety net that actually lifts people out of poverty.

Fixing those issues won’t be easy, but there is gathering momentum in the state to again think big and act.

A remedy plan focuses on four imperatives that can result in an agenda that simultaneously advances economic, environmental and equity interests.

First, we must lift the bottom and ensure our safety net delivers outcomes. We need to create a public-private, state-county collaborative, piloted by willing counties, to better direct the billions of dollars we are investing in the safety net to create pathways that permanently lift people out of poverty.

Then, we can adopt what is working by developing a new safety net for all communities and regions in the state.

Second, we need to re-imagine our lifelong learning pathways for California’s 21st-century economy. We must revise and adapt the education master plan authored six decades ago by Governor Pat Brown to prepare California’s children for a changing world and workplace.

This time, the economy is changing faster than could have been imagined in the 1960s. We have a huge gap in college degrees and Career and Technical Education (CTE) certificates — a gap that is widening to 2.3 million by 2025.

We simply must better align an education system that gets Californians ready for kindergarten, ready to successfully attend college and the inevitable re-skilling that will be needed to keep pace in a rapidly changing economy.

Third, we must make California a place where we can all afford to live, get around and have the water we need. We must build more affordable housing and make certain our watersheds are sustainable.

The state needs to actively step in to address what has been an intractable housing challenge, reduce the impact of high utility and fuel costs and work to increase water reliability in a changing climate.

Finally, we need to learn how to more effectively connect our regions. In the Bay Area, someone earning $75,000 cannot make ends meet. That same job can be done in the Central Valley, where $75,000 is 50 percent above the family median income.

The upcoming California Economic Summit is one vehicle for positive change. It is one of the state’s best examples of cross-sector, cross-regional leadership from the private, public and nonprofit sectors and is focusing on upward mobility as the most important challenge facing our state.

The summit’s annual meeting will gather 500 leaders from across California who will adopt a set of economic mobility goals called the California Dream Index to measure and promote pathways to lift more people out of poverty and reverse the steady decline in the size of our middle class.

The summit leaders can help adopt on a larger scale the productive programs and approaches underway in different regions of the state:

  • Project Welcome Home in Santa Clara County has a pay-for-success initiative that provides housing and clinical services to chronically homeless individuals;
  • Los Angeles County has created an Office of Diversion and Reentry to train thousands of professional staff to help those being released from county jail; and
  • Fresno has piloted the Bridge Academies, a ground-breaking multi-generational program to lift families to economic self-sufficiency.

These are just three examples of successful programs. There are more to be identified and brought to scale.

What’s very important is that California is ready to act boldly — and we know that when California acts on the big issues, the rest of the country soon follows. If the fifth-largest economy in the world can renew the California Dream, maybe the American Dream has hope.

Lenny Mendonca is a lecturer on inequality at the Stanford Business School and a senior partner emeritus from McKinsey and Company.