Another Bright Spot! Middle Class Wealth: It’s Not as Bad as It Looks

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In the Brookings post, “Middle Class Wealth: It’s Not as Bad as It Looks,” Opinion, July 5, 2102, it debunks the gloomy view that the middle class are in the worst shape in decades.  It says, “The Census Bureau released its latest data on wealth, updating earlier figures from 2005 to 2010. The numbers confirm findings from a Federal Reserve Board survey showing unprecedented declines in the net worth of the typical American household. Viewed in context, however, the wealth levels of middle-class Americans are in better shape than these dramatic figures would suggest, though they have not improved markedly over several decades.”

Explaining what is really happening, the post states, “In some sense the recent drop in wealth is a mirage, because it reflects the reversal of wealth increases that themselves were illusory. For the vast majority of families, “wealth” essentially means, “home equity”. And the relatively high wealth levels of the mid-2000s reflected the inflation of the housing bubble. The bursting of the bubble exposed the wealth gains as having been unreal and produced the sizable declines in net worth revealed in the government data. How illusory were the earlier wealth gains? In 1998, home prices were right in line with the cost of rental housing by historical standards. By early 2006, they had increased 70 to 90 percent more than rents had. Correspondingly, median non-financial assets increased 41 percent from 1998 to 2007, while median financial assets rose just 1 percent. Only now are home prices approaching the historical norm again relative to rents.”

An interesting point is the measurement of wealth levels does not include “public and private commitments that most Americans can count on to meet their needs in old age.” If  “the present value of Social Security benefits were included in the definition of wealth, median net worth for adults under age 65 in 2010 would be at least four times higher than indicated by the standard definitions of net worth used by the Census Bureau and the Fed. And this adjustment would still exclude the value that future Medicare benefits will have for most retirees, as well as the value of traditional pensions and retiree health benefits provided by employers.”

A final point made is that as people age, their wealth tends to increase.  And while we have not seen “sizable improvements in the wealth levels of the middle class…over the long run, things are not getting worse.”  And sometimes, things not getting worse is very good news.

Keep California Green and Golden with CEQA reforms

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By George Deukmejian, Pete Wilson & Gray Davis

From The San Diego Union-Tribune, LLC. An MLIM LLC Company
July 12, 2012

Californians are unique- independent, optimistic, innovative, entrepreneurial and self-confident. These characteristics, evident during the Gold Rush, are just as common today in communities up and down California, from the Silicon Valley, to Los Angeles, to San Diego. This entrepreneurial spirit has fueled hundreds of thousands of small businesses throughout our state and created millions of jobs. It’s what makes California the Golden State and why we are the eighth 1argest economy in the world.

Likewise, California is often referred to as more of a “state of mind “than a state.  A place where great weather, geography and natural beauty combine to provide a re1axed and fulfilling lifestyle.  Because of this, Californians also share a strong environmental consciousness – one that has helped to make our state the greenest in the country and a world leader in environmental policy. This too is part of who we are.

From these two parts of our collective personality comes a unique challenge – keeping California both “green” and “golden.” Doing this requires reason and understanding that both goals are coequal priorities for Californians. This certainly means protecting our environment. However, it also means a willingness to relentlessly advance smart reforms of environmental1aws, business regulations, or policies that unnecessarily disrupt the reasonable balance between being “green” and “golden”

As three former California governors with firsthand experience managing this dynamic, we believe that one of our state’s oldest environmental1aws, the California Environmental Quality Act (CEQA), is in need of modernization

Adopted in 1970, CEQA provides a process for government to evaluate and mitigate adverse environmental impacts from projects and programs. While CEQA’s original intent must remain intact, now is the time to end reckless abuses of this important 1aw; abuses  that are threatening California’s economic vitality, costing jobs,  and are wasting valuable taxpayer dol1ars.

Ending these abuses means modernizing CEQA with smart reforms such as requiring petitioners to disclose their economic interests, adding certainty to the CEQA timeline, avoiding duplicative CEQA reviews, lessening opportunities for litigation and de1ay and updating CEQA so that it better integrates and coordinates numerous environmental protection mandates.

Today, CEQA 1awsuits are frequently filed only to extract concessions not re1ated to the environment, or for the purpose of opposing a project for reasons having nothing to do with environmental protection For example, in Los Angeles, a company that owns several student housing buildings near USC filed a CEQA 1awsuit against another developer in an attempt to stop them from building a competing project in the area.

Frivolous CEQA lawsuits also cost taxpayers real dollars. Recently, the San Diego Association of Governments was the first region in the nation to complete a new long-term regional growth and transportation plan that would reduce greenhouse gas emissions and pollution After two years of extensive collaboration which generated
4,000 public comments, the plan was adopted. Preserving over half of the region’s land as open space, the plan will create more than 35,000 jobs and generate an additional $4.4 billion in economic activity. Unfortunately, before the ink was even dry, local anti-growth groups filed a CEQA lawsuit putting t:1M “smart growth” blueprint at risk, and unquestionably delaying, if not costing, jobs.

Also in San Diego, in response to multiple lawsuits filed by the Coastal Environmental Rights Foundation,  a judge ruled that an annual fireworks display in La Jolla Cove and other community events in urban parks require a CEQA study. Arguably this decision has the effect of broadening CEQA’s reach and opening the door for other temporary events, like charity walks, street fuirs and concerts in the park to be pulled into the costly and litigious morass of CEQA review.

Sadly, these are but a small fraction of the examples of abusive CEQA litigation, where costly delays and settlements have had very little to do with true environmental protection

There has been a lot of talk about the need to confront CEQA litigation abuse, but unfortunately it’s been mostly talk. Inaction is no longer an option, as there is simply too nruch at risk for both our economy and our environment. We must tackle the important issue now. By applying reason along with well-established California characteristics of innovation, self-confidence, and environmental and economic leadership, we can indeed modernize CEQA, end frivolous litigation abuse,  and restore the necessary balance so that our state can remain both “green” and “golden.” As Californians, anything less is simply not acceptable.

Deukmejian, Wilson and Davis, former governors of California, are members of  the Southern California Leadership Council, a nonpartisan, nonprofit  public policy partnership.

Upholding of the ACA brings much need Certainty

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NBLC welcomes the decision by the Supreme Court on the Affordable Care Act.  It is a relief to have some of the uncertainty removed about implementing this law, so that employers may now better plan for their organization’s future.  While we acknowledge and applaud this effort to contain the crippling cost of health care, NBLC recognized that there is still much to be done to contain costs and improve the value of the health care system.  The ACA puts us on a better path that will allow millions of people to obtain health care regardless of pre-existing conditions and/or inability to afford insurance.  A healthier  population will help our economy grow and our workforce to be more productive.  NBLC now turns it focus on successful implementation, especially in ensuring the California Health Benefits Exchange, a new marketplace launching in 2014 for businesses and consumers to purchase health insurance, fulfills its purpose of providing a competitive marketplace.  Health insurance premiums increased about 113 percent over the past 10 years, fueling the demand for reform.  NBLC hopes that the ACA leads to more predictable and affordable costs, puts the U.S. on a more globally competitive footing, and results in better quality health care for all Americans.

NOMINATION DEADLINE LOOMING FOR LEADERS OF THE NORTH BAY!

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Get Your Nomination in Today!

North Bay Leadership Council (NBLC) seeks nominations for its 2012 LEADERS OF THE NORTH BAY AWARDS. The deadline is fast approaching – June 29. If you know a leader who should be given recognition and brought to the community’s attention, please submit a nomination. 

This is the sixth year that NBLC has presented awards for leadership. To qualify you must live or work in Sonoma, Marin or Napa counties. The awards are given in five categories: Caught in the Act of Leadership, Individual excellence in leadership; We’re All in this Together, Community building: Paint the Community Green, Environmental stewardship: The ‘Light Bulb’ Went On, Innovative/entrepreneurial spirit: Empowering the Latino Community, Leadership within the Latino community. Honorees can be an individual, organization or partnership.

The awards will be presented at a luncheon ceremony on November 2, 2012, at the Embassy Suites Hotel, San Rafael. For more information, please contact NBLC at info@northbayleadership.org or (707) 283-0028.

Finding Jobs in Petaluma

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By Janelle Wetzstein, ARGUS-COURIER STAFF

Many of Petaluma’s young adults now graduating from college are finding themselves in a precarious position. Between the economic downturn, a rapid increase in technology and more baby-boomers waiting longer to retire, students who graduate with a job lined up right after school are becoming the minority.

Petaluma native Tyler Hartrich was one of these students. Armed with a degree in city and regional planning from Cal Poly in San Luis Obispo, he entered the workforce in 2010, skilled enough to have multiple offers from several companies across the nation.

Hartrich — who attended the now-closed Bernard-Eldridge Elementary School and the former Kenilworth Junior High before graduating from Casa Grande High School in 2004 — eventually accepted a creative specialist marketing position in his home town at Enphase, a local solar energy firm.

“I had applications out across the world and a few offers, but it wasn’t until the interview that I discovered how great the potential and growth in this company and area is. So I settled here,” said Hartrich.

But for every Tyler Hartrich who has their pick of jobs after college, there are many others who don’t. Cynthia Murray, a Petaluma resident and CEO of the North Bay Leadership Council, says that gone are the days of young people choosing careers strictly based on what they love to do.

“What we need to reinforce with our young people is the importance of going to jobs that require brains, because there are all kinds of jobs that technology is doing for us,” she said. “We also need to push our young people to careers that are going to remain viable for the long term future.”

Murray says that science, technology, engineering and math majors — or STEM degrees — have the most potential for growth in the employment sector. “That is where the jobs are going, but we’re seeing students not following them. It’s leading to a shortage of local talent.”

Kady Cooper, media relations and communications manager at Enphase, said that while her company was started by Petalumans and has an affinity for hiring local talent, the company recruits from all over the world to make sure it employs those best trained for the firm’s jobs. Enphase is just one of many local companies that works to recruit locally, but has been forced to look outside the area to fill its employment needs.

Murray attributes this lack of local workers to several trends her organization is witnessing right now, including less boys going to college and only 20 percent of females leaning towards STEM degrees.

“With scarce dollars and jobs, we need to make sure that we are pushing kids into careers that they are going to get employment from,” she added.

No matter what careers young people are exploring today, Murray said that job searching itself has become a new skill that nowadays requires more than just picking up the local job classified ads. Much like Hartrich, who scoured job boards and LinkedIn to find his position, Murray stressed that young adults must learn how to network and market themselves to find employment, especially from local businesses.

“One of the best things local young people can do to get connected is to build their network through tools like LinkedIn and Facebook,” Murray said. “The other thing they can do is internships. In my experience, the ones doing internships are the ones getting jobs.”

The North Bay Leadership Council, an employer-led public advocacy organization committed to making employment in the area sustainable and innovative, is just one local organization working to keep homegrown talent in the area.

Local colleges, for instance, offer programs to connect graduates to jobs. Santa Rosa Junior College’s Economic and Workforce Development office offers several ways for students to connect with local employers looking to hire.

Director Chuck Robbins said that his office uses the typical methods of student job boards and campus employment centers, but also tries to step outside the traditional modes of hiring to connect their students with more opportunities.

“We have a Work Experience academic course where students link their course studies with a specific workplace,” he said. “It’s designed to help the students improve their job skills and general work skills by having them do the jobs they are studying for.”

Programs involved in Work Experience include linking culinary students to local restaurants and paralegals to local law firms to have the students gain experience and college credit at the same time.

Robbins added that the two-year certification degree programs at the college all have advisory committees made up of industry people who volunteer to work with the college on course development and curriculum. These members are a great resource and often refer employers looking for qualified people to the college’s instructors, he said.

Murray agreed that a key to keeping talent local is connecting youth with SRJC’s programs and others like it.

“The best thing local young people can do is keep getting more skills, whether it’s a certificate program at the JC or a trade or additional learning. Continuing to pick up new skills is what they’re going to have to do forever to remain employable,” she said.

Contact Janelle Wetzstein at janelle.wetzstein@arguscourier.com or Cynthia Murray, NBLC at cmurray@northbayleadership.org

A future of abundance, if it’s grasped; the good news, it can be!

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Brad Bollinger, North Bay Business Journal Editor in Chief writes in an editorial

He had just spent an entire day in briefings in the state Capitol and was having a hard time staying optimistic.

The Capitol today is like entering an alternative reality. Staffers are energetically preparing new regulations and energy taxes – cap and trade by some estimates could cost already burdened California businesses $1 billion or more. Sure, there have been some tweaks to CEQA and there is the governor’s Office of Business and Economic Development.

But reform to the much-abused California Environmental Quality Act – which contributed greatly to the loss of Lucasfilm’s Grady Ranch project in Marin County – is all-but-dead in an election year. Amazingly, apparently some people in Sacramento actually like the insufferable delaying mechanisms in CEQA because, they reportedly say, it means all constituencies will have time to put in their two cents, even if they apparently have nothing constructive to contribute.

Meanwhile, Democrats and Republicans in the Capitol openly admit they have stopped talking to each other.

Oh, and did someone mention the state has a $16 billion budget hole.

All of this would understandably put this person firmly in the camp that believes “California is ungovernable.”

But then he watched an incredible speech at Ted.com, a site that carries interesting and inspiring videos of thought leaders. He was preparing for a conference where a talk by X-Prize Foundation CEO Peter Diamandis would be shown.

In the talk, Mr. Diamandis talks about a “Future of Abundance” largely driven by technological innovation. Start with that iPhone in your pocket. In 1978, it would have cost $4 billion. Innovation occurring today, Mr. Diamandis says, will transform energy production and provide new supplies of drinking water to the entire planet. Three-dimensional printing will allow local manufacturing, perhaps in people’s homes. Technology will provide new medicines, treatments and remote diagnostic tools not dreamed of a decade ago. Billions of people are and will be brought into the global conversation – and economy – via cellphones and other forms of communication and goods movement.

“I’m not saying we don’t have our set of problems – climate crisis, species extinction, water and energy shortage – we surely do,” Mr. Diamandis said. But “ultimately we knock them down.”

Which brings us back the state budget crisis and dysfunction in Sacramento.

Yes, the state has its problems. But it is still home to some of the greatest thinkers and innovators anyhere in the world. The state is by far the leading center of venture capital investment and is home to many of the world’s great universities and think tanks. As panels of speakers at the North Bay Leadership Council conference May 31 focused on California’s Bright Future, the North Bay and the Bay Area – with all their challenges – have an educated and affluent population and companies and organizations poised to shape the future.

Sacramento’s dysfunction and budget deficit – which receive unending and out-sized attention – have unnecessary and unfortunate impacts on people and companies.

But the Capitol is not California. To put it in perspective, consider that California’s total economic output is about $1.9 trillion annually. So Sacramento’s budget deficit is a mere fraction of a percent of California’s productive assets, a blip on the screen of a vast and diverse state. It is just one more challenge to knock down.

Take Mr. Diamandis’s word for it. There can be an abundant future if we dream of it.

Brad Bollinger is the editor and associate publisher of the Journal. He can be reached at 707-521-4251 or bbollinger@sonic.net. He was a moderator at the May 31 North Bay Leadership Council Economic Insight Conference where Mr. Diamandis’s talk was shown. 

Your Vote Matters … Remember to Vote June 5

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We are blessed to live in a democracy. Please exercise your right to vote in the June Primary. This primary is groundbreaking in two ways. It is the first election since redistricting so voters have new boundaries and new candidates to consider. Second, it is the first election where the “Top Two” vote-getters will face a run-off in November. So it is possible that two Democrats can be in the run-off as opposed to the usual Democrat v. Republican run-off. Don’t miss this historic election designed to shake up how we vote and who gets elected.
NBLC’s Endorsements for June 5 Primary
North Bay Leadership Council (NBLC), a coalition of leading employers in Marin, Sonoma and Napa Counties, announces its endorsements for the June Primary.  As the only employer-led public policy organization that represents the North Bay, NBLC advocates for a regional perspective when addressing community concerns.  NBLC supports candidates that share the same values on improving education, increasing economic competitiveness, reforming public pensions and making government sustainable within today’s fiscal realities, improving transportations, and regulatory reform.

The following candidates have been endorsed by NBLC for their balanced approach on key issues, knowledge, problem-solving skills and ability to address North Bay challenges:

Congressional District #2:
Jared Huffman

Congressional District #5:
Mike Thompson

Marin County Board of Supervisors:
District #4: Steve Kinsey and District #2: Katie Rice

Sonoma County Supervisors:
District #5: Efren Carrillo, District #1: John Sawyer and District #3: Shirlee Zane

Napa County Supervisor:
District #2: Mark Luce

NBLC also endorses Proposition 28, which makes term limits more flexible by allowing legislators to serve a total of 12 years in any office or combination thereof.  It closes a current loophole that allows some legislators to serve up to 17 years in office.  Prop 28 will allow for more experienced legislators to serve and hopefully, decrease reliance on lobbyists and special interest groups who fill the void of a lack of institutional memory.

NBLC believes in strong public/private partnerships and building relationships between business and government for the betterment of the community.  For more information, visit us online at www.northbayleadership.org.

Out of Marin … Out of Time!

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What does Lucasfilm’s decision to pullout of the Grady Ranch project mean for the North Bay economy? A lot. Lucasfilm has been the iconic company headquartered in Marin County. They put Marin on the map and sent a message to other companies that you could start and grow a business in the county. With Lucas deciding that pursuing the final part of his master plan that he started decades ago was not worth the brain damage of dealing with regulatory agencies that throw a wrench in the works at the last minute, neighbors who want to do anything to delay the project and are willing to drag it through the courts for years and the uncertainty of how long and how much, who can blame George Lucas from throwing in the towel?  A quality company with a model project will be welcomed ANYWHERE but not Marin.  Marin has lost its chance for high-paying jobs, jobs that represent the future and would have been perfect for our talented young people.  And the people of Marin have lost a lot of money in terms of taxes and the multipliers that a thriving business like Lucasfilm produces.

Losing Grady Ranch is a wake-up call.  Let’s get over the shock of the loss and work together to prevent losing another Grady Ranch.  It is time for reform of the California Environmental Quality Act to stop these abuses.  It is time for tort reform so lawsuits aren’t frivolous. And it is time for anyone who cares about the future of Marin County, to support our local businesses and work with them to create and save jobs.  George Lucas is reminding us that businesses have a choice.  And his choice is to walk away and take all that he has to offer someplace where they will appreciate it.  After all he’s been through, who could blame him?

Pension Reform Coming?

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Latest news out of Sacramento is that Democratic leaders Senate Pro Tem Darryl Steinberg and Assembly Speaker John Perez have agreed to take up pension reform by June in advance of approving the budget. The Governor’s office and Republican leaders have been actively pushing legislative approval of the 12 point plan.

Unfortunately, the scuttlebutt is that the Democratic leaders have trouble with the first four points of that plan.  And if those first four points aren’t part of the pension reform bill when it is adopted, it will likely kill the support of the business leaders.  Here are the first 4 points of the Governor’s Plan:

 

  1. Equal Sharing of Pension Costs: All Employees and Employers
    While many public employees make some contribution to their retirement – state employees contribute at least 8 percent of their salaries – some make none. Their employers pay the full amount of the annual cost of their pension benefits. The funding of annual normal pension costs should be shared equally by employees and employers.  My plan will require that all new and current employees transition to a contribution level of at least 50 percent of the annual cost of their pension benefits. Given the different levels of employee contributions, the move to a contribution level of at least 50 percent will be phased in at a pace that takes into account current contribution levels, current contracts and the collective bargaining process.  Regardless of pacing, this change delivers real near-term savings to public employers, who will see their share of annual employee pension costs decline.
  2. “Hybrid” Risk-Sharing Pension Plan: New Employees
    Most public employers provide employees with a defined benefit pension plan. The employer (and ultimately the taxpayer) guarantees annual pension benefits and bears all of the risk of investment losses under those plans. Most private sector employers, and some public employers, offer only 401(k)-type defined contribution plans that place the entire risk of loss on investments on employees and deliver no guaranteed benefit.
    I believe that all public employees should have a pension plan that strikes a fair balance between a guaranteed benefit and a benefit subject to investment risk. The “hybrid” plan I am proposing will include a reduced defined benefit component and a defined contribution component that will be managed professionally to reduce the risk of employee investment loss. The hybrid plan will combine those two components with Social Security and envisions payment of an annual retirement benefit that replaces 75 percent of an employee’s salary. That 75 percent target will be based on a full career of 30 years for safety employees, and 35 years for non-safety employees. The defined benefit component, the defined contribution component, and Social Security should make up roughly equal portions of the targeted retirement income level. For employees who don’t participate in Social Security, the goal will be that the defined benefit component will make up two-thirds, and the defined contribution component will make up the remaining one-third, of the targeted retirement benefit.
    The State Department of Finance will study and design hybrid plans for safety and non-safety employees, and will fashion a cap on the defined benefit portion of the plans to ensure that employers do not bear an unreasonable liability for high-income earners.
  3. Increase Retirement Ages: New Employees
    Over time, enriched retirement formulas have allowed employees to retire at ever-earlier ages. Many non-safety employees may now retire at age 55, and many safety employees may retire at age 50, with full retirement benefits. As a consequence, employers have been required to pay for benefits over longer and longer periods of time.  We have to align retirement ages with actual working years and life expectancy. Under my plan, all new public employees will work to a later age to qualify for full retirement benefits. For most new employees, retirement ages will be set at the Social Security retirement age, which is now 67. The retirement age for new safety employees will be less than 67, but commensurate with the ability of those employees to perform their jobs in a way that protects public safety.
  4. Require Three-Year Final Compensation to Stop Spiking: New Employees
    Pension benefits for some public employees are still calculated based on a single year of “final compensation.” That one-year rule encourages games and gimmicks in the last year of employment that artificially increase the compensation used to determine pension benefits. My plan will require that final compensation be defined, as it is now for new state employees, as the highest average annual compensation over a three-year period.
    The proposals are divided into two groups. The constitutional amendment Brown offered broadly outlines the pension changes more narrowly defined in the language to change state law. The governor’s plan won’t go forward without two-thirds of the Legislature voting to put the constitutional changes on the Nov. 6 ballot, which would then need voter approval from a majority.

The changes would kick in Jan. 1, 2013. Labor agreements that contradict the governor’s plan would prevail until the pacts expire.  The statutory language includes these proposals:

  • Ends additional retirement service credit purchases, or “airtime.”
  • Forfeits all or part of pensions for elected officials or civil servants convicted of a felony associated with their offices or jobs.
  • Ends retroactive pension enhancements.
  • Ends “pension holidays” for employers and employees.
  • Mandates that all employees pay “at least one-half” the normal costs for defined benefit plans or the defined portion of a hybrid plan. Employers may not pick up the employee share.
  • Limits the hours and wages for retirees who return to government work.
  • Calculates benefits based on a 36-month average of an employees’ wages.
  • Narrows the definition of wages that can be included for pension calculation purposes.
  • Establishes a hybrid pension system for new hires. It would replace 75 percent of an employee’s income after 30 years of service and a “normal” retirement age of 57 for public safety employees or, for all other workers, 35 years of service at age 67.
  • Sets 5 years and 52 years old as the minimum length of service and age that safety classes can qualify for retirement, 57 years old for all other groups.
  • Eliminates seats on the CalPERS Board of Administration now occupied by a member of State Personnel Board and an insurance industry representative
  • Gives CalPERS board membership to the Department of Finance director.
  • Adds an independent health insurance expert and a representative from a contracting agency to the CalPERS board, both appointed by the governor.
  • Adds three public representatives to CalPERS’ board, two appointed by the governor and one jointly appointed by the Assembly speaker and the Senate Rules Committee.
  • Sets 25 years of service as the threshold to receive 100 percent of the state’s retiree health benefit. Applies to new hires only.

Read more here: http://gov.ca.gov/docs/Twelve_Point_Pension_Reform_10.27.11.pdf

The Governor’s 12 point plan has been endorsed by the Marin County Board of Supervisors.  While the Plan is great progress, it isn’t all that needs to be done to make the public pension system sustainable.  The recent change in the rate of predicted return from 7.75% to 7.5 demonstrates how vulnerable the state, counties and cities are to being able to make the payments for a pension system that is consuming more revenue than ever possible to provide.
In other news, the independent effort to put an initiative on pension reform has been suspended.  The following is a statement from Dan Pellissier, president of California Pension Reform: “California Pension Reform is suspending its effort to qualify an initiative for the 2012 ballot after determining that the Attorney General’s false and misleading title and summary makes it nearly impossible to pass. We will continue to push our elected representatives to reform our broken pension system and if they fail, we will focus on qualifying an initiative for 2014. California taxpayers face more than $240 billion in pension debts that grow every year, a brutal math problem that requires courageous leadership instead of the special interest politics that is blocking meaningful reform today.”