proposition 30

New Jersey Lawmakers Should Take Notes on California’s Economic Growth

Written by N. James Brago; Photo Courtesy of Neon Tommy

Individual states play a significant role in testing the success of economic and political ideologies. States are sometimes referred to as the laboratories of democracy. This gives governors an important role in how the rest of the country approaches economic obstacles. The successful policies in states act as templates for other governors or the federal government. The failed policies in states should serve as examples for what not to do.

California’s economy:

The prime example of success is California’s economy under governor Jerry Brown. When Brown took office in 2011 for his fourth overall term, California’s economy was growing at a mere 1.4 percent. Fast forward to 2015 and that percentage rate grew to 3.8 percent. Brown also took office when household median income was at its lowest point in ten years at $60,374. The household median income grew to to $64,500 in 2015.

Not only is California’s economy growing, but the new wealth generated from this growth is being shared more equally amongst Californians. California’s job numbers and unemployment rate decline also entail healthy economic growth in 2015. Within a year California gained 450,200 jobs between April 2014 and April 2015. During which time California’s unemployment rate dropped from 6.5 percent to 5.3 percent.

After balancing the budget through budget cuts, Brown turned his attention to increasing revenue to pay for more government spending. Brown pushed for Proposition 30 which was a ballot initiative to increase taxes on the wealthy with a modest increase in the sales tax.

To reverse budget cuts, Brown started off by accepting Medicaid expansion under Obamacare that covers about 1.4 million low income Californians. The California insurance exchange also has allowed 5 million more Californians access to health insurance. Brown’s education policy has restored school district funding to pre-recession levels and increases per-pupil spending in disadvantaged areas.

Brown has also utilized the California Infrastructure and Economic Development Bank (IBANK) to create jobs. This bank finances public infrastructure projects and private development infrastructure.

IBANK gives out loans to small businesses to create more jobs and stabilize the economy. This includes $32 billion dollars in economic development and infrastructure. Investments into jobs, education, and healthcare have fostered a healthy long term economy for the state of California.

New Jersey’s economy:

Now our home state of New Jersey has come across tough economic times recently. New Jersey household income, between 2014 and 2015, increased from $71,994 to $72,222. That is a measly 0.3 percent. Meanwhile, the median household income increased 5.2 percent nationwide. Household income growth for New Jersey has stagnated over the past six years.

New Jersey is a state with a lot of economic diversity. Tourism on the coasts, research and development on college campuses, agriculture production, and seemingly endless suburban neighborhoods with small business.

However, under Governor Chris Christie, the investments pale in comparison to Jerry Brown’s California. In 2010, Christie cut education spending by $1 billion dollars. Additionally, Christie is on track to hand out $2.3 billion dollars in tax benefits for businesses. This is more than the $1.2 billion given out in the previous decade before Christie was in office.

To be fair, the effectiveness of these tax benefits to businesses may be playing a factor in New Jersey’s unemployment rate. In December 2016, the New Jersey unemployment rate stood at 4.7 percent. This is similar to the overall United States unemployment rate, which has been decreasing since former President Barack Obama signed the American Recovery and Reinvestment Act of 2009.

At what cost are these very big tax benefits to companies? Median household income has not seen its fair share of increase, and the New Jersey unemployment rate has not returned to pre-recession levels. In New Jersey, job numbers are still struggling to close the gap to pre-recession levels.

The job market of New Jersey still had not recovered all the jobs lost in the recession by 2015. Coming into 2015, New Jersey recovered only 62 percent of jobs lost in the recession, while the United States had recovered 132 percent of jobs lost.

What can be made from all these numbers? It’s easy to say that California is doing a lot better than New Jersey. Although the respective economies and populations of New Jersey and California differ, the philosophies used by Governor Jerry Brown can be applied to any state. Those philosophies revolve around using state money to promote public services and fostering a healthy economic environment for businesses and workers.


You can follow N. James Brago on Twitter and his book titled This Nation can be purchased on Amazon.