The Labor and Workforce Development Agency (LWDA) is the shop steward for California workers—endeavoring to protect their rights and safety in the workplace, provide training and help support them in hard times. The entities under the agency—including the Employment Development Department that handles unemployment and disability payments—support workforce training and apprenticeship programs; enforce labor and occupational safety laws; offer state disability, paid family leave and unemployment insurance benefits; run the state’s workers’ compensation program; provide job services; mediate public sector contract disputes; provide employment-related information and statistics; administer union representation elections for farmworkers; and collect payroll taxes. The cabinet-level agency, based in Sacramento, has become increasingly focused on combating the underground economy and helping legitimate businesses and workers. Its people and policies perform a constant juggle—protecting workers by enforcing workplace standards on safety and exploitation and protecting employers who comply with those laws from competitors who attempt to gain advantage, at the expense of workers, by failing to comply.
The agency was created in 2002 with a mission to ensure that California businesses and workers have a level playing field to compete and prosper. It pulled together several departments that oversee worker and workplace issues, becoming at the same time their protector and their enforcer.
But the need for an agency through which employer and laborer could be brought together was realized as early as 1868 with the establishment of the California Labor & Employment Exchange by civic groups in San Francisco. In less than two years, the exchange placed more than 22,000 idle people in such jobs as hop pickers, potato diggers, sheep shearers, shepherds and vineyard workers. Efforts were begun to enact laws to make it a state-supported institution to replace a private network that was accused of leading to exploitation.
As Charles H. Forster wrote in “Hoboes of the Pacific Coast,” around that time: “The employment office was part of a vicious system operated by human sharks who divided spoils with camp bosses. The solution is the establishment of free employment offices, these to cooperate with the large companies and with State help force the latter to establish decent living conditions in camps.”
But not until about 1903 was an act passed regulating employment agencies. Strengthening of the occupational safety laws, standards and enforcement improved the situation from the workers’ standpoint from 1913 to 1927, when the Legislature created a Division of State Employment Agencies within the Department of Industrial Relations.
The state’s workers at that time benefited from the many reforms of the Progressive era that protected and supported workers in response to alarming rates of death and injury during the country’s shift to an industrial-based economy. The fire at the Triangle Shirtwaist Factory that killed 146 garment workers in New York in 1911 galvanized many efforts to bring oversight of worker safety into the purview of state governments.
The way California has organized the entities that oversee labor issues, however, has been complicated by the difficulty of balancing the needs of competing interests—worker vs. employer and development vs. regulation.
Labor Protection
One of the first labor entities in California government was the Bureau of Labor Statistics, established in 1883. The Department of Industrial Relations (DIR) was created in 1927 to consolidate the functions of several entities but its functions were shuffled as the century progressed and debates over worker rights and safety grew more complex.
The Commission of Immigration and Housing, for example, was established in 1913 to provide protections for the state’s large immigrant population, including improving conditions at labor camps. It became part of DIR, but after the division that it advised took over the internment of Japanese Americans in World War II it lost its role in immigration. Its housing responsibilities were absorbed by the Division of Housing in 1965.
The Division of State Employment Agencies moved into the new Department of Employment in 1935, blurring the line between the state’s employment development and employer regulation functions.
In 1945, Governor Earl Warren reorganized DIR and proposed separating the research and enforcement functions of the Division of Labor Statistics and Law Enforcement.
The Division of Fair Employment Practices, which handled employment discrimination claims, was created in 1959 but was spun off in 1980 as the independent and expanded Department of Fair Employment and Housing, carving away one aspect of the DIR’s watchdog responsibility.
Farmworkers’ Rights
The U.S. granted hourly workers their first legal protection in the 1930s, but the National Labor Relations Act of 1935 specifically excluded farmworkers, who flocked to the state from the Midwest in the 1930s and were brought to the country from Mexico in a federal program in great numbers in the 1940s and 1950s.
In 1966, two small unions—one led by co-founders Cesar Chavez and Dolores Huerta—joined to form the United Farm Workers (UFW), which quickly took on the mighty grape growers in California to win a contract for Central Valley farmworkers.
Enthusiasm for state farmworker labor law mounted with the 1974 election of Democrat Governor Jerry Brown, who had marched with Chavez. The following year he signed the California Agricultural Labor Relations Act into law to codify the rights, powers and duties of farm owners and their employees, as well as labor organizations representing farmworkers. It defined unfair labor practices and established the Agricultural Labor Relations Board (ALRB), appointed by the governor.
But when Republican Governor George Deukmejian took office in 1982, he said Brown’s agricultural policy was antagonistic to the state’s premier industry. He changed the makeup of the board and its operations to give more weight to the interest of farm owners rather than workers. Likewise, Republican Governor Arnold Schwarzenegger vetoed the UFW’s signature legislative objective—card-check—which would have made it easier for workers to organize. But just before leaving office in 2010, he appointed the author of the legislation, Democratic state Senator Carole Migden, to the ALRB. Early in his second stint as governor in 2011, Jerry Brown, under pressure not to alienate the business interests he needed to support an election to approve his budget-balancing plan, also vetoed card-check legislation.
Job Training
The California Workforce Investment Board is the indirect product of President Bill Clinton’s job training overhaul, which integrated a fragmented and duplicative job training system with the Workforce Investment Act of 1998. In an attempt to better serve job seekers and employers, the act gathered welfare, unemployment compensation, employment services and training into a system of public assistance channeled through state-level Workforce Investment Boards.
Workers’ Safety
Cal/OSHA also had its germination in the soil of the federal government when, in 1970, Congress enacted the Occupational Safety and Health Act, which said all workers have the right to a workplace that does not endanger their health and safety.
California, which had prided itself on such a concept, moved to preserve its jurisdiction over occupational safety and health. In 1973, the Legislature enacted the California Occupational Safety and Health Act and Cal/OSHA was created. Its mission is similar to that of its federal counterpart but includes some state-specific programs such as the Heat Illness Prevention Program.
Jobless Aid
The Employment Development Department has roots in several programs launched by the state, many in response to the Great Depression of the ‘30s. While State Free Employment Bureaus existed since 1915, the state created a Department of Employment during the Depression. To comply with the federal Social Security Act of 1935, which ordered states to pay unemployment insurance, California enacted the Unemployment Reserves Act to set aside funds “to assist in protecting the public against the social effects of unemployment” (note the emphasis on benefiting society rather than the jobless). State Disability Insurance, a partial wage replacement program, started in 1946. Family leave was established by a law passed in 2002.
The agency changed its name to the Department of Human Resources in 1968, then to the Employment Development Department (EDD) in 1974. The Legislature relocated EDD in 2002 from the Health and Human Services Agency to the newly created Labor and Workforce Development Agency in hopes the move would allow EDD to capture lost revenue from the underground economy while coordinating programs, services and data collection with the Department of Industrial Relations and other agency departments.
Workers’ Comp
Before the enactment of compensation laws, almost the entire burden of industrial accidents in the U.S. fell upon the worker and his family. Laws were adopted by most states between 1908 and 1925 to place the responsibility for compensating injured workmen upon the business that employs them. The California State Compensation Fund was set up to supplement private insurance for this purpose in 1914.
California passed the state’s first compensation law in 1911, then bolstered it in 1913 and 1917 and 1927, partly to include more agricultural workers. The California Workmen’s Compensation, Insurance and Safety Act provided that when an employee receives a workplace injury the employer shall provide certain measures of relief. The law not only sustained the injured worker and protected the farmer, but prodded the insurance companies to advise the farmer in how to reduce the chance of accidents.
The California Workmen’s Compensation Act and its Application to Migrants (by Raymond P. Barry, Federal Writers Project)
Influence of Employment Agencies on Migratory Farm Labor (by Raymond P. Barry, Federal Writers Project)
Progressive Era Investigations (U.S. Department of Labor)
Agency Oversight: Watchdogging Cal/OSHA (Worksafe website)
Mandatory Mediation and Conciliation (ALRB)
Labor Relations in California Agriculture: 1975-2000 (by Professor Philip Martin, University of California, Davis)
The ALRB–Twenty Years Later (by Tracy E. Sagle, The National Educational Law Center) (pdf)
Department of Industrial Relations (Online Archive of California)
Agricultural Labor Relations Board
The Agricultural Labor Relations Board (ALRB) enforces the collective bargaining rights of agricultural workers. The five-member board, appointed by the governor, conducts secret ballot elections allowing farm workers to decide on union representation during collective bargaining, and investigates, prosecutes and adjudicates unfair labor practice disputes.
Employment Development Department
The Employment Development Department (EDD) administers unemployment insurance, disability insurance and paid family leave programs. The department provides services to keep employers and job seekers connected and competitive. EDD also oversees training programs funded by the federal Workforce Investment Act of 1998, collects employment payroll taxes, and gathers data on the state’s economic and occupational demographics.
Job seeker help:
· Losing a job? See the unemployment benefits and the claim forms page.
· The EDD maintains a job seekers site and one-stop career centers. There are sites for veterans, youths and seniors looking for a job.
· CalJOBS is California’s free Internet job search database. Job seekers can search more than 1.8 million job listings across California and enter a resume for prospective employers to review.
· Those looking for an on-the-job training program with classroom instruction can apply to one of California’s apprenticeship programs serving more than 800 occupations, including construction, heating and air technicians.
Business owner help:
· The department offers options and alternatives to companies considering reducing their workforce through its layoff services.
· Keep up with employment laws, labor market conditions and labor laws through free EDD seminars.
· Hiring or recruiting: Search more than 800,000 resumes from throughout California for free at CalJOBS. Enter your job opening online for prospective workers to review.
California Unemployment Insurance Appeals Board
This state board processes and makes decisions on California workers denied unemployment or disability benefits and on businesses dealing with a former employee who is incorrectly claiming benefits.
California Workforce Investment Board
The CalWIB is the conduit for federal funds for job training and other workforce development services.
Department of Industrial Relations
The Department of Industrial Relations is the primary enforcer of California’s labor laws. Its operations are dominated by the administration of Cal/OSHA and the often-troubled workers’ compensation program. It also enforces minimum wage and rest-period requirements; mediates disputes between workers and their employers; manages apprenticeship programs; and publishes statistics and research.
The Division of Occupational Safety and Health (Cal/OSHA) enforces federal and state workplace safety standards. It aims to reduce danger to workers, as well as to members of the public who, for example, ride in elevators or aerial trams. The Occupational Safety and Health Standards Board adopts and amends state health and safety standards while the Occupational Safety and Health Appeals Board hears employer and employee protests of the division’s actions. The Division of Labor Standards Enforcement is in charge of standards not covered by Cal/OSHA or another division, including the minimum wage, hours and rest periods, and other workplace regulations.
The Division of Workers’ Compensation administers the program that insures workers against injury on the job, while the Office of Self Insurance Plans regulates business owners that provide funds for potential workers’ compensation claims themselves rather than through an insurance company.
· File a retaliation/discrimination complaint
· Obtain a work permit for a minor
Employment Training Panel
The ETP offers grants to business owners to subsidize training to update workers’ skills.
About LWDA (Labor and Workforce Development Agency website)
About EDD (EDD website)
2009-10 Annual Report (CWIB website) (pdf)
Agriculture Labor Relations Act (ALRB website) (pdf)
Guide to the Social Service Employees Union Records WAG 003 (The Tamiment Library & Robert F. Wagner Library Archives)
Guide to the Social Service Employees Union Photographs PHOTOS 014 (The Tamiment Library & Robert F. Wagner Library Archives)
Paying unemployed Californians and helping them find new jobs is the biggest expense of the Labor and Workforce Development Agency.
And in most times, the money paid out to jobless workers and families is covered by the money the agency collects in employment payroll taxes from the state’s businesses. EDD takes in a third of the state’s General Fund revenues.
But the recession that began in 2007 tilted the agency’s income statement out of whack, to the point that the state had to borrow from the federal government to keep unemployment checks churning out of Sacramento. Even as employment subsequently rose and the length of jobless benefits shrank, the state needed to come up with money to pay back that money, with interest, to Washington, D.C.
The state Legislative Analyst’s Office said the state had three choices: reduce benefits, increase employer tax contributions or a combination of the two.
For 2012-13, the agency budget included total funding of $14.8 billion, with $834.3 million coming from the state. The state funds represent about 0.6% of California’s $136.5 billion budget. The bulk of the agency’s budget comes from federal funds, other non-governmental cost funds and reimbursements.
The biggest chunk of the agency budget supports the Employment Development Department, which under Governor Jerry Brown’s 2012-13 proposed budget receives $14.3 billion ($438.8 million from the General Fund). Unemployment benefit payments were budgeted at $13.2 billion in 2011-12 and $6.9 billion in 2012-13.
To square accounts with the federal government, the governor proposed taking $417 million from the General Fund to make an interest payment on the funds borrowed to pay for the surge of unemployment benefits without interruption during the recession. To pay for that, and to repay money borrowed from the Unemployment Compensation Disability Fund, the governor proposed a surcharge on employers starting January 1, 2013. To reduce the amount of money needed to be paid out, the governor also planned to raise the eligibility requirements to qualify for benefits.
Cutbacks and consolidation would trim the budget for the Unemployment Insurance Appeals Board by $2.6 million in 2012-13.
The governor’s discretionary Workforce Investment Act (WIA) budget is forecast to fall $39.5 million with a decrease in funding by the federal government.
Next biggest spender at the agency is the Department of Industrial Relations, budgeted at $425.1 million ($4.4 million from the General Fund) for 2012-13. Almost 40% of the department’s budget goes to administering workers’ compensation. An increase of $2.3 million is included to expand education and outreach efforts to boost the effectiveness of the labor compliance field staff.
The Agricultural Labor Relations Board, budgeted at $5.4 million for 2012-13, gets an additional $500,000 to reduce a backlog of unfair labor practice cases. The department will make changes to clear these cases more quickly in the future.
Ninety-two percent of the California Workforce Investment Board’s $3.3 million budget comes from the federal government, but the board oversees the local workforce investment boards that receive federal dollars that flow mostly through the EDD. Of the 2008-09 federal appropriation (allocated over two years), California spent $125 million on adult programs: 63% to One-Stop Employment Services, 20% to job training and 17% to administrative/operating expenses. Around $84 million went to similar programs for dislocated workers. A third allocation went to youth programs, whose numbers aren’t broken out in data provided to the Legislature.
The Workforce Investment Act: How Is the Federal Funding Being Spent? (California Senate Office of Research) (pdf)
3-Year Budget (pdf)
2012-13 Governor’s budget, Labor and Workforce Development (pdf)
Hiring Discrimination Protection for the Jobless
California has often been at the forefront of legislation protecting the rights of the individual vs. business. Some legislators and workers’ rights groups want it to take another step in that direction by protecting a new class of worker from discrimination: those who aren’t working at all. AB 1450, introduced in January 2012 by Democratic Assemblyman Michael Allen, would fine employers or employment agencies that refuse to consider out-of-work applicants for openings.
An applicant’s employment status would be added to such characteristics as race, gender and religion that are protected criteria in hiring decisions.
“To say that otherwise qualified individuals cannot even apply for a position solely because they are unemployed, particularly in light of the fact that so many of our unemployed workers have been out of work for extended periods of time, is truly unconscionable,” Allen said in a statement released by his office.
But California isn’t alone this time in sticking its neck out to protect a new group of residents. New Jersey enacted such a law in March 2012, and other states debated similar legislation. Congress has introduced HR 2501 in the House and S 1471, two bills that would provide similar protections on a nationwide basis.
A survey of online job postings released in July 2011 by the National Employment Law Project, an advocacy group for the unemployed and low-wage workers, found 125 ads from named companies that required applicants to be employed. Most of those ads said applicants “must be currently employed.”
“These sorts of policies obviously add to the burden of seeking employment and disadvantage those who stopped working because of an injury, a pregnancy, a family emergency, or who were laid off due to the down economy,” wrote Julius Young on the Workers Comp Zone blog.
But opponents to Allen’s bill, mostly business interests, say it intrudes too far into a company’s internal process of evaluating job candidates and their relevant skills, especially in technology-dependent jobs that require skill sets that change rapidly.
Roger Niello, president of the Sacramento Metropolitan Chamber of Commerce, told The Sacramento Bee that barring employers from disqualifying the jobless could tie a company’s hands in the kinds of questions asked during job interviews.
When an applicant’s résumé shows a gap in employment, it is natural to ask why, Niello said. “If that law passed, you’d really be getting into risky territory any time you asked any question like that,” he said.
That concern prompted the California Chamber of Commerce to request a provision to protect employers from being sued.
The law as proposed did not distinguish between those fired for poor performance, for example, and those laid off through no fault of their own, said Jennifer Barrera, the California Chamber’s policy advocate for labor and employment, reported the Riverside Press-Enterprise. “It would prevent an employer from legitimately looking into employment history,” Barrera said.
“There is a correlation between continued employment and job performance, and I think it should be up to the employer to make that determination,” echoed Rohit Joy, the national committeeman of the California Young Republican Federation.
Allen met with people on both sides of the issue about possible amendments to AB 1450.
California Bill Would Ban Employers From Screening Out Long-Term Unemployed (by Jim Sanders, Sacramento Bee)
New Regulation Unnecessary (by Becky Yeh, OneNewsNow California, American Family News Network)
AB 1450 (Julius Young, Workers Comp Zone blog)
Bill Would Prohibit Discrimination Against Unemployed in Hiring (by Marc Lifsher, Los Angeles Times)
Will Being Unemployed Be a New Protected Class? (by Mark S. Spring, California Labor & Employment Law blog)
Hiring Discrimination Against the Unemployed (National Employment Law Project) (pdf)
Bill Would Protect Unemployed Job Hunters (by Jack Katzanek, Riverside Press-Enterprise)
Unintended Effects of Crackdown on Illegal Immigration on Labor Market
Juggling workers’ rights and employers’ financial interests is a constant theme in the state’s labor policies. That juggle has become more challenging as a third political interest is thrown into the act: the drive to reduce hiring of undocumented workers.
Immigration reform and stricter enforcement of current immigration laws could significantly boost labor costs for California’s $20 billion fresh fruit, nut and vegetable crops, according to agricultural economists at UC Davis and the U.S. Department of Agriculture.
This would likely prompt labor-saving moves in California’s fields, the study says. For example, there could be wider use of mechanized harvesting for raisin-grapes, a shift to more imports in the asparagus industry, and the use of harvesting aids—such as in-field conveyor belts—to speed the strawberry harvest, says the study.
“California’s produce industry depends on a constant influx of new, foreign-born laborers, and more than half of those are unauthorized laborers, primarily from Mexico,” says Phillip Martin, a UC Davis professor of agricultural and resource economics.
The proposals made, especially by Republican lawmakers, to reduce illegal immigration with physical barriers along the U.S.-Mexico border and audits of workers’ I-9 employment verification forms will likely push up the cost of hiring laborers, Martin says.
As these audits force some undocumented workers to quit their jobs, some farm employers are planning to hire higher-paid, legal guest workers, who must be provided with government-approved housing, thereby raising the cost of their operations.
In addition to higher costs for growers, a crackdown on illegal immigration had a second unintended effect, says a study by the Public Policy Institute of California (PPIC), which looked at the impact of Arizona’s anti-illegal immigrant law, SB 1070. The law did have the intended effect of reducing illegal immigrants in the state, it noted. But it found that those undocumented immigrants who stayed in the state were forced into an even deeper underground economy—one in which labor regulations are practically nonexistent.
Before the law was enacted, undocumented workers could hold “above-ground” jobs and receive the labor and employment law protections that came with them. But unable to hold such jobs, those immigrants, mostly Latino, began to seek jobs on an ad hoc basis. A similar trend occurred in Alabama and Georgia, which also enacted anti-illegal immigration laws, causing a significant growth in the underground economy.
These new “self-employed” laborers are pushed into a world in which labor and employment law enforcement is non-existent, says the PPIC study. “Employers hold all the power in the employer-employee relationship. A constant distrust of law enforcement and overwhelming fear of deportation make undocumented immigrants an easy target for employers looking to exploit workers. Simply put, abuse by employers is high because undocumented workers risk too much by denouncing any injustices.”
Besides the higher cost to farmers, then, and the loss of rights by workers, there is a wholly unintended effect of Republican efforts to tamp the flow of undocumented workers, concludes the PPIC: By threatening the prosecution of undocumented workers and pushing them into an underground economy, the government cannot collect any taxes stemming from the underground transactions. “Supporting, not alienating immigrants, furthers the goal of healthy government budgets,” sums up the study.
Lack of Labor Law Protections Result from Anti-Immigration Policies (Public Policy Institute of California) (pdf)
Labor Costs Could Prompt Produce Industry Changes (UC Davis)
Benefit Delays
The Labor and Workforce Development Agency’s largest department, the Employment Development Department (EDD), has performed at an unacceptable level for a decade by U.S. Department of Labor standards, according to the California State Auditor.
A March 2011 report (and the Labor Department) criticized EDD for not delivering unemployment benefits in a timely fashion. The department has responded to this ongoing criticism for years by increasing staff and allowing them to work overtime but has failed to implement key reforms.
The department replaced an antiquated phone system in December 2010 that had been blamed for some of its problems, but the Auditor warned that “access to agents may continue to be a challenge.” Forty-eight percent of callers who wished to speak to an agent in 2001-02 were unsuccessful; that number grew to 91% in 2008-09.
The Auditor also expressed skepticism that EDD would be able to meet a September 2012 federal deadline for changing the way it calculates base pay for claimants in order for it to qualify for $839 million in stimulus funds.
Finally, the Auditor criticized long delays by EDD in determining eligibility for the California Training Benefits program, thereby shortchanging claimants and limiting their participation.
The Auditor acknowledged that the economic downturn was responsible for much of EDD’s difficulties, citing a rise in the state’s unemployment rate from 5.3% in 2007 to 12.3% in 2010. And federal extensions of benefits during that period caused a major uptick in the department’s workload.
Its Unemployment Program Has Struggled (State Auditor) (pdf)
Should Labor Costs be Trimmed to Ease the State’s Financial Troubles?
A frustration that has eaten away at some California residents for some time was exacerbated by the recession of the late 2000s: The state has some of the highest labor costs in the nation, and now companies were pointing to that expense as they packed up operations and jobs and headed to less expensive states such as Texas and Nevada.
Wage requirements on public construction projects, workers’ compensation costs and health care costs for California employers are among the highest in the country.
Could California hold onto those jobs, and even create new ones, if it overhauled its labor regulations to reduce the cost of labor?
Reduce Labor Costs in California
CalWatchdog, a conservative, Sacramento-based journalism venture, said an overhaul of labor regulations would have a much more stimulating effect on the state’s economic recovery than the jobs plan that Governor Jerry Brown proposed in August 2011, which relied on tax credits to employers who hire new workers, among other things.
“What he should have proposed last week is a comprehensive plan to overhaul state labor regulations that contribute to California’s dismal business climate, that inflate the cost of hiring workers, that are a drag on job creation within the state,” said the CalWatchdog blog at the time. California needs “game-changing” policy from Sacramento that will lead to a robust economic recovery and encourage the state’s employers to start hiring again, it said.
But enacting legislation to reduce labor costs is a tough job with a Democratic-controlled Legislature that traditionally has close ties to organized labor, admits CalWatchdog. Unions will object to any legislation that reduces the pay or benefits of workers.
An index by the Competitive Enterprise Institute, a Washington, D.C.-based public policy organization dedicated to fighting “over-regulation,” in partnership with Crossroads GPS, a policy and grassroots advocacy organization, ranked each state based on how much its policies favor taxpayers over unions. California placed 36th, indicating a decided tilt toward unions.
Sympathy for high union pay and benefits appears to be waning among California voters, according to an April 2011 poll. Seventy percent of respondents said they supported a cap on pensions for current and future public employees. Nearly as many, 68%, approved of raising the amount of money government workers should be required to contribute to their retirement. Increasing the age at which government employees may collect pensions was favored by 52%. Forty-three percent said wages and benefits were too high; 33% said they were about right; 12% said they were too low.
“It’s pretty clear that there’s broad support for making changes in the area of pensions,” said Democratic pollster Stanley Greenberg, who co-directed the bipartisan poll for the Los Angeles Times and the USC Dornsife College of Letters, Arts and Sciences. The kind of pensions voters object to are those of public safety officers, for example, who can retire at 50 with a pension equal to 3% of their final salary for each year worked—for example, 60% of salary after 20 years on the job.
On October 27, 2011, Governor Brown released his plan to reduce pension and retiree health costs for state and local government. The plan includes eliminating pension spiking and capping defined-benefit pension benefits at a “reasonable” level.
No Labor Holiday for California Taxpayers (by Joseph Perkins, CalWatchdog)
Times/USC Dornsife Poll: California Voters Want Public Employees To Help Ease State’s Financial Troubles (by Shane Goldmacher, Los Angeles Times)
Don’t Sacrifice Workers’ Living Wage and Retirement
Labor’s attempts to hold the line against reducing public employee compensation suffered a blow with a spate of news stories of in 2011 revealing that the leaders of several small, financially struggling California cities —including Bell and Vernon—drained city coffers by paying themselves enormous salaries and handing out generous pensions.
Such instances created a “moment of envy” among California’s residents over public employee benefits that, in general, are far from lavish, Art Pulaski, executive secretary-treasurer of the California Labor Federation, told the Los Angeles Times.
His union’s position is that every worker should be entitled to a pension, not an unsecured retirement reliant on Wall Street earnings, referring to the 401(k) accounts that workers pay into and that rise and fall based on the fluctuations of financial markets.
Policy-makers should focus on winning back a stable retirement for private-sector workers rather than demonize public employees, he said. (In fact, SB 1234, written by Democratic state Senator Kevin de León, would require businesses with five or more employees to enroll them in a new defined-benefit program or offer an alternative employer-sponsored plan.)
The federation, which represents 2.1 million union members—about half in the public sector, half private—proposed in March 2012 that California’s economic health be restored by focusing on building state infrastructure, job training and clean energy along with building high-speed rail and raising taxes on the state’s wealthiest residents.
Another defense of unions’ benefit plans comes from Californians for Retirement Security, a coalition of more than 1.5 million public employees and retirees. The group points to a report released by the National Institute on Retirement Security (NIRS) in March 2012 that found that state and local pension plans in California supported 324,761 jobs that paid $17.4 billion in wages and salaries in 2009, as well as supporting $52.5 billion in total economic output the same year. Each dollar “invested” by California taxpayers in these plans supported $6.67 in total economic activity in the state, NIRS reports.
The trend away from traditional pensions seemed inexorable, even in an administration that had been called soft on unions by critics, and Brown’s October 2011 pension reform plan was met with relief by representatives of public employee associations. But they did object to one aspect: a hybrid pension for new employees that combines a reduced defined-benefit pension benefit with a defined-contribution, 401(k)-type plan. A news release by an associate academic specialist at the UC Berkeley Center for Labor Research and Education said 401(k)-type plans, never meant to be a vehicle through which to save and invest for basic living expenses, entail risks and costs that lower-wage workers are ill-equipped to absorb.
“It’s one thing for Republican governors in Wisconsin and Indiana to support these types of changes, but seeing this type of support from California voters, even California Democrats, is really remarkable,” Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC and a former GOP strategist, told the Los Angeles Times.
Pensionomics: Measuring the Economic Impact of DB Pension Expenditures (National Institute on Retirement Security) (pdf)
Bell And Vernon Cases Put Focus on Pensions of Non-Elected Officials (by Hector Becerra, Los Angeles Times)
Times/USC Dornsife Poll: California Voters Want Public Employees to Help Ease State’s Financial Troubles (by Shane Goldmacher, Los Angeles Times)
Potential Impact of Governor Brown’s Pension Reform Plan on Low Wage Workers (by Nari Rhee, UC Berkeley Center for Labor Research and Education)
Restructure Governmental Agencies
Overlapping missions, redundant functions and scattered programs are a tempting target for new governors looking to cut the state’s budget. Governor Jerry Brown’s 2012-13 budget proposal lays out several areas of state government to eliminate or consolidate to lower costs and improve efficiency. Programs that affect the Labor and Workforce Development Agency include:
· Consolidate the tax collection functions of the Employment Development Department and the Franchise Tax Board in a new Department of Revenue to improve revenue collection and better enforce tax laws.
· Eliminate the Unemployment Insurance Appeals Board, a seven-member panel that reviews second-level appeal decisions, and consolidate it with the Employment Development Department.
· Collapse the Occupational Safety and Health Standards Board—responsible for the adoption, amendment, and repeal of the occupational safety and health standards and public safety standards—into the Department of Industrial Relations.
· Eliminate the Division of Labor Statistics and Research and transfer its functions related to maintaining job safety, records, reports and statistics to the Division of Occupational Safety and Health. Transfer functions related to prevailing wage rate determination for public works projects to the Division of Labor Standards Enforcement.
· Put the Public Employees’ Retirement System and the State Teachers’ Retirement System under the umbrella of a new agency, the Government Operations Agency. Combining these functions with others that assist in the general operation of state government into one agency will make state government more manageable and efficient, said Brown.
Victoria L. Bradshaw, 2009-2011. Bradshaw was secretary of the LWDA from 2004-2008, leaving to serve as deputy chief of staff and cabinet secretary in the Office of the Governor. She had served as undersecretary and acting secretary of the agency from 2003-2004. When she was appointed by Governor Arnold Schwarzenegger, she was tasked with overseeing his increased efforts to spur development of the green economy and green jobs.
Bradshaw attracted national media attention in 1995, when she was state labor commissioner, for a police raid on an apartment compound in the city of El Monte. Officials arrested eight operators of a garment sweatshop and freed 72 illegal Thai immigrants who had been forced to work there. After leaving the agency, Bradshaw was appointed to the Little Hoover Commission and works for consulting firm California Strategies.
Governor Schwarzenegger Appoints Victoria Bradshaw as LWDA Secretary (Governor’s Office news release) Between a Rock and a Hard Place: A History of American Sweatshops, 1820-Present (by Peter Liebhold and Harry Rubenstein, History Matters)
Douglas Hoffner, 2009 (acting)
Victoria L. Bradshaw, 2004-2008
Victoria L. Bradshaw, 2003-2004 (acting)
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Labor and Workforce Development Agency
The Labor and Workforce Development Agency (LWDA) is the shop steward for California workers—endeavoring to protect their rights and safety in the workplace, provide training and help support them in hard times. The entities under the agency—including the Employment Development Department that handles unemployment and disability payments—support workforce training and apprenticeship programs; enforce labor and occupational safety laws; offer state disability, paid family leave and unemployment insurance benefits; run the state’s workers’ compensation program; provide job services; mediate public sector contract disputes; provide employment-related information and statistics; administer union representation elections for farmworkers; and collect payroll taxes. The cabinet-level agency, based in Sacramento, has become increasingly focused on combating the underground economy and helping legitimate businesses and workers. Its people and policies perform a constant juggle—protecting workers by enforcing workplace standards on safety and exploitation and protecting employers who comply with those laws from competitors who attempt to gain advantage, at the expense of workers, by failing to comply.
The agency was created in 2002 with a mission to ensure that California businesses and workers have a level playing field to compete and prosper. It pulled together several departments that oversee worker and workplace issues, becoming at the same time their protector and their enforcer.
But the need for an agency through which employer and laborer could be brought together was realized as early as 1868 with the establishment of the California Labor & Employment Exchange by civic groups in San Francisco. In less than two years, the exchange placed more than 22,000 idle people in such jobs as hop pickers, potato diggers, sheep shearers, shepherds and vineyard workers. Efforts were begun to enact laws to make it a state-supported institution to replace a private network that was accused of leading to exploitation.
As Charles H. Forster wrote in “Hoboes of the Pacific Coast,” around that time: “The employment office was part of a vicious system operated by human sharks who divided spoils with camp bosses. The solution is the establishment of free employment offices, these to cooperate with the large companies and with State help force the latter to establish decent living conditions in camps.”
But not until about 1903 was an act passed regulating employment agencies. Strengthening of the occupational safety laws, standards and enforcement improved the situation from the workers’ standpoint from 1913 to 1927, when the Legislature created a Division of State Employment Agencies within the Department of Industrial Relations.
The state’s workers at that time benefited from the many reforms of the Progressive era that protected and supported workers in response to alarming rates of death and injury during the country’s shift to an industrial-based economy. The fire at the Triangle Shirtwaist Factory that killed 146 garment workers in New York in 1911 galvanized many efforts to bring oversight of worker safety into the purview of state governments.
The way California has organized the entities that oversee labor issues, however, has been complicated by the difficulty of balancing the needs of competing interests—worker vs. employer and development vs. regulation.
Labor Protection
One of the first labor entities in California government was the Bureau of Labor Statistics, established in 1883. The Department of Industrial Relations (DIR) was created in 1927 to consolidate the functions of several entities but its functions were shuffled as the century progressed and debates over worker rights and safety grew more complex.
The Commission of Immigration and Housing, for example, was established in 1913 to provide protections for the state’s large immigrant population, including improving conditions at labor camps. It became part of DIR, but after the division that it advised took over the internment of Japanese Americans in World War II it lost its role in immigration. Its housing responsibilities were absorbed by the Division of Housing in 1965.
The Division of State Employment Agencies moved into the new Department of Employment in 1935, blurring the line between the state’s employment development and employer regulation functions.
In 1945, Governor Earl Warren reorganized DIR and proposed separating the research and enforcement functions of the Division of Labor Statistics and Law Enforcement.
The Division of Fair Employment Practices, which handled employment discrimination claims, was created in 1959 but was spun off in 1980 as the independent and expanded Department of Fair Employment and Housing, carving away one aspect of the DIR’s watchdog responsibility.
Farmworkers’ Rights
The U.S. granted hourly workers their first legal protection in the 1930s, but the National Labor Relations Act of 1935 specifically excluded farmworkers, who flocked to the state from the Midwest in the 1930s and were brought to the country from Mexico in a federal program in great numbers in the 1940s and 1950s.
In 1966, two small unions—one led by co-founders Cesar Chavez and Dolores Huerta—joined to form the United Farm Workers (UFW), which quickly took on the mighty grape growers in California to win a contract for Central Valley farmworkers.
Enthusiasm for state farmworker labor law mounted with the 1974 election of Democrat Governor Jerry Brown, who had marched with Chavez. The following year he signed the California Agricultural Labor Relations Act into law to codify the rights, powers and duties of farm owners and their employees, as well as labor organizations representing farmworkers. It defined unfair labor practices and established the Agricultural Labor Relations Board (ALRB), appointed by the governor.
But when Republican Governor George Deukmejian took office in 1982, he said Brown’s agricultural policy was antagonistic to the state’s premier industry. He changed the makeup of the board and its operations to give more weight to the interest of farm owners rather than workers. Likewise, Republican Governor Arnold Schwarzenegger vetoed the UFW’s signature legislative objective—card-check—which would have made it easier for workers to organize. But just before leaving office in 2010, he appointed the author of the legislation, Democratic state Senator Carole Migden, to the ALRB. Early in his second stint as governor in 2011, Jerry Brown, under pressure not to alienate the business interests he needed to support an election to approve his budget-balancing plan, also vetoed card-check legislation.
Job Training
The California Workforce Investment Board is the indirect product of President Bill Clinton’s job training overhaul, which integrated a fragmented and duplicative job training system with the Workforce Investment Act of 1998. In an attempt to better serve job seekers and employers, the act gathered welfare, unemployment compensation, employment services and training into a system of public assistance channeled through state-level Workforce Investment Boards.
Workers’ Safety
Cal/OSHA also had its germination in the soil of the federal government when, in 1970, Congress enacted the Occupational Safety and Health Act, which said all workers have the right to a workplace that does not endanger their health and safety.
California, which had prided itself on such a concept, moved to preserve its jurisdiction over occupational safety and health. In 1973, the Legislature enacted the California Occupational Safety and Health Act and Cal/OSHA was created. Its mission is similar to that of its federal counterpart but includes some state-specific programs such as the Heat Illness Prevention Program.
Jobless Aid
The Employment Development Department has roots in several programs launched by the state, many in response to the Great Depression of the ‘30s. While State Free Employment Bureaus existed since 1915, the state created a Department of Employment during the Depression. To comply with the federal Social Security Act of 1935, which ordered states to pay unemployment insurance, California enacted the Unemployment Reserves Act to set aside funds “to assist in protecting the public against the social effects of unemployment” (note the emphasis on benefiting society rather than the jobless). State Disability Insurance, a partial wage replacement program, started in 1946. Family leave was established by a law passed in 2002.
The agency changed its name to the Department of Human Resources in 1968, then to the Employment Development Department (EDD) in 1974. The Legislature relocated EDD in 2002 from the Health and Human Services Agency to the newly created Labor and Workforce Development Agency in hopes the move would allow EDD to capture lost revenue from the underground economy while coordinating programs, services and data collection with the Department of Industrial Relations and other agency departments.
Workers’ Comp
Before the enactment of compensation laws, almost the entire burden of industrial accidents in the U.S. fell upon the worker and his family. Laws were adopted by most states between 1908 and 1925 to place the responsibility for compensating injured workmen upon the business that employs them. The California State Compensation Fund was set up to supplement private insurance for this purpose in 1914.
California passed the state’s first compensation law in 1911, then bolstered it in 1913 and 1917 and 1927, partly to include more agricultural workers. The California Workmen’s Compensation, Insurance and Safety Act provided that when an employee receives a workplace injury the employer shall provide certain measures of relief. The law not only sustained the injured worker and protected the farmer, but prodded the insurance companies to advise the farmer in how to reduce the chance of accidents.
The California Workmen’s Compensation Act and its Application to Migrants (by Raymond P. Barry, Federal Writers Project)
Influence of Employment Agencies on Migratory Farm Labor (by Raymond P. Barry, Federal Writers Project)
Progressive Era Investigations (U.S. Department of Labor)
Agency Oversight: Watchdogging Cal/OSHA (Worksafe website)
Mandatory Mediation and Conciliation (ALRB)
Labor Relations in California Agriculture: 1975-2000 (by Professor Philip Martin, University of California, Davis)
The ALRB–Twenty Years Later (by Tracy E. Sagle, The National Educational Law Center) (pdf)
Department of Industrial Relations (Online Archive of California)
Agricultural Labor Relations Board
The Agricultural Labor Relations Board (ALRB) enforces the collective bargaining rights of agricultural workers. The five-member board, appointed by the governor, conducts secret ballot elections allowing farm workers to decide on union representation during collective bargaining, and investigates, prosecutes and adjudicates unfair labor practice disputes.
Employment Development Department
The Employment Development Department (EDD) administers unemployment insurance, disability insurance and paid family leave programs. The department provides services to keep employers and job seekers connected and competitive. EDD also oversees training programs funded by the federal Workforce Investment Act of 1998, collects employment payroll taxes, and gathers data on the state’s economic and occupational demographics.
Job seeker help:
· Losing a job? See the unemployment benefits and the claim forms page.
· The EDD maintains a job seekers site and one-stop career centers. There are sites for veterans, youths and seniors looking for a job.
· CalJOBS is California’s free Internet job search database. Job seekers can search more than 1.8 million job listings across California and enter a resume for prospective employers to review.
· Those looking for an on-the-job training program with classroom instruction can apply to one of California’s apprenticeship programs serving more than 800 occupations, including construction, heating and air technicians.
Business owner help:
· The department offers options and alternatives to companies considering reducing their workforce through its layoff services.
· Keep up with employment laws, labor market conditions and labor laws through free EDD seminars.
· Hiring or recruiting: Search more than 800,000 resumes from throughout California for free at CalJOBS. Enter your job opening online for prospective workers to review.
California Unemployment Insurance Appeals Board
This state board processes and makes decisions on California workers denied unemployment or disability benefits and on businesses dealing with a former employee who is incorrectly claiming benefits.
California Workforce Investment Board
The CalWIB is the conduit for federal funds for job training and other workforce development services.
Department of Industrial Relations
The Department of Industrial Relations is the primary enforcer of California’s labor laws. Its operations are dominated by the administration of Cal/OSHA and the often-troubled workers’ compensation program. It also enforces minimum wage and rest-period requirements; mediates disputes between workers and their employers; manages apprenticeship programs; and publishes statistics and research.
The Division of Occupational Safety and Health (Cal/OSHA) enforces federal and state workplace safety standards. It aims to reduce danger to workers, as well as to members of the public who, for example, ride in elevators or aerial trams. The Occupational Safety and Health Standards Board adopts and amends state health and safety standards while the Occupational Safety and Health Appeals Board hears employer and employee protests of the division’s actions. The Division of Labor Standards Enforcement is in charge of standards not covered by Cal/OSHA or another division, including the minimum wage, hours and rest periods, and other workplace regulations.
The Division of Workers’ Compensation administers the program that insures workers against injury on the job, while the Office of Self Insurance Plans regulates business owners that provide funds for potential workers’ compensation claims themselves rather than through an insurance company.
· File a retaliation/discrimination complaint
· Obtain a work permit for a minor
Employment Training Panel
The ETP offers grants to business owners to subsidize training to update workers’ skills.
About LWDA (Labor and Workforce Development Agency website)
About EDD (EDD website)
2009-10 Annual Report (CWIB website) (pdf)
Agriculture Labor Relations Act (ALRB website) (pdf)
Guide to the Social Service Employees Union Records WAG 003 (The Tamiment Library & Robert F. Wagner Library Archives)
Guide to the Social Service Employees Union Photographs PHOTOS 014 (The Tamiment Library & Robert F. Wagner Library Archives)
Paying unemployed Californians and helping them find new jobs is the biggest expense of the Labor and Workforce Development Agency.
And in most times, the money paid out to jobless workers and families is covered by the money the agency collects in employment payroll taxes from the state’s businesses. EDD takes in a third of the state’s General Fund revenues.
But the recession that began in 2007 tilted the agency’s income statement out of whack, to the point that the state had to borrow from the federal government to keep unemployment checks churning out of Sacramento. Even as employment subsequently rose and the length of jobless benefits shrank, the state needed to come up with money to pay back that money, with interest, to Washington, D.C.
The state Legislative Analyst’s Office said the state had three choices: reduce benefits, increase employer tax contributions or a combination of the two.
For 2012-13, the agency budget included total funding of $14.8 billion, with $834.3 million coming from the state. The state funds represent about 0.6% of California’s $136.5 billion budget. The bulk of the agency’s budget comes from federal funds, other non-governmental cost funds and reimbursements.
The biggest chunk of the agency budget supports the Employment Development Department, which under Governor Jerry Brown’s 2012-13 proposed budget receives $14.3 billion ($438.8 million from the General Fund). Unemployment benefit payments were budgeted at $13.2 billion in 2011-12 and $6.9 billion in 2012-13.
To square accounts with the federal government, the governor proposed taking $417 million from the General Fund to make an interest payment on the funds borrowed to pay for the surge of unemployment benefits without interruption during the recession. To pay for that, and to repay money borrowed from the Unemployment Compensation Disability Fund, the governor proposed a surcharge on employers starting January 1, 2013. To reduce the amount of money needed to be paid out, the governor also planned to raise the eligibility requirements to qualify for benefits.
Cutbacks and consolidation would trim the budget for the Unemployment Insurance Appeals Board by $2.6 million in 2012-13.
The governor’s discretionary Workforce Investment Act (WIA) budget is forecast to fall $39.5 million with a decrease in funding by the federal government.
Next biggest spender at the agency is the Department of Industrial Relations, budgeted at $425.1 million ($4.4 million from the General Fund) for 2012-13. Almost 40% of the department’s budget goes to administering workers’ compensation. An increase of $2.3 million is included to expand education and outreach efforts to boost the effectiveness of the labor compliance field staff.
The Agricultural Labor Relations Board, budgeted at $5.4 million for 2012-13, gets an additional $500,000 to reduce a backlog of unfair labor practice cases. The department will make changes to clear these cases more quickly in the future.
Ninety-two percent of the California Workforce Investment Board’s $3.3 million budget comes from the federal government, but the board oversees the local workforce investment boards that receive federal dollars that flow mostly through the EDD. Of the 2008-09 federal appropriation (allocated over two years), California spent $125 million on adult programs: 63% to One-Stop Employment Services, 20% to job training and 17% to administrative/operating expenses. Around $84 million went to similar programs for dislocated workers. A third allocation went to youth programs, whose numbers aren’t broken out in data provided to the Legislature.
The Workforce Investment Act: How Is the Federal Funding Being Spent? (California Senate Office of Research) (pdf)
3-Year Budget (pdf)
2012-13 Governor’s budget, Labor and Workforce Development (pdf)
Hiring Discrimination Protection for the Jobless
California has often been at the forefront of legislation protecting the rights of the individual vs. business. Some legislators and workers’ rights groups want it to take another step in that direction by protecting a new class of worker from discrimination: those who aren’t working at all. AB 1450, introduced in January 2012 by Democratic Assemblyman Michael Allen, would fine employers or employment agencies that refuse to consider out-of-work applicants for openings.
An applicant’s employment status would be added to such characteristics as race, gender and religion that are protected criteria in hiring decisions.
“To say that otherwise qualified individuals cannot even apply for a position solely because they are unemployed, particularly in light of the fact that so many of our unemployed workers have been out of work for extended periods of time, is truly unconscionable,” Allen said in a statement released by his office.
But California isn’t alone this time in sticking its neck out to protect a new group of residents. New Jersey enacted such a law in March 2012, and other states debated similar legislation. Congress has introduced HR 2501 in the House and S 1471, two bills that would provide similar protections on a nationwide basis.
A survey of online job postings released in July 2011 by the National Employment Law Project, an advocacy group for the unemployed and low-wage workers, found 125 ads from named companies that required applicants to be employed. Most of those ads said applicants “must be currently employed.”
“These sorts of policies obviously add to the burden of seeking employment and disadvantage those who stopped working because of an injury, a pregnancy, a family emergency, or who were laid off due to the down economy,” wrote Julius Young on the Workers Comp Zone blog.
But opponents to Allen’s bill, mostly business interests, say it intrudes too far into a company’s internal process of evaluating job candidates and their relevant skills, especially in technology-dependent jobs that require skill sets that change rapidly.
Roger Niello, president of the Sacramento Metropolitan Chamber of Commerce, told The Sacramento Bee that barring employers from disqualifying the jobless could tie a company’s hands in the kinds of questions asked during job interviews.
When an applicant’s résumé shows a gap in employment, it is natural to ask why, Niello said. “If that law passed, you’d really be getting into risky territory any time you asked any question like that,” he said.
That concern prompted the California Chamber of Commerce to request a provision to protect employers from being sued.
The law as proposed did not distinguish between those fired for poor performance, for example, and those laid off through no fault of their own, said Jennifer Barrera, the California Chamber’s policy advocate for labor and employment, reported the Riverside Press-Enterprise. “It would prevent an employer from legitimately looking into employment history,” Barrera said.
“There is a correlation between continued employment and job performance, and I think it should be up to the employer to make that determination,” echoed Rohit Joy, the national committeeman of the California Young Republican Federation.
Allen met with people on both sides of the issue about possible amendments to AB 1450.
California Bill Would Ban Employers From Screening Out Long-Term Unemployed (by Jim Sanders, Sacramento Bee)
New Regulation Unnecessary (by Becky Yeh, OneNewsNow California, American Family News Network)
AB 1450 (Julius Young, Workers Comp Zone blog)
Bill Would Prohibit Discrimination Against Unemployed in Hiring (by Marc Lifsher, Los Angeles Times)
Will Being Unemployed Be a New Protected Class? (by Mark S. Spring, California Labor & Employment Law blog)
Hiring Discrimination Against the Unemployed (National Employment Law Project) (pdf)
Bill Would Protect Unemployed Job Hunters (by Jack Katzanek, Riverside Press-Enterprise)
Unintended Effects of Crackdown on Illegal Immigration on Labor Market
Juggling workers’ rights and employers’ financial interests is a constant theme in the state’s labor policies. That juggle has become more challenging as a third political interest is thrown into the act: the drive to reduce hiring of undocumented workers.
Immigration reform and stricter enforcement of current immigration laws could significantly boost labor costs for California’s $20 billion fresh fruit, nut and vegetable crops, according to agricultural economists at UC Davis and the U.S. Department of Agriculture.
This would likely prompt labor-saving moves in California’s fields, the study says. For example, there could be wider use of mechanized harvesting for raisin-grapes, a shift to more imports in the asparagus industry, and the use of harvesting aids—such as in-field conveyor belts—to speed the strawberry harvest, says the study.
“California’s produce industry depends on a constant influx of new, foreign-born laborers, and more than half of those are unauthorized laborers, primarily from Mexico,” says Phillip Martin, a UC Davis professor of agricultural and resource economics.
The proposals made, especially by Republican lawmakers, to reduce illegal immigration with physical barriers along the U.S.-Mexico border and audits of workers’ I-9 employment verification forms will likely push up the cost of hiring laborers, Martin says.
As these audits force some undocumented workers to quit their jobs, some farm employers are planning to hire higher-paid, legal guest workers, who must be provided with government-approved housing, thereby raising the cost of their operations.
In addition to higher costs for growers, a crackdown on illegal immigration had a second unintended effect, says a study by the Public Policy Institute of California (PPIC), which looked at the impact of Arizona’s anti-illegal immigrant law, SB 1070. The law did have the intended effect of reducing illegal immigrants in the state, it noted. But it found that those undocumented immigrants who stayed in the state were forced into an even deeper underground economy—one in which labor regulations are practically nonexistent.
Before the law was enacted, undocumented workers could hold “above-ground” jobs and receive the labor and employment law protections that came with them. But unable to hold such jobs, those immigrants, mostly Latino, began to seek jobs on an ad hoc basis. A similar trend occurred in Alabama and Georgia, which also enacted anti-illegal immigration laws, causing a significant growth in the underground economy.
These new “self-employed” laborers are pushed into a world in which labor and employment law enforcement is non-existent, says the PPIC study. “Employers hold all the power in the employer-employee relationship. A constant distrust of law enforcement and overwhelming fear of deportation make undocumented immigrants an easy target for employers looking to exploit workers. Simply put, abuse by employers is high because undocumented workers risk too much by denouncing any injustices.”
Besides the higher cost to farmers, then, and the loss of rights by workers, there is a wholly unintended effect of Republican efforts to tamp the flow of undocumented workers, concludes the PPIC: By threatening the prosecution of undocumented workers and pushing them into an underground economy, the government cannot collect any taxes stemming from the underground transactions. “Supporting, not alienating immigrants, furthers the goal of healthy government budgets,” sums up the study.
Lack of Labor Law Protections Result from Anti-Immigration Policies (Public Policy Institute of California) (pdf)
Labor Costs Could Prompt Produce Industry Changes (UC Davis)
Benefit Delays
The Labor and Workforce Development Agency’s largest department, the Employment Development Department (EDD), has performed at an unacceptable level for a decade by U.S. Department of Labor standards, according to the California State Auditor.
A March 2011 report (and the Labor Department) criticized EDD for not delivering unemployment benefits in a timely fashion. The department has responded to this ongoing criticism for years by increasing staff and allowing them to work overtime but has failed to implement key reforms.
The department replaced an antiquated phone system in December 2010 that had been blamed for some of its problems, but the Auditor warned that “access to agents may continue to be a challenge.” Forty-eight percent of callers who wished to speak to an agent in 2001-02 were unsuccessful; that number grew to 91% in 2008-09.
The Auditor also expressed skepticism that EDD would be able to meet a September 2012 federal deadline for changing the way it calculates base pay for claimants in order for it to qualify for $839 million in stimulus funds.
Finally, the Auditor criticized long delays by EDD in determining eligibility for the California Training Benefits program, thereby shortchanging claimants and limiting their participation.
The Auditor acknowledged that the economic downturn was responsible for much of EDD’s difficulties, citing a rise in the state’s unemployment rate from 5.3% in 2007 to 12.3% in 2010. And federal extensions of benefits during that period caused a major uptick in the department’s workload.
Its Unemployment Program Has Struggled (State Auditor) (pdf)
Should Labor Costs be Trimmed to Ease the State’s Financial Troubles?
A frustration that has eaten away at some California residents for some time was exacerbated by the recession of the late 2000s: The state has some of the highest labor costs in the nation, and now companies were pointing to that expense as they packed up operations and jobs and headed to less expensive states such as Texas and Nevada.
Wage requirements on public construction projects, workers’ compensation costs and health care costs for California employers are among the highest in the country.
Could California hold onto those jobs, and even create new ones, if it overhauled its labor regulations to reduce the cost of labor?
Reduce Labor Costs in California
CalWatchdog, a conservative, Sacramento-based journalism venture, said an overhaul of labor regulations would have a much more stimulating effect on the state’s economic recovery than the jobs plan that Governor Jerry Brown proposed in August 2011, which relied on tax credits to employers who hire new workers, among other things.
“What he should have proposed last week is a comprehensive plan to overhaul state labor regulations that contribute to California’s dismal business climate, that inflate the cost of hiring workers, that are a drag on job creation within the state,” said the CalWatchdog blog at the time. California needs “game-changing” policy from Sacramento that will lead to a robust economic recovery and encourage the state’s employers to start hiring again, it said.
But enacting legislation to reduce labor costs is a tough job with a Democratic-controlled Legislature that traditionally has close ties to organized labor, admits CalWatchdog. Unions will object to any legislation that reduces the pay or benefits of workers.
An index by the Competitive Enterprise Institute, a Washington, D.C.-based public policy organization dedicated to fighting “over-regulation,” in partnership with Crossroads GPS, a policy and grassroots advocacy organization, ranked each state based on how much its policies favor taxpayers over unions. California placed 36th, indicating a decided tilt toward unions.
Sympathy for high union pay and benefits appears to be waning among California voters, according to an April 2011 poll. Seventy percent of respondents said they supported a cap on pensions for current and future public employees. Nearly as many, 68%, approved of raising the amount of money government workers should be required to contribute to their retirement. Increasing the age at which government employees may collect pensions was favored by 52%. Forty-three percent said wages and benefits were too high; 33% said they were about right; 12% said they were too low.
“It’s pretty clear that there’s broad support for making changes in the area of pensions,” said Democratic pollster Stanley Greenberg, who co-directed the bipartisan poll for the Los Angeles Times and the USC Dornsife College of Letters, Arts and Sciences. The kind of pensions voters object to are those of public safety officers, for example, who can retire at 50 with a pension equal to 3% of their final salary for each year worked—for example, 60% of salary after 20 years on the job.
On October 27, 2011, Governor Brown released his plan to reduce pension and retiree health costs for state and local government. The plan includes eliminating pension spiking and capping defined-benefit pension benefits at a “reasonable” level.
No Labor Holiday for California Taxpayers (by Joseph Perkins, CalWatchdog)
Times/USC Dornsife Poll: California Voters Want Public Employees To Help Ease State’s Financial Troubles (by Shane Goldmacher, Los Angeles Times)
Don’t Sacrifice Workers’ Living Wage and Retirement
Labor’s attempts to hold the line against reducing public employee compensation suffered a blow with a spate of news stories of in 2011 revealing that the leaders of several small, financially struggling California cities —including Bell and Vernon—drained city coffers by paying themselves enormous salaries and handing out generous pensions.
Such instances created a “moment of envy” among California’s residents over public employee benefits that, in general, are far from lavish, Art Pulaski, executive secretary-treasurer of the California Labor Federation, told the Los Angeles Times.
His union’s position is that every worker should be entitled to a pension, not an unsecured retirement reliant on Wall Street earnings, referring to the 401(k) accounts that workers pay into and that rise and fall based on the fluctuations of financial markets.
Policy-makers should focus on winning back a stable retirement for private-sector workers rather than demonize public employees, he said. (In fact, SB 1234, written by Democratic state Senator Kevin de León, would require businesses with five or more employees to enroll them in a new defined-benefit program or offer an alternative employer-sponsored plan.)
The federation, which represents 2.1 million union members—about half in the public sector, half private—proposed in March 2012 that California’s economic health be restored by focusing on building state infrastructure, job training and clean energy along with building high-speed rail and raising taxes on the state’s wealthiest residents.
Another defense of unions’ benefit plans comes from Californians for Retirement Security, a coalition of more than 1.5 million public employees and retirees. The group points to a report released by the National Institute on Retirement Security (NIRS) in March 2012 that found that state and local pension plans in California supported 324,761 jobs that paid $17.4 billion in wages and salaries in 2009, as well as supporting $52.5 billion in total economic output the same year. Each dollar “invested” by California taxpayers in these plans supported $6.67 in total economic activity in the state, NIRS reports.
The trend away from traditional pensions seemed inexorable, even in an administration that had been called soft on unions by critics, and Brown’s October 2011 pension reform plan was met with relief by representatives of public employee associations. But they did object to one aspect: a hybrid pension for new employees that combines a reduced defined-benefit pension benefit with a defined-contribution, 401(k)-type plan. A news release by an associate academic specialist at the UC Berkeley Center for Labor Research and Education said 401(k)-type plans, never meant to be a vehicle through which to save and invest for basic living expenses, entail risks and costs that lower-wage workers are ill-equipped to absorb.
“It’s one thing for Republican governors in Wisconsin and Indiana to support these types of changes, but seeing this type of support from California voters, even California Democrats, is really remarkable,” Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC and a former GOP strategist, told the Los Angeles Times.
Pensionomics: Measuring the Economic Impact of DB Pension Expenditures (National Institute on Retirement Security) (pdf)
Bell And Vernon Cases Put Focus on Pensions of Non-Elected Officials (by Hector Becerra, Los Angeles Times)
Times/USC Dornsife Poll: California Voters Want Public Employees to Help Ease State’s Financial Troubles (by Shane Goldmacher, Los Angeles Times)
Potential Impact of Governor Brown’s Pension Reform Plan on Low Wage Workers (by Nari Rhee, UC Berkeley Center for Labor Research and Education)
Restructure Governmental Agencies
Overlapping missions, redundant functions and scattered programs are a tempting target for new governors looking to cut the state’s budget. Governor Jerry Brown’s 2012-13 budget proposal lays out several areas of state government to eliminate or consolidate to lower costs and improve efficiency. Programs that affect the Labor and Workforce Development Agency include:
· Consolidate the tax collection functions of the Employment Development Department and the Franchise Tax Board in a new Department of Revenue to improve revenue collection and better enforce tax laws.
· Eliminate the Unemployment Insurance Appeals Board, a seven-member panel that reviews second-level appeal decisions, and consolidate it with the Employment Development Department.
· Collapse the Occupational Safety and Health Standards Board—responsible for the adoption, amendment, and repeal of the occupational safety and health standards and public safety standards—into the Department of Industrial Relations.
· Eliminate the Division of Labor Statistics and Research and transfer its functions related to maintaining job safety, records, reports and statistics to the Division of Occupational Safety and Health. Transfer functions related to prevailing wage rate determination for public works projects to the Division of Labor Standards Enforcement.
· Put the Public Employees’ Retirement System and the State Teachers’ Retirement System under the umbrella of a new agency, the Government Operations Agency. Combining these functions with others that assist in the general operation of state government into one agency will make state government more manageable and efficient, said Brown.
Victoria L. Bradshaw, 2009-2011. Bradshaw was secretary of the LWDA from 2004-2008, leaving to serve as deputy chief of staff and cabinet secretary in the Office of the Governor. She had served as undersecretary and acting secretary of the agency from 2003-2004. When she was appointed by Governor Arnold Schwarzenegger, she was tasked with overseeing his increased efforts to spur development of the green economy and green jobs.
Bradshaw attracted national media attention in 1995, when she was state labor commissioner, for a police raid on an apartment compound in the city of El Monte. Officials arrested eight operators of a garment sweatshop and freed 72 illegal Thai immigrants who had been forced to work there. After leaving the agency, Bradshaw was appointed to the Little Hoover Commission and works for consulting firm California Strategies.
Governor Schwarzenegger Appoints Victoria Bradshaw as LWDA Secretary (Governor’s Office news release) Between a Rock and a Hard Place: A History of American Sweatshops, 1820-Present (by Peter Liebhold and Harry Rubenstein, History Matters)
Douglas Hoffner, 2009 (acting)
Victoria L. Bradshaw, 2004-2008
Victoria L. Bradshaw, 2003-2004 (acting)