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Column: The Hoover Institution says all recent California job growth has been in government jobs. That's completely wrong

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Column: The Hoover Institution says all recent California job growth has been in government jobs. That's completely wrong

Back when most sensible Californians were concerning themselves with Thanksgiving preparations, the California-bashing right wing went hog wild over a stunning report that almost all private job growth in the state collapsed from January 2022 to June 2024 and almost all growth — 96.5% — was in government jobs.

“California’s Businesses Stop Hiring,” was the headline on the report published by the conservative Hoover Institution. Its main claim was that from January 2022 to June 2024, private employers in the state added only 5,400 jobs.

You can imagine how California bashers, including some within the state, greeted the news that government was propping up the state’s economy.

“This is what a failing state looks like,” Rep. Kevin Kiley (R-Rocklin), who badly lost a bid to replace Gov. Gavin Newsom in the 2021 recall election, tweeted. Others who gleefully tweeted about the Hoover claim included Rep. Vince Fong (R-Bakersfield), and venture investor Steve Jurvetson. Right-wingers outside California also joined the choir.

The Hoover article was what we in the news biz often pigeonhole as “interesting, if true.”

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But it’s not true.

The original article, by UCLA economics professor Lee Ohanian, a Hoover Institution senior fellow, asserted that California added only 156,000 nonfarm jobs in the January 2022-June 2024 period. Since government statistics also showed that government employment in the state rose by 150,500, that left (after rounding) only about 5,400 new jobs created outside the government sector.

The picture painted was one in which private employers are shutting down and only government hiring is keeping the California economy afloat. The opposite is true, however.

(The Hoover Institution has retracted the original article and removed it from its website. An archived version of the original can be found here.)

Here’s the main problem with the Hoover analysis: During the sample period, California actually added 672,300 nonfarm jobs, not 156,000. Consequently, the 150,500 new government jobs accounted for only about 22.4% of the total, not 96.5%. The accurate figures show that not only did California’s businesses not stop hiring, but continued to hire fairly robustly from January 2022 to June 2024.

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How did this calculation go so awry? The answer is simple. Ohanian conflated the two separate monthly employment surveys issued by the Bureau of Labor Statistics: One is its so-called household survey, which asks a national sample of about 60,000 households how many people in the household are employed. The other is its establishment or “payroll” survey, which asks about 629,000 workplaces how many people they employ.

Generally, the household survey yields a higher number of employed persons than the establishment survey. That’s because it counts the self-employed (including gig workers) and farmworkers, among others who are excluded from the payroll statistics. But that relationship breaks down when you’re counting only payroll workers, slicing and dicing the statistics into industry sectors.

Mixing together the BLS household data and the BLS establishment data is “a cardinal sin of BLS data analysis,” observes the pseudonymous economics commentator Invictus on The Big Picture blog of Ritholtz Wealth Management, in an indispensable deconstruction of Ohanian’s original post.

In that post, Ohanian subtracted the government jobs figure reported in the establishment survey from the nonfarm employment figure in the household survey. That effectively overstated the government jobs percentage of California employment growth. The proper approach, Invictus notes, would have been to use the establishment survey for both measures.

Ohanian acknowledged in an email that he had erroneously considered the household and establishment figures similar enough to treat them as effectively equivalent. “If I had seen the differences in the two series,” he says, “I would have written the piece differently. Mea culpa.”

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In a corrective article posted Tuesday on the Hoover website, Ohanian makes public his mea culpa but also reiterates a point he made in the original article, which is that California’s job growth is weakening. That’s echoed by other studies, including a recent warning from the state’s Legislative Analyst’s Office.

Yet there’s much more to be said about Ohanian’s original article, as well as the glee with which conservatives seized on its headline claim as the basis for largely groundless attacks on California’s economic policies. First, it’s proper to note that the original piece was published Aug. 7, which is why its analysis covers only the period that ended in June.

The government issues two distinct sets of employment statistics — the payroll or establishment survey (in orange) and the household survey (in red). It also adjusts the household survey to confirm more with the payroll survey. The adjusted figure is in blue. The two major surveys measure different things and shouldn’t be mixed.

(Bureau of Labor Statistics)

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Why it got resurrected and shot around the right-wing echo chamber last week is a mystery. Ohanian himself seemed uncertain when I asked him about it. Kiley, Fong and Jurvetson haven’t responded to my requests for comment.

That brings us to the statistics themselves. Employment data bristle with pitfalls for the unwary, even among experienced economists such as Ohanian. Indeed, in April, Ohanian posted an analysis on the Hoover website that purported to show a loss of 10,000 fast-food jobs in California from September 2023, when Newsom signed a minimum wage increase for that sector, through January this year — even before the increase went into effect.

As I reported, Ohanian based his post on a Wall Street Journal article that used employment figures that weren’t seasonally adjusted. That’s a crucial error when tracking jobs in seasonal industries such as restaurants.

The Journal’s article, and consequently Ohanian’s, mistook a seasonal decline in restaurant employment that occurs from September to January every single year for the one-time consequences of the minimum wage increase. Fast-food jobs, seasonally adjusted, actually rose by 6,300 in the period being reported. Ohanian told me at the time that he had been unaware that the Journal used nonseasonally adjusted figures.

BLS employment figures may be especially confusing because the bureau’s two surveys superficially seem to measure the same thing, but are very different — so much so that the bureau itself has issued a detailed explainer about the distinction. It notes that the establishment survey is “a highly reliable gauge of monthly change in nonfarm payroll employment.” The household survey is oriented more toward demographics and is best known as the source of the national unemployment rate.

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Ohanian used his misconstruction of employment figures as the basis for a wide-ranging critique of California economic policy, mostly citing how the high cost of living drives people out of the state.

“Part of California’s job weakness,” he wrote, “reflects the number of people and businesses leaving the state.” California’s population fell by about 75,000 from 2022 and 2023 (the latest data available), he wrote, adding that companies such as Tesla, Oracle, and Chevron have moved or are moving their headquarters elsewhere.

“Population loss naturally leads to job loss,” Ohanian told me by email. “It is challenging to see how California could be gaining jobs as portrayed in the Establishment Survey, given a smaller population.”

That may well be true over the longer term and with larger numbers. But the 75,000 departed residents in 2022-23 represent less than two hundredths of a percent of the state’s population. Even the larger population decline of about 538,000 since 2020 represents about 1.4% of the state’s population.

The key question would be: Who’s leaving? Many emigrants may be retirees, who don’t have occupational reasons to stay in the high-cost state and may have sizable equity in their homes to pocket for a move to a cheaper location; about 7.5 million of California’s residents today are older than 65. The pandemic also drove the population down — COVID-related deaths numbered at least 60,000 in 2020 and 2021.

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As for the emigration of corporate headquarters, California still leads the nation in headquarters of Fortune 500 companies, with 57. New York and Texas were runners up with 52 each. California remains a national leader in business creation, with nearly 560,000 new business applications filed with the state in 2023. When new technologies emerge with the potential to aid economic expansion, they tend to start in California.

One other subtext of the debate over California job growth needs to be mentioned. That’s the picture that conservatives paint about government jobs. The tweeted hand-wringings about the purported explosion in government jobs, which implies that the government workers are an army of faceless bureaucrats engaged in writing anti-business regulations.

The idea that the Musk/Ramaswamy Department of Government Efficiency can cashier them without affecting your daily life is a fantasy. In fact, the federal government employs only about 3 million workers, about half of whom are in the military, the Department of Veterans Affairs, and the Department of Homeland Security; the overall figure has remained fairly stable since the 1960s.

An additional 20 million are state and local employees, the majority of whom are teachers, along with police and fire fighters. Which of these workers should we fire?

Any discussion of California’s economy limited to periods of a year or two needs to be viewed in relation to the big picture, which is that California’s economy is by far the biggest in the country — indeed, it would rank in the top five or six countries if it were a sovereign state. At an estimated $4.08 trillion in gross domestic product, its economy is more than half again as large as the runner-up among U.S. states, Texas ($2.7 trillion).

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Ohanian is right to argue that there’s reason for concern about where the state goes from here. But to suggest that there’s something fundamentally faulty about policies that still undergird the most powerful state economy in the nation or that California is a “failing state” — that’s “interesting, if true” … but, again, not true.

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In-N-Out Burger outlets in Southern California hit by counterfeit bill scam

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In-N-Out Burger outlets in Southern California hit by counterfeit bill scam

Two people allegedly used $100 counterfeit bills at dozens of In-N-Out Burger restaurants in Southern California in a wide-reaching scam.

Glendale Police officials said in a statement Friday that 26-year-old Tatiyanna Foster of Long Beach was taken into custody last month. Another suspect, 24-year-old Auriona Lewis, also of Long Beach, was arrested in October.

Police released images of $100 bills used to purchase a $2.53 order of fries and a $5.93 order of a Flying Dutchman.

The Los Angeles County District Attorney’s Office charged Lewis with felony counterfeiting and grand theft in November.

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Elizabeth Megan Lashley-Haynes, Lewis’s public defender, didn’t immediately respond to a request for comment.

Glendale police said that Lewis was arrested in Palmdale in an operation involving the U.S. Marshals Task Force. Foster is expected in court later this month, officials said.

”Lewis was found to be in possession of counterfeit bills matching those used in the Glendale incident, along with numerous gift cards and transaction receipts believed to be connected to similar fraudulent activity,” according to a police statement.

A representative for In-N-Out Burger told KTLA-TV that restaurants in Riverside, San Bernardino and San Diego counties were also targeted by the alleged scam.

“Their dedication and expertise resulted in the identification and apprehension of the suspects, helping to protect our business and our communities,” In-N-Out’s Chief Operations Officer Denny Warnick said. “We greatly value the support of law enforcement and appreciate the vital role they play in making our communities stronger and safer places to live.”

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The company, opened in 1948 in Baldwin Park, has restaurants in nine states.

An Oakland location closed in 2024, with the owner blaming crime and slow police response times.

Company chief executive Lynsi Snyder announced last year that she planned to relocate her family to Tennessee, although the burger chain’s headquarters will remain in California.

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Newsom’s budget includes $200 million to make up for Trump’s canceled EV rebates, among other climate items

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Newsom’s budget includes 0 million to make up for Trump’s canceled EV rebates, among other climate items

Gov. Gavin Newsom on Friday doubled down on California’s commitment to electric vehicles with proposed rebates intended to backfill federal tax credits canceled by the Trump administration.

The plan would allocate $200 million in one-time special funds for a new point-of-sale incentive program for light-duty zero-emissions vehicles. It was part of a sweeping $348.9-billion state budget proposal released Friday, which also included items to address air pollution and worsening wildfires, amid a projected $3-billion state deficit.

EVs have become a flashpoint in California’s battle against the Trump administration, which moved last year to repeal the state’s long-held authority to set strict tailpipe emission standards and eventually ban the sale of new gas powered cars.

Last year, Trump ended federal tax credits of up to $7,500 for EV customers that were part of President Biden’s 2022 Inflation Reduction Act. In September, his administration also let lapse federal authorization for California’s Clean Air Vehicle decal program, which allowed solo EV drivers to use carpool lanes.

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“Despite federal interference, the governor maintains his commitment to protecting public health and achieving California’s world leading climate agenda,” Lindsay Buckley, spokesperson for the California Air Resources Board, said in an email. “This incentive program will help continue the state’s ZEV momentum, especially with the federal administration eliminating the federal EV tax credit and carpool lane access.”

Newsom had previously flip-flopped on this idea, first vowing to restore a state program that provided up to $7,500 to buy clean cars and then walking it back in September. That same month, a group of five automakers including Honda, Rivian, Hyundai, Volkswagen and Audi wrote a letter urging Newsom and state legislators to establish a $5,000 EV tax rebate to replace the lost federal incentives, Politico reported.

During his State of the State speech Thursday — one year after the devastating Palisades and Eaton fires in Los Angeles — Newsom said California “refuse[s] to be bystanders” while China and other nations take the lead on electric vehicles and the clean energy transition. He touted the state’s investments in solar, hydrogen, wind and nuclear power, as well as its recent move away from the use of any coal-fired power.

“We must continue our prudent fiscal management, funding our reserves, and continuing the investments Californians rely on, from education to public safety, all while preparing for Trump’s volatility outside our control,” the governor said in a statement. “This is what responsible governance looks like.”

Several environmental groups had been urging Newsom to invest more in clean air and clean vehicle programs, which they say are critical to the state’s ambitious goals for human health and the environment. Transportation is the largest source of climate and air pollution in California and is responsible for more than a third of global warming emissions, said Daniel Barad, Western states policy manager with the nonprofit Union of Concerned Scientists.

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“As federal attacks threaten California’s authority to protect public health, incentives are more essential than ever to scale up clean cars and trucks,” Barad said. “The governor and legislative leaders must act now to fully fund zero-emission transportation and pursue new revenue to grow and sustain climate investments.”

Katelyn Roedner Sutter, California senior director with the nonprofit Environmental Defense Fund, called it “an essential step to save money for Californians, cut harmful pollution, spur innovation, and support the global competitiveness of our auto industry.”

While the budget proposal does not include significant new spending proposals, it contains other line items relating to climate and the environment. Among them are plans to continue implementing Proposition 4, the $10-billion climate bond approved by voters in 2024 for programs geared toward wildfire resilience, safe drinking water, flood management, extreme heat mitigation and other similar efforts.

Among $2.1 billion in climate bond investments proposed this year are $58 million for wildfire prevention and hazardous fuels reduction projects in vulnerable communities, and nearly $20 million to assist homeowners with defensible space to prevent fire. Water-related investments include $232 million for flood control projects and nearly $70 million to support repairs to existing or new water conveyance projects.

The proposal also lays out how to spend money from California’s signature cap-and-trade program, which sets limits on greenhouse gas emissions and allows large polluters to buy and sell unused emission allowances at quarterly auctions. State lawmakers last year voted to extend the program through 2045 and rename it cap-and-invest.

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The spending plan includes a new tiered structure for cap-and-invest that first funds statutory obligations such as manufacturing tax exemptions, followed by $1 billion for the high speed rail project, $750 million to support the California Department of Forestry and Fire Protection, and finally secondary program funding such as affordable housing and low-carbon transit options.

But while some groups applauded the budget’s broad handling of climate issues, others criticized it for leaning too heavily on volatile funding sources for environmental priorities, such as special funds and one-time allocations.

The Sierra Club called the EV incentive program a crucial investment but said too many other items were left with “patchwork strategies that make long-term planning harder.”

“Just yesterday, the Governor acknowledged in his State of the State address that the climate risk is a financial risk. That is exactly why California needs climate investments that are stable and ongoing,” said Sierra Club director Miguel Miguel.

California Environmental Voters, meanwhile, stressed that the state should continue to work toward legislation that would hold oil and gas companies liable for damages caused by their emissions — a plan known as “Make Polluters Pay” that stalled last year amid fierce lobbying and industry pressure.

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“Instead of asking families to absorb the costs, the Legislature must look seriously at holding polluters accountable for the harm they’ve caused,” said Shannon Olivieri Hovis, California Environmental Voters’ chief strategy officer.

Sarah Swig, Newsom’s senior advisor for climate, noted that the state’s budget plan came just days after Trump withdrew the United States from the United Nations Framework Convention on Climate Change, a major global treaty signed by nearly 200 countries with the aim of addressing global warming through coordinated international action.

“California is not slowing down on climate at a time when we continue to see attack after attack from the federal government, including as recently as this week with the Trump administration’s withdrawal from the UNFCCC,” Swig told reporters Friday. “California’s leadership has never mattered more.”

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Abandoned shops and missing customers: Fire-scarred businesses are still stuck in the aftermath

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Abandoned shops and missing customers: Fire-scarred businesses are still stuck in the aftermath

The charred remains of the historic Pacific Palisades Business Block cast a shadow over a once-bustling shopping district along West Sunset Boulevard.

Empty lots littered with debris and ash line the street where houses and small businesses once stood. A year since the Palisades fire roared through the neighborhood, only a handful of businesses have reopened.

The Starbucks, Bank of America, and other businesses that used to operate in the century-old Business Block are gone. All that remains of the Spanish Colonial Revival building are some arches surrounding what used to be a busy retail space. The burned-out, rusty remnants of a walk-in vault squat in the center of the structure.

Nearby, the Shade Store, the Free-est clothing store, Skin Local spa, a Hastens mattress store, Sweet Laurel Bakery and the Hydration Room are among the many stores still shuttered. Local barbershop Gornik & Drucker doesn’t know if it can reopen.

“We have been going back and forth on what it would take to survive,” co-owner Leslie Gornik said. “If we open, we have to start over from scratch.”

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Hundreds gathered around Business Block on the anniversary of he fire on Wednesday to witness a military-style white-glove ceremony to pay respects to the families who lost loved ones. Photos of those killed from the neighborhood were placed at the Palisades Village Green next door.

The Palisades fire burned for 24 days, destroying more than 6,800 structures, damaging countless others and forcing most of the neighborhood’s residents to move elsewhere. About 30 miles northeast, the Eaton fire burned more than 9,400 structures. Combined, the fires killed 31 people.

Remnants of the the Pacific Palisades Business Block, which was completed in 1924 and burned in the Palisades fire.

The few businesses that are back in Palisades serve as a beacon of hope for the community, but owners and managers say business is down and customers haven’t returned.

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Ruby Nails & Spa, located near the Business Block, was closed for eight months before reopening in September. Now business is only half of what it was before the fires, owner Ruby Hong-Tran said.

“People come back to support but they live far away now,” she said. “All my clients, their houses burned.”

Ruby Hong-Tran, owner of Ruby Nails & Spa in Pacific Palisades, says her business is half of what it was since reopening.

Ruby Hong-Tran, owner of Ruby Nails & Spa in Pacific Palisades, says her business is half of what it was since reopening.

It took months to clean all the smoke damage from her shop. The front is still being fixed to cover up burn damage.

The firestorms destroyed swaths of other neighborhoods, including Malibu, Topanga, Sierra Madre and Altadena, where businesses and homeowners also are struggling to build back.

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Some are figuring out whether it is worth rebuilding. Some have given up.

The Los Angeles Economic Development Corporation estimated last year that more than 1,800 small businesses were in the burn zones in Pacific Palisades, Malibu and Altadena, impacting more than 11,000 jobs.

Businesses say they often have been on their own. The Federal Emergency Management Agency tasked the U.S. Army Corps of Engineers to clean up debris at private residences, some public buildings and places of worship — but not commercial properties.

Business owners had to clean up the charred debris and toxic waste on their properties. Many had to navigate complicated insurance claims and apply for emergency loans to stay afloat.

Rosie Maravilla, general manager of Anawalt’s Palisades Hardware, said damage to her store was limited, and insurance covered the cleaning, so she was able to open quickly. The store reopened just one month after the fire.

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Rosie Maravilla, general manager of Anawalt Palisades Hardware, in front of of the store in Pacific Palisades.

Rosie Maravilla, general manager of Anawalt Palisades Hardware, in front of of the store in Pacific Palisades.

Still, sales are 35% lower than what they used to be.

“In the early days, it was bad. We weren’t making anything,” Maravilla said. “We’re lucky the company kept us employed.”

The customer base has changed. Instead of homeowners working on personal projects, the store is serving contractors working on rebuilding in the area.

An archival image of the area in Pacific Palisades hangs over the aisles in Anawalt Palisades Hardware.

An archival image of the area in Pacific Palisades hangs over the aisles in Anawalt Palisades Hardware, where business is down despite a customer base of contractors who are rebuilding.

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Across the street from the Business Block, the Palisades Village mall was spared the flames and looks pristine, but is still closed. Shop windows are covered with tarps. Low metal gates block entry to the high-end outlets. The mall is still replacing its drywall to eliminate airborne contaminants that the fire could have spread.

All of its posh shops still are shut: Erewhon, Lululemon ,Bay Theater, Blue Ribbon Sushi, athletic apparel store Alo, Buck Mason men’s and Veronica Beard women’s boutiques.

Mall owner and developer Rick Caruso said he is spending $60 million to reopen in August.

The need to bring back businesses impacted by the fires is urgent, Caruso said, and not just to support returning residents.

“It’s critical to bring jobs back and also for the city to start creating some tax revenue to support city services,” he said. ”Leaders need to do more to speed up the rebuilding process, such as speeding up the approval of building permits and stationing building inspectors closer to burn areas.”

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Pedestrians walk past the Erewhon market in Palisades Village that plans to reopen this year.

Pedestrians walk past the Erewhon market in Palisades Village that plans to reopen this year.

(Genaro Molina/Los Angeles Times)

Wednesday, on the anniversary of the fire, Caruso sent three light beams into the sky over the mall, which met in one stream to honor the impacted communities of Pacific Palisades, Altadena and Malibu.

The nighttime display will continue through Jan. 31.

Business Block’s history dates to 1924, when it served as a home for the community’s first ventures. In the 1980s, plans to tear it down and build a mall sparked a local uprising to save the historic symbol of the neighborhood’s vibrancy. It was designated a Los Angeles Historic-Cultural Monument in 1984.

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Tiana Noble, a Starbucks spokesperson, said the landlord terminated the company’s lease when the building burned down. Bank of America said it secured a new lease to rebuild nearby.

Business Block’s fate is still unclear. Some people want to preserve its shell and turn it into a memorial.

This week, it was ringed by a fence emblazoned with the words “Empowering fresh starts together.”

Caruso said the ruins should be torn down.

“It needs to be demolished and cleaned up,” he said. “It’s an eyesore right now and a hazard. I would put grass on it and make it attractive to the community.”

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Twisted and scorched remnants of the the Pacific Palisades Business Block still are there a year after the fire.

Twisted and scorched remnants of the the Pacific Palisades Business Block still are there a year after the fire.

A short walk from the Business Block and near a burned-down Ralphs grocery store is the Palisades Garden Cafe, one of the few places in the neighborhood to get food and drink. The small, vibrant cafe was closed for two months after the fire, during which the employees went without pay.

Manager Lita Rodriguez said business is improving, but misses the regulars.

“We used to get tons of students and teachers who live and work here,” she said. “Our customers are mostly contractors now.”

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