As Californians, we proudly boast of having the fifth largest economy in the world. Last year we created more jobs than all but six other states. Because we generate less per capita Greenhouse Gas Emissions than any other state, we pride ourselves on being the nation’s environmental leader. And yet, not all is well in the Golden State.
California has by far the highest rate of poverty in the nation, when cost of living is taken into consideration. Our state’s middle class has declined from 60 percent of the population in 1980 to 48 percent today. Using the Gini coefficient, which measures income inequality, we have the 7th highest rate of income disparity in the country. California is home to some of the most affluent and the highest poverty zip-codes in the nation. We are home to 11 percent of the nation’s population and 32 percent of the population on welfare.
The Stanford Institute for Poverty and Inequality and the Public Policy Institute of California tell us that more than 40 percent of Californians are “poor or near-poor.”
Stanford Professor Raj Chetty tells us that if you were a 30-year-old Californian in 1980, there was a 92 percent probability that you were earning more than your parents. If you are 30 years old today, that probability is now a coin-flip. As a young adult in 1980, it was reasonable to assume that if you worked hard, you would be able to buy a home in the neighborhood where you were raised. That’s no longer a reasonable assumption.
These are all measures of economic well-being, measures of what most people would include in their image of the California Dream—the belief that if you apply yourself there is a high likelihood that you will achieve economic security and upward mobility.
That is no longer the case. The Stanford Institute for Poverty and Inequality and the Public Policy Institute of California tell us that more than 40 percent of Californians are “poor or near-poor,” economically vulnerable Californians who are either in poverty or unable to cover the cost of any unexpected emergency.
Upward mobility is not the only defining measure of the California dream. The other major measure has always been quality of life – the sheer beauty of the state and weather that allows us to BBQ in January. But while beauty and weather remain constant, other quality of life factors are eroding. A recent Bay Area Council survey shows that more than one-third of Bay Area residents want to leave, largely because of traffic gridlock and cost of living.
In a democracy, societies succeed when they concurrently advance progress toward three goals: the economy, environment and socio-economic equity. Society suffers if any one of the three goals is consistently overlooked.
Management expert Peter Drucker is often given credit for saying “what you measure gets managed.” We use measures, such as GDP growth, to see how the economy is doing; we measure greenhouse gas emissions to gauge progress in slowing climate change. Harvard Professor Michael Porter has recently developed a Social Progress Index to measure social factors (California ranks 33rd among the 50 states).
While Californians care deeply about all three aspects of sustainable and shared economic and social prosperity, we do not routinely, consistently and simultaneously measure our progress and assess our policy choices against a Triple Bottom Line.
We need to – because the data show we must do a lot better when it comes to socio-economic mobility if we want hard-working people born into the 1st or 2nd quintile of the economic ladder to have a shot at middle class or more. Do they have an opportunity to own a home, cover their health care expenses, afford a college education for their children, save money for retirement?
If those are the outcomes we want, we should begin by establishing a socio-economic mobility measure that tells us whether California is working for all Californians, in all regions of the state. We need a California Dream Index, and major state policy choices need to be assessed to determine whether we are advancing or suppressing upward mobility.
California Forward via the California Economic Summit has worked with a wide range of stakeholders to develop a Roadmap for Shared Prosperity. Work is now underway to develop the California Dream Index, along with a data collection and reporting system. At the 2018 Economic Summit in November in Santa Rosa, we expect to propose that the Governor and the Legislature adopt the index and set targets that will enable us to measure progress.
We hope the Index will encourage stakeholders and advocates to review existing and proposed policies to ensure we are moving in the right direction. Major legislation and ballot initiatives should be scored on the Dream Index in the same way the fiscal impacts are estimated. And the index should be disaggregated by county and by demographics to inform community and regional decisions, as well as state policies.
It is not ok that Silicon Valley thrives while the Central Valley lags, or that first generation Californians have little hope of achieving the California Dream, nor is it ok for Bay Area blue-collar workers to have to commute two or three hours each day to get to their jobs. These are among the reasons we are excited to sign on and help support the work of the Economic Mobility Collaborative.
Sound undoable? No more ambitious than 15 years ago when Governor Schwarzenegger signed an executive order which established greenhouse gas emissions targets for the state that later was embedded in legislation as the Global Warming Solutions Act (AB 32), then expanded and extended two years ago in SB 32. We set aggressive targets for greenhouse gas reductions and put in place the mechanisms to measure and achieve them.
We intend to pursue a similar bold ambition for the California Dream. We hope you’ll join the movement.
Ed’s Note: Lenny Mendonca and Pete Weber are co-chairs of California Forward, a nonpartisan, nonprofit political reform group.