Brown's Criticism Hurts Candidacy

Remarks on California's economic slump ire business

AS America's most-watched governor's race for 1994 approaches its first curve - the June 7 Democratic primary - the lead rider is in danger of being bucked by her own bugle-cry.

After opening up a substantial 20- to 30-point lead over Gov. Pete Wilson last December, Democratic state treasurer Kathleen Brown watched the gap close as she stumbled amidst political gaffes and staff shakeups. In March, a new political image-maker was hired who created a slogan that has begun airing in statewide TV ads: ``America's Best Treasurer To Revive America's Worst Economy.''

Now with the primary date fast approaching, Ms. Brown is being taken to task by local and national economists for trying to capitalize on a state in fragile recovery and also misstating the facts.

``It is unfortunate that a major, American gubernatorial candidate is contributing to the polluting frenzy of misinformation about the California economy,'' says Phil Burgess, president of the Denver Center for the New West, a non-partisan, non-profit think tank that examines economic trends in the West.

Admitting that California has been through a tough recession - losing 600,000 to 800,000 jobs since 1990 - he says the state's overall economic strength alone would make it the world's seventh largest economy. The state still ranks in the top quarter in several indicators, he says, including high-tech growth, telecommunications, highway infrastructure, foreign trade, per capita income.

``Brown is trying to make political hay by making California sound like Arkansas, Mississippi, or Alabama ... Get serious!'' Mr. Burgess says.

Joel Kotkin, a California-based economist for the Progressive Policy Institute in Washington, has taken issue with the Brown claim in print and broadcast. ``California is not remotely the worst economy in the country,'' he says, citing the May issue of Inc. magazine indicating 33 of the nation's 100 fastest-growing companies are located here. ``You don't have that much successful, entrepreneurial activity in a bottomed-out state.''

The figures mentioned by the Brown camp to support its contention, are job losses, which currently push California's unemployment to 9.7 percent - well over the national average of 6.7. But those numbers are highly deceiving, Mr. Kotkin says, because they are based on previous labor participation rates that are up to 20 percent higher than states such as Massachusetts, Connecticut, Rhode Island, Vermont, and New York.

``In these states there is a far greater, permanent underclass that simply never gets counted among the unemployed,'' he says. The state's sheer size also magnifies negative appearances that shrink when compared as percentages. He cites Bureau of Labor Statistics (BLS) showing four states with far higher job losses - Massachusetts with 12 percent, Connecticut 10 percent, New Jersey 6 percent, and New York 6 percent - than California's 5 percent loss in non-farm employment between 1989 and 1994.

Even by choosing the state's worst measures - residential construction, job growth, income growth - ``the evidence is that we are somewhere between 45th and 50th'' for 1991-'94, says Steve Levy, director of the Center for the Continuing Study of the California Economy. ``But that is very clearly a retrospective view ... things are beginning to turn around.''

The creation of almost 150,000 jobs a month for both January and February is reported by the University of California at Los Angeles Business Forecasting Unit. ``Such job gains would be good for the nation, no less the state, and are scarcely believable,'' says director Larry Kimbell.

Demand for new homes jumped nearly 25 percent from January 1993 to 1994.

Slowed income growth does not negate the state's top-15 rating nationwide in per capita income, says Adrian Sanchez, an economist for First Interstate Bank.

John Whitehurst, chief spokesman for the Brown campaign, says such analyses do not negate that ``49 states are in recovery and California continues to get worse.'' He cites BLS statistics released last week showing more new, unemployment claims (10,044) than any other state while claims nationwide are down (381,000 to 367,000).

``California is certainly the worst managed economy,'' Mr. Whitehurst says. ``There was simply no preparation by Pete Wilson for the realities of the past four years.''

Economists here recall that when Gov. Wilson voiced his concerns publicly in 1991 that California was a bad place for business, his ratings plummeted to the worst of any governor in state history. Likewise, they say, the Brown stance has brought the wrath of the business community. ``She has alienated businessman and corporate leaders across the state,'' Kotkin says.

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