Governor Newsom’s State of the State Address: Will He Do More to Reduce California Inequality?

Gov. Gavin Newsom is an odd defender of the State’s impoverished. Nonetheless, the wine entrepreneur, who established his political career and riches with the assistance of the State’s wealthy elite, campaigned on a vow to address California’s imbalances aggressively.

Since his inauguration in January 2019, Newsom has referred to the manifestations of California’s inequality – homelessness, poverty, and growing expenses – as “moral imperatives,” not merely legislative issues. “As long as they persist, they weaken every one of us,” he stated.

These inequities remained and were exposed throughout the two years of the COVID-19 outbreak, a turbulent period during which the government survived a Republican-led recall campaign last September.

Now that the epidemic has subsided, the economy is recovering, and there is no significant political opposition to his reelection this year, Newsom has the chance to return to his initial aim of eradicating poverty in the State.

He is scheduled to address the problem during today’s State of the State address, which will conclude his first term. “There will be a specific reference to inequality and the stakes,” one aide said, speaking on condition of anonymity because they were not allowed to provide a preview of the address.

“One of the speech’s topics will be a democracy, with an emphasis on how unrestrained inequality affects democracy.”

According to some analysts and advocates, Newsom’s attempts to reduce the economic disparity may help define his legacy – and distinguish him from his predecessor and fellow Democrat, Jerry Brown. They argued that the state government could only bridge the wealth divide.

“In compared to other governors in California, he is attempting a great deal,” said Chris Hoene, director of the California Budget & Policy Center, a nonprofit that researches low-income Californians’ policy issues.

“If we look at where we were when he became governor and where we are now, he is up against a lot of headwinds. And the sense of urgency and necessity fuels expectations of him doing more.”

Nationally, the jobs recovery is well underway. While California has lagged behind other states, it may finally see improvements as mask mandates are relaxed and the economy returns to normal conditions.

The epidemic – and the State’s historic fiscal surpluses – have created a chance for Newsom to address the State’s disparities. Additionally, the Democratic leaders of the state Assembly and Senate have stated that they intend to use the budget to foster a more inclusive recovery and equitable economy.

However, Assembly Republican Leader James Gallagher of Yuba City asserted that Democrats’ policies blame inequality.

“We have a massive surplus as a result of the wealthy doing so well,” he explained. “That is not representative of the state’s middle- and low-income earners.”

For example, he added, families are being crushed by the quick rise in gasoline costs, which have already surpassed the average of $5 per gallon – a rise hastened by the Ukraine crisis.

Gallagher and other Republicans also point the finger at the State’s gas tax, which Democrats increased under Brown in 2017 to fund road and bridge repairs and mass transit expansion.

Newsom has proposed deferring a scheduled July rise but has encountered opposition from members of his party in the Legislature. California Democrats’ climate change program has also increased the cost of utilities, aggravating inequality, Gallagher added.

“I believe he is truly concerned about this issue, but I believe his actions – or the policies of Democrats in the Legislature – have exacerbated the situation,” Gallagher said.

“The other issue is that the governor lacks accountability. He is a proponent of grandiose announcements and the announcement of new projects but falls short on execution and outcomes.”

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What is Newsom’s track record?

Last year, in his State of the State address, Newsom returned to the issue of inequality, stating that the epidemic was “widening the divide between the haves and have-nots.” “Income disparity continues to be California’s most serious preexisting condition,” he stated.

He has pushed through some key measures during his three years in office:

  • Newsom has gradually increased Medi-Cal coverage to include undocumented individuals until they reach the age of 26 and then until they reach the age of 50. In his January budget proposal, he advocated covering those previously excluded. However, the increase would leave several hundred thousand illegal immigrants ineligible since their yearly income exceeds the program’s income criteria.
  • Newsom increased the Earned Income Tax Credit and the Young Child Tax Credit in 2019 to benefit low-wage workers and families. In 2020, he signed legislation expanding the earned income tax credit to anybody with an Individual Taxpayer Identification Number.
  • This qualified illegal employees for hundreds, if not thousands, of cash each year. He signed a law last year providing $600 one-time payments to people who qualify for the State’s earned income tax credit, as well as an additional $600 to some undocumented taxpayers who are ineligible for certain federal assistance.
  • California enhanced eligibility for various safety net programs during the epidemic, including food assistance, allowing more individuals to participate.
  • The State delayed the process of recertification for the State’s CalFresh program, which offers food assistance to around 2.6 million low-income households. Additionally, the State established a universal free school lunch program last year, eliminating a prior income restriction.
  • When Newsom took office, he announced plans to assist working parents by providing six months of paid family leave. He has thus far increased the duration of the program to eight weeks per parent.
  • He signed a law providing unpaid family leave to smaller firms in 2020 but rejected a bill extending the program to low-wage workers in 2021. Additionally, the governor has made headway toward his aim of expanding preschool, with a goal of universal transitional kindergarten for four-year-olds by 2025.
  • Experts and activists agree that increasing access to higher education is critical for eliminating inequality. Last year, the government dropped age and time out of high school criteria for Cal Grant community college grants.
  • However, the governor vetoed a bill that would have expanded the availability of Cal Grants. Last year, lawmakers expressed their intention to extend a scholarship program for middle-class students in the State and increase the number of California students admitted to public colleges. However, lawmakers must agree this year to finance those pledges.
  • The governor’s economic recovery measures, which include attempting to focus monies locally, may benefit the Central Valley and other economically distressed areas of the State.
  • Such work will not be simple; a legislative attempt to retrain oil employees has already prompted a political battle between several of the State’s labor organizations. Nonetheless, proponents argue that the State could do more to close the economic difference.

What are the numbers indicating?

While recessions tend to exacerbate income inequalities between wealthy and poor, incomes for low-income employees have grown, while extraordinary government assistance has kept millions out of poverty.

Despite the steep decline expected in 2020 and the disproportionate share of pandemic-related employment losses occurring in low-wage industries.

According to Sarah Bohn, vice president and policy research chair at the Public Policy Institute of California, some of the most significant gains throughout the recovery has occurred in the leisure and hospitality industries.

“Wages are increasing the most at the bottom end of the range, although we are still in a recovery phase with high unemployment,” Bohn added.

“Inequality may be diminishing during the epidemic – which is bizarre, and we’ll learn more shortly – but when you look at the salary numbers, the lowest-paid sectors have had the largest wage increases.”

Across the country, figures from the Atlanta Federal Reserve Bank indicate that the mean wage growth rate for the poorest 25% of earnings is quicker than for other income categories.

Meanwhile, the Biden administration has emphasized data from two prominent economists at the University of California, Berkeley demonstrating that economic growth has been broadly shared since he took office in January 2021.

Although income inequality numbers for 2020 are not yet available in California, the pattern over the long term has been one of substantial widening, as the contemporary economy places a premium on highly educated people.

By examining pretax income and incorporating funds from some safety net programs, the PPIC discovered that income growth for the least 10% of California families lagged substantially behind the top 10% from 1980 to 2019.