Thursday, October 1, 2015

Celebrate Industry and Many SoCal jobs

There are three little words we all like to hear, “Made in America.  Manufacturing helped grow our nation and build a middle class.  Manufacturing jobs pay good wages.  Manufacturing spurs economic growth and drives innovation. 

Many are quick to think that all manufacturing has left Southern California.  Not true.  While the number of jobs has declined, Los Angeles County still has a significant manufacturing base providing almost 815,000 jobs -8.6 percent of the total workforce. 

The Los Angeles Economic Development Corporation (LAEDC), which tracks employment by sector, reports “LA County has more manufacturing employment than any other county in the nation.  We have a diverse set of manufacturing industries here that don’t receive enough publicity and support.”

These companies sell products around the world which brings money here and creates wealth for the entire region.

The San Gabriel Valley - where I live and work - is the proud home of 58,900 manufacturing jobs.  In fact in the last 10 years several highly specialized advanced manufacturing sub-sectors have added jobs in the SGV - primarily those involved in making the parts, components, resins, and fibers for the aerospace industry and pharmaceutical and medical manufacturing serving the burgeoning healthcare industry. 

Tomorrow, October 2, 2015, is National Manufacturing Day.  You might wonder why we need a day to celebrate manufacturing.  There are lots of good reasons.

First, it is needed to set the record straight.  Manufacturing is not dead.  It is an important part of our economy and the infrastructure required to support manufacturing exists here in abundance - our ports, freeways, utilities, and workforce.

Second - LAEDC is right. These important companies don’t get enough publicity and support.  We want these companies to stay here and to grow here.  We should let them know they are appreciated.

Finally, manufacturing offers opportunities for future employment.  Manufacturing Day provides a good opportunity to get students thinking about careers in manufacturing.

Manufacturing companies, colleges, and universities are all pitching in to share the good news and cheer on manufacturing.  There are almost 2,000 events planned across the nation.  A quick visit to LAEDC’s website provides a list of the events planned closer to home.

One other top manufacturing sector in LA County is food manufacturing.  The SGV is adding jobs in this sector especially related to specialty sauces.  How about celebrating manufacturing by touring Huy Fong Foods to see how their famous Rooster Sriracha sauce is made?  It is chili picking season and the best time to pay a visit.  Sign up for Saturday tours on their website at Huy Fong Foods, Inc.

Happy Manufacturing Day however you decide to celebrate it.

Thursday, September 24, 2015

CEQA Suits Block Housing, Transit

Housing has always been expensive in California. It is understandable since the state is a great place to live. Housing is in high demand. 

Buying a house has been out of the reach for many families for a long time.  California has the second lowest ownership rate in the country.  In the greater Southern California region, which includes Los Angeles, Orange, Riverside, San Bernardino and Ventura counties, approximately 48 percent of the housing stock comprises rental units according to the U.S. Census Bureau.

However, today, even the rental market is also becoming unaffordable.  A recent study by the California Housing Partners Corporation and Harvard University concluded, “The rental market in Southern California is the least-affordable it has ever been.”  One in five Southern California renters spends more than half their monthly incomes on rent.

The major cause of the housing crisis is lack of supply.  With more people and more demand economics tells us the market should increase the supply of housing.  But that is happening very slowly. 

A report by the nonpartisan California Legislative Analyst’s Office says the cause of California’s high prices is the California’s Environmental Quality Act (CEQA). 

Holland & Knight, a California law firm, recently released their study of over 600 CEQA lawsuits from 2010 to 2012.  What they found is that the most frequently targeted projects for CEQA litigation are residential projects (21 percent).  Forty-five percent of the projects challenged were multi-family (apartments and condominiums) and many of these projects included affordable housing.

Of course, just because a residential project is multi-family doesn’t mean it will not have environmental impacts. Projects proposed for wetlands or in sensitive natural areas should be scrutinized for environmental impacts.  Proposed projects located in undisturbed greenfields or where there is lack of infrastructure such as water, power, roads and public transit, should receive detailed environmental reviews. 

But the report also found that 80 percent of the projects sued under CEQA - not just housing but also parks, schools, commercial, retail and industrial projects - were in-fill projects.  They were proposed to be built in areas that had infrastructure in place and were already urban places.

Half of the CEQA lawsuits were filed against public projects.  The most frequent were against public transit projects.   A CEQA lawsuit delayed San Francisco’s plan to expand bicycle lanes for five years increasing the cost by millions of dollars of taxpayer money.  Student housing near USC, that was specifically designed to reduce impacts on adjacent neighborhoods, was tied up in the courts for years by a CEQA challenge.

These findings run counter to our perception of CEQA.  It is easy to see through the thinly veiled “environmental protection” arguments of so many CEQA cases and recognize them for what they are – efforts by business competitors, NIMBY’s, labor unions, and people just fearful of change – to use the law to thwart change or damage opponents. CEQA was never intended for such uses It is unfortunately easy to see how much damage is being caused in California under the banner of environmental protection.

Thursday, September 17, 2015

Kaiser Polls Highlight National Drug Costs

Kaiser Permanente is well known for its excellent health care services.  The Kaiser Permanente Baldwin Park Medical Center recently received several awards including the American Heart Association and American Stroke Association’s Gold Plus Quality Achievement Award, a ranking in U.S. News & World Report as one of the Best Hospitals, and 2015 Women’s Choice Award as one of American’s Best Breast Centers

All 14 of Kaiser Permanente’s Southern California Hospitals received an “A” from the Leapfrog Group - a national non-profit watchdog organization.

This year Kaiser celebrates 70 years of excellent care, clinical research and community support.   Seventy years ago a young surgeon, Dr. Sidney Garfield, saw that the workers on the Colorado River Aqueduct Project needed medical services.  His 12-bed Mojave Desert hospital would not turn anyone away but cash flow was a problem - insurance companies were often slow to pay - and many workers had no insurance. 

An insurance agency associate suggested the insurance company pay Garfield’s hospital a fixed per day, per worker amount solving the cash flow problem and offering the workers an affordable insurance plan.  The “prepaid” system was born. 

A few years later Dr. Garfield partnered with Henry Kaiser, creator of the Kaiser Shipbuilding Company, to expand services to construction, shipyard and steel mill workers.  In 1945 the program was opened to the public.  Today Kaiser Permanente serves 10 million members.

Kaiser is also a leader in researching and addressing national healthcare issues in order to improve the healthcare system.  Kaiser conducts frequent nationwide polls of people over the age of 18 to provide information about a variety of health issues. The August 2015 poll covered one of the most pressing issues effecting American healthcare costs - prescription drugs.

Research and development along with FDA approval of new prescription drugs is expensive.  Drug companies deserve to make a fair return on their work.  Kaiser’s poll showed that while 62 percent of adults believe that prescription drugs make people’s lives better, 72 percent believe that the cost of prescription drugs is unreasonable.  To lower the cost, respondents preferred market place competition (51 percent) rather than government regulations (40 percent). 

Specific policies, such as requiring drug companies to release information to the public on how they set their drug prices, was overwhelming supported by 86 percent of respondents.

With federal legislative action unlikely, California is considering AB 463 (Chiu - San Francisco) which would require price reporting for any drug or treatments that cost more than $10,000.  The annual report would include breakdowns for research & development, clinical trials, manufacturing, marketing & advertising, and profits.

Getting this legislation passed won’t be easy.  Drug companies are fighting passage of AB 463.  Last year they contributed $2 million to California state campaigns and $14.8 million to federal campaigns. 

Happy anniversary Kaiser and thanks for helping us understand these important healthcare issues.

Thursday, September 3, 2015

Where did the current term ‘bug’ come from?

Bugs - those little things that fly around your head and crawl up your leg - have a bad reputation.   If we are bugged, it means that either someone is annoying us or listening without our permission.  And if you have suffered from a computer bug, which most computer owners have, you know that bugs are not only annoying but can be very expensive.

How is it that we associate computer problems with a bug?  There are several theories but most trace back to Thomas Edison and the telegraph.  He was just 26 years old when he began his work on sending messages by wire in two directions by changing the direction of the current. 

But he had a problem with a false break when the current switched.  His solution was to isolate the unwanted break into a “bug trap.” 

Edison continued to expand the use of the word bug to describe problems that needed attention.  Bug appears frequently in his notes on incandescent lighting, “Awful lot of bugs still.” In 1878 He defined the word in a communication to his employee, Theodore Paskas, “This thing gives out and then that ‘Bug’ - as such little faults and difficulties are called - show themselves, and months of anxious watching, study and labor are requisite before commercial success - or failure - is certainly reached.”

By 1892 the terms “bug” and “bug trap” had spread widely in the engineering community and were included in Thomas Sloane’s “Standard Electrical Dictionary.   A  “bug” was defined as “any fault or trouble” and a “bug trap” as “any connection or arrangement for overcoming said bug.”

On September 9, 1947 there was a more literal manifestation of the idea of a computer bug.   A computer programmer, Navy Commander Grace Murray Hopper, was working on the Harvard Mark II electromechanical computer.

The computer wasn’t working properly so technicians began digging around in the machine to find the cause.  Low and behold they found a moth - yes a real live, well actually dead, moth - between panel F and relay # 70.  If you know where that is you know a lot more about computers than most of us.

The moth was retrieved and taped into the log book with the citation, presumably from the Commander herself, “First actual case of a bug being found.”   The whereabouts of the moth today are a bit unclear.  Some accounts say it is in the Naval Surface Warfare Center Computer Museum in Virginia.  Others say it is kept at the History of American Technology which is a part of the Smithsonian National Museum of American History.

We do know that Commander Hopper’s work in computer languages including COBAL earned her the first ever Computer Science Man of the Year Award in 1969 and the National Medal of Technology in 1991.

Thomas Edison may have coined the term “bug” to describe a problem, but it was Grace Hopper who was the first person to actually “debug” a computer.  

Next Wednesday, September 9, is the 68th anniversary of that debugging and a good time to run an anti-virus “debugging” program on your computer.  Also a good time to salute Mr. Edison and Ms. Hopper.  They fixed a lot of bugs for us.

Thursday, August 27, 2015

Minimum wage issue stirs mixed reactions

Major cities across the country are discussing the minimum wage.  The City of Los Angeles joined the growing list approving an annual wage increase from the current state minimum of $9.00 per hour to $15.00 per hour effective July 1, 2020. 

The Los Angeles Board of Supervisors adopted a similar proposal for the unincorporated areas of the County but gave small businesses until 2022 to meet the $15.00 per hour minimum.  They also created a task force to recommend a package of initiatives to help small businesses with tax credits, reductions in the cost of permitting or business licenses fees, and streamlined permitting.

While any reasonable person knows that the minimum wage needs to incrementally increase, at least to keep pace with inflation, the current proposals have raised many questions and complexities.  To begin a regional discussion, the San Gabriel Valley Economic Partnership recently held a forum for advocates and opponents of the minimum wage increase to offer their perspectives.

Peter Dreier, E.P. Clapp Distinguished Professor of Politics and Urban & Environmental Policy at Occidental College, described the plight of the working poor.  There are three million people living in poverty in LA County.  This is a drag on the economy.  Professor Dreier believes that increased wages will move people out of poverty.  With additional money to spend, minimum wage could mean increased revenues for local businesses.

Ruben Gonzalez, Senior Vice President of the Los Angeles Area Chamber of Commerce, quoted H.L. Menken in describing the Chamber’s perspective on minimum wage - “For every complex problem there is a clear, simple and wrong answer.”  Calling minimum wage increases the politically easy answer; he believes the way to move people out of poverty lies in education and training.  

Michael Hawkins, Founding Partner of Green Street Restaurant in Pasadena, asked elected officials to remember that decisions made by governments have real life impacts on people.  He gave a real life example.  Based on his existing staffing level, his payroll, income tax and worker’s compensation tax would increase by just over $1 million if the minimum wage rises to $15.00 in 2020.  That doesn’t take into account increasing costs he may experience from suppliers who have minimum wage impacts on their bottom lines.  He doesn’t see how his revenues can keep-up even if he increases prices. That could mean fewer jobs, reduced benefits, or even closing the restaurant.

Dr. Mark Maier, Professor of Economics at Glendale Community College, supports increasing the minimum wage but believes that it needs to be at a regional level.  While the panelists didn’t agree on many things, everyone admitted it is a big problem having a patchwork of minimum wage rates across an economic region.  It’s disruptive to competition and confusing to employers, employees and consumers alike.

Some audience members were concerned about the impact on non-profits.  Non-profits can’t raise prices.  Fundraising is difficult especially for existing services.  Many believe reducing services to clients could be the only option.

Warren Buffet recently penned an article in the Wall Street Journal saying that the best means to provide a livable income for those working below the poverty line is to expand the federal Earned Income Tax Credit.  He argues it could provide everyone willing to work an income that provides a decent standard of living without distorting the market system.

Are current proposals to raise minimum wages 66 percent over five years too much too fast?  Is it a necessary moral response to wage stagnation and economic inequality? Will it reduce poverty or reduce jobs?  Will it hurt the economy or help the economy? Are there better ways to reach the same goal?  Difficult questions.  Few answers.