Horton Matt
Matt Horton
Associate Director, California Center
Matt Horton is an associate director of the Milken Institute California Center. In that capacity, he interacts with government officials, business leaders and other key stakeholders to provide outreach and support for California research and policy efforts while developing programming and coordinating Forums, briefings and stakeholder meetings. He also monitors policy developments...
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Minoli Ratnatunga
Director, Regional Economics Research, Center for Regional Economics
California and Human Capital and Indexes & Rankings and Job Creation and Regional Economics
Minoli Ratnatunga is director of regional economics research at the Milken Institute's Center for Regional Economics, where she focuses on regional economic development and regional competitiveness.
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Investing in California’s Workforce to Build a Better Business Climate

By: Matt Horton and Minoli Ratnatunga
November 16, 2015

If perception were reality, then California’s long-term economic viability would be in peril. The world’s seventh largest economy again finds itself atop the list of places CEOs find the least friendly to operate. California ranks 48th on the Tax Foundation’s State Business Tax Climate Index. From high taxes and the increasing costs of doing business, to the challenges of operating in an uncertain and evolving regulatory environment, California is often seen as less welcoming to business than other states. Yet California also had four representatives in the top 25 of the Milken Institute’s Best-Performing Cities index in 2014, including the top spot, San Francisco. Companies in some parts of the state are finding it difficult to hire enough qualified workers to sustain their growth. How can state leaders address both of these challenges to foster future economic growth? By investing in people, and helping them cultivate the skills necessary for a vibrant 21st century economy, leaders can pave the path toward growth and prosperity.

Providing a framework that really focuses on providing Californians with the skills they need, and clear career pathways to better jobs and better wages would be good for the people of California. They want better lives for themselves and their families. Businesses in California need a qualified workforce to compete in a global market. The California Community College Chancellor’s Office has recently released a strategic plan that is a step in the right direction, though it will need funding and follow-through to make the impact our economy needs.

Currently before the California Community Colleges Board of Governors, the report, “Doing What Matters for Jobs and the Economy” proposes to go much farther than closing the state’s evident skills gap. If funded and implemented, the plan will support job sectors and regional economies by establishing a pipeline of adaptable, highly skilled and technically trained workers who are prepared for the 21st century workplace. The state’s economic health tomorrow depends on business and policy leaders acting today to invest in the appropriate social infrastructure. By supporting the “Doing What Matters” recommendation to provide sustained funding and curriculum support that allows broader access to career and technical education courses, state leaders can act now to support CTE courses that match growing demand for middle-skilled jobs. Moreover, by partnering with businesses, state leaders can satisfy regional demand with an appropriately trained local workforce—while integrating CTE delivery with the mission of broader higher education and regional job growth goals.

In a patchwork of state grant allocations, Governor Brown’s 2015 budget is set to fund adult education and CTE programs in excess of $1.2 billion through 2016. Investing in our workforce is something that benefits all—and is an achievable goal. Where much of the debate around building a more favorable business climate is dominated by concerns about a lack of tax incentives and the desire to ease the process of complying with government regulations (and while there are specific tax or regulatory changes that particular businesses and sectors might prefer, or grants that would rival those offered by other states), these are unlikely to find a state-wide consensus or will fail to meet the actual regulatory needs and evolving environmental challenges faced by a growing state of nearly forty million people.

Instead, let’s aim to make California globally competitive based on the power of its human capital. While urging the board of governors to support this strategic plan, we encourage policy and business leaders from around the state to identify sustainable workforce development funding streams so that CTE curriculum provisions become a more permanent fixture of the higher education conversation.

  • Let’s set up regional conversations between business and policy leaders to coordinate effectively around local workforce needs while developing the fundamental components necessary that can enhance a region’s workforce.
  • Let’s invest in the relevance of California’s high skill job training so that it meets business needs and continues to support an innovation-based economy.
  • Long term, let’s develop a sustainable pool of highly-skilled workers, and strengthen the recent entrepreneurial growth around innovation, which can act as a beacon attracting the best and the brightest from around the globe.

This investment in career and technical education moves the state in the right direction and reaffirms the historical pathway to prosperity that led many of us to the golden state in pursuit of the California dream. If California aspires to remain a global economic leader, we must begin to think about economic competition in larger global terms, rather than as a struggle with other states, such as Texas, for low-wage and low-skill job growth. Collectively, we must focus on, invest in and market the strength of California’s human capital. The new “Doing What Matters” plan sets the state on a course of cultivating the necessary political and business climate that prioritizes attracting, growing and retaining high skilled workforce talent from around the globe.