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Senate Labor, Public Employment and Retirement Committee California State Senate
Follow its sittingsSpeaker 2
If we can go to the first slide. Do I control that? Oh, thank you. California's labor market is still large and dynamic, but job growth has slowed considerably compared with strong recovery we saw after the pandemic. This chart here shows changes in employment month to month, and the data show that employment growth has been virtually nonexistent since January 2023.
So if you were to fit a line of average growth, you'd be right at the zero line there since 2023. This raises concerns that national and global economic developments could further weaken an already fragile labor market. For workers who remain employed, paychecks have not kept up with rising prices. This is true at both the national and the state level. At the national level, in this chart, we can see that the rate of inflation, the dashed line, has been clearly above the growth rate in earnings for private sector employees, the solid blue line, for most of the post pandemic period.
Similarly, in California oh, I went oh, we look at California, real weekly earnings for private sector employees also rose in 2021 early in the pandemic recovery, but then fell sharply in 2022 as inflation surged. While real weekly earnings recovered a little bit in 2024, that growth was very modest. Growth is not just important, but the distribution of those gains matters as well. About 35% of California workers, roughly 5,600,000 people, earn low wages, defined as workers getting paid less than twothree of the area median full time wage. That number would be $20.83 in 2024.
So that means that more than one out of every three workers in the state struggles with earnings that fall far below what is needed to afford basic living costs in California. Low wage workers are not only paid less than the median worker, they are also more likely to face unstable work schedules, limited benefits, and fewer workplace protections. Many work in sectors where hours fluctuate and access to employer provided health insurance, retirement plans, or paid leave is limited. All these conditions make it much harder for these workers to weather the next economic downturn and adequately support their families. California's affordability crisis magnifies these issues, especially for the most vulnerable workers.
Housing costs, in particular, place enormous pressure on working families. Even workers earning average wages often struggle to afford typical rent in many parts of the state. When we look at housing data, we see that full time workers earning typical rent or wages cannot afford average rents in many areas. In this chart here, you can see that the market rate for one bedroom is about it's over $2,000 So, a worker who's making 30% of the median income can only afford $928 in rent a month. So they cannot afford the market rent in many places.
At the same time, child care and long term care costs consume large shares of family budgets, making it harder for workers, especially parents, to stay attached to the labor force. In this chart here, you can see that, on average, about one fifth of the household budget goes to child care costs. And if you're a single parent, especially a single mother, you're looking at almost two thirds of your budget going to child care costs. Proposed federal policy changes will exacerbate these pressures. H.
R. One, which was passed, includes major reductions to programs such as Medi Cal, which millions of Californians rely on. These policies can also directly affect employment. Our estimates suggest that large federal cuts to medical funding could lead to significant job losses, not only in California's health care sector, but other industries as well, along with billions of dollars in local and state tax revenues. Similarly, H.
R. One will cut funding for the Supplemental Nutrition Assistance Program, which one in seven Californians rely on. Our research also shows that low wage workers rely on SNAP, called CalFresh, in the state at higher rates than other workers. These federal policies are targeting programs that support working families and help stabilize local economies at a time when we need more stabilization, not less. Finally, California's economy depends heavily on immigrant workers.
About one third of the state's workforce is immigrant, and immigrants contribute over $1,000,000,000,000 to the state's GDP. Increased federal immigration enforcement is disrupting key industries such as agriculture, construction, hospitality, and care work, creating labor shortages and adding to the economic instability of our state. Taken together, these trends point to a labor market where many workers, especially low wage workers, are facing increasing economic insecurity. Slowing job growth, rising costs, and federal policy changes will only deepen that insecurity. Thank you again for the opportunity to present, and I'm happy to answer any questions.
Speaker 1
Ms. Thank you so much for that thorough overview and and the outlook that we have for for working people. I do have a few questions. You you showed the in the first two charts just sort of what the overall outlook has been for, wages and the overall economy. I wonder how do these how do how do these tables look when we are moving into or approaching recessionary levels?
Are we are these are there indicators here that can show that this outlook, how it compares to the state when we sort of really hit the hardest economic times?
Speaker 2
Doctor. Yeah. So thank you for the question. Yeah. So I was focusing on the labor market side of the economy and showing weak job growth is one indicator.
You mentioned unemployment rate increasing. That's another indicator. You know, the economy is vast for California, being the fourth largest economy. And so it's really it's hard to predict when the next recession will come. But these are all indicators of uncertainty, which businesses don't like, uncertainty for consumers, and they cannot plan for their purchases.
So yes, I think if the market if the labor market keeps getting weaker and we start seeing inflation spike up, especially around some of the recent geopolitical events, we're seeing gas prices spike up. Yeah, taking together all these indicators could signal that the economy will turn into a recession. But it's recession is a technical term. It's hard to predict. But these are all important indicators that are worrisome when taken together.
Speaker 1
That's helpful to understand because it's as we are keeping an eye on these different indicators, whether it's the unemployment, whether it's the lowering of wages, suppressing of wages. It's something for us to watch. But one of the things we're also seeing, and there was a recent poll done by PPIC that was just talking about the ways that middle wage jobs, have just been flatlined. Like, they just have not moved at all. But we are seeing a really intensely sort of growing number of low wage jobs and very high wage earners.
And so I'm curious what does that what impact does that kind of trend have, and what's driving that? Where where we're seeing growing unemployment in some places, we're seeing no growth at all, and then we're seeing in low wage and very high incomes, you know? Right. Growth.
Speaker 2
Yeah. So thanks for the question. So in some sectors, like health care, I mentioned that these cuts to Medicare Medi Cal are coming. We have seen that, and heard from folks, that some employers are already reducing employment based on the expectation of decreased funding. So, you know, the recession doesn't need to happen for employers to react trying to anticipate one, and that means less employment less opportunities for workers.
So we're seeing some of that from the funding cuts in health care. We also see in the tech sector, especially in the Bay Area, lots of layoffs happening there. Part of that is from overstaffing during the pandemic, but we're seeing beyond that some of the layoffs. There's also the uncertainty from new technologies, right? So everybody's trying to figure out what AI is going to mean.
And like I said, a lot of employers try to anticipate and start making decisions based on those expectations. And then, as you mentioned, there's just a tremendous need for the work that occupations that are traditionally low wage occupations are still important and essential. They were considered essential during the pandemic. They're still essential today. And if you look at some of the forecast from the EDD, you see that most of the job openings expected in the next ten years are pretty much low wage occupations, which speaks to the need to improve the quality of those jobs, increase labor standards, better pay, make sure that folks can earn a living wage and take care of their families.
Speaker 1
Yeah. And I feel that's part of our calculus here at the state because when workers obviously don't have the wage and the income to allow ins to meet in terms of dealing with spiking gas prices, rent, health care costs, then our safety net has to really be durable and robust to be able to hold, the increases of numbers who who are going to rely on services. Unfortunately, now, at the same time, we have HR one that is, you know, just slicing through
Speaker 1
The safety net, particularly when it comes to health care and hurting families. And I'm curious, do in in the calculus as we're thinking about, well, what can the state do to prepare for that? What types of workers do we need to be watching in sectors we need to be watching? Which industries have the highest rates of employees who rely on social services? And, you know, what are the ways that we, particularly thinking about this committee, can really best support those workers?
Speaker 2
Yeah. So actually, health care has a lot of workers in health care who rely Medi Cal. And we also as I mentioned also, one out of seven Californians rely on CalFresh. And we know from our research that low wage workers rely on Cal Fresh at higher rates than other workers. So low wage industries, retail, leisure hospitality, Those have large numbers of workers who rely on these safety net programs.
And those are large industries for the state. And so, you know, in the Bay Area, we talked about the Super Bowl coming, and last year, and then the World Cup or this year, and the World Cup coming this summer. These are all industries that are going to rely on those low wage workers to make sure that those events that are supposed to drive economic growth can happen. And so these workers are relying on the safety net to make ends meet, and these are very important industries to the economic condition of the state.
Speaker 1
Well, really appreciate that sort of identifying core large and precarious sectors that we need to to keep an eye on, in terms of the safety net. I mean, at this same time, and we I sort of alluded to this in my opening statement, we see a lot of impact of tariffs, and we also see sort of the political football of do we have them? Do do we not? And, you know, most Californians, we're not thinking day to day what impacts those kinds of policies from the federal administration have on on our on our daily lives. When you and and we all use the term unprecedented, and I'm sort of thinking that's not the right term anymore, because these programs just seem to, have these ripple effects that we don't even, can can anticipate.
But what impacts does this have on our workforce when we have these kinds of economic policies, particularly as we are, you know, the largest part of Los Angeles and and Long Beach, one of the largest in the world. We have logistics all over the state, big part of our economy. How does that shifting and changing policy impact the day to day lives of workers?
Speaker 2
Yeah. Thank you for the question. Yeah. So in two ways. One is it creates uncertainty for employers.
And like I said, when employers see uncertainty, they tend to want to mitigate it. And usually, the first place that they want to mitigate uncertainty is by reducing labor costs. And that means either reducing the increases to wages or laying off workers. It also creates uncertainty for these workers in terms of consumers. So when you have policies like tariffs, which affect prices, but not it doesn't happen immediately because sometimes employers or firms eat some of those prices, sometimes they pass them on.
It makes it harder to budget. And as I mentioned, for low wage workers who are already stretched thin, not knowing what their budget is going to look like when there's a spike in gasoline prices from right now, they're in, you know, the war or from tariffs increasing food prices, it makes it really hard for them to budget. So it sort of hits them on both sides of their lives, as consumers and providers of their families, and then also as workers, not just providing for themselves, but also as part of the economic engine of the state.
Speaker 1
Well, I really appreciate the thoroughness of your presentation in indulging these questions. I'm sure as an economist, you've you've been in this business for quite a while. And like so many of us, we're just watching day to day as more policies roll out and seeing more impacts across our communities. Is there any closing parting words of sunshine, of hope, of that we can take from this to to help us? At least, you know, for me, preparation is hope, because if we aren't prepared, that's when we really face the toughest challenges.
Speaker 2
Yeah. So I'll try really hard not to be a dismal economist with dismal science. But so, you know, what gives me hope is that workers are engaged in California. We put out a report last year about the state of unions in California. And what our report showed is that unions in California have been very stable in terms of growth and membership over the last two decades.
And part of that is because workers are organizing. Theyre engaged, not just in terms of their contracts, but in terms of policy. So we see a lot of some of the policies that were passed recently. You know, labor organizations were a part of that. So what gives me hope is that workers in California are organizing and continue to push back as much as they can against some of these federal policies that are detrimental to the state.
Speaker 1
Well, I really, again, thank you again for your presentation. I absolutely agree. That is good news. And, one, because it means we have some standards in terms of safety and wages and protections for workers. But two, we also have a communication channel with factual information and tools and resources to help workers, and that's the other added benefit of unionization and having worker networks.
And so I absolutely agree with you and hold that hope with you. Again, thank you for your presentation, and we will be in touch on this issue as we continue forward this year.
Speaker 1
As Professor Lopez Lira leaves the the table, we will invite, for our next panel immigration federal immigration enforcement effects California's workers and labor market. And in this panel, we will have UC Merced community and labor center, and the Los Angeles County Economic Development Corporation, have a seat at the table. They will be discussing the impact of federal immigration enforcement on California's labor market. I wanna say welcome to professor Edward Orozco Flores, with UC Merced. And you are going first, so feel free to start when you're ready.
Speaker 4
Thank you. Thank you to the California Senate Committee on Labor, Public Employment, and Retirement for the opportunity to present testimony on behalf of the UC Merced Community and Labor Center. The current federal administration is attempting the largest mass deportation campaign in U. S. History with profound implications for California.
And as a member of the University of California system, we recognize the obligation to conduct research and education on issues that advance the public interest here in California and beyond. So today, I'll be sharing findings from the Center's recent report, the effects of federal immigration enforcement on private sector employment in six states and Washington, D. C. The center sorry. The center has been tracking monthly employment trends since the COVID-nineteen pandemic.
Last year, we published multiple research briefs that focus on California. Our February report communicates much of the same data, but with additional historical context. And in our report, we ask one simple question: During escalations in federal immigration enforcement, how does private sector employment change? The report utilized Current Population Survey data from January 1983 to 2026. The CPS Basic Monthly is a month is a representative survey with responses from 40,000 American households per month.
It is the largest survey of its kind that provides insight into current U. S. Work and employment. We analyzed private sector data private sector employment trends in those states targeted by the federal administration's major immigration enforcement operations Tennessee, California, Oregon, Washington, D. C, Illinois, Louisiana, and Minnesota.
In this presentation, we'll refer to these as the enforcement states and the rest of The U. S. As rest of The U. S. Table one reports how we coded periods of escalated immigration enforcement to measure employment trends before, during, and after periods of escalation.
We can see that California experienced roving patrols and workplace raids from June 6 to July 11, after which a federal judge placed a temporary restraining order on the roving patrols and racial profiling. This was in effect until September 8 when the Supreme Court placed a stay on the TRO. We examined private sector employment trends in targeted states, during the first year of the second, Trump administration, and we found that, private sector employment and enforcement states declined 1.8%, while the rest of The U. S. Experienced a 11.1% increase.
In California, the number of private sector jobs remained flat from January 2025 to January 2026. But when we look at May 2025, just before the roving patrols began, and January 2026, the most recent month we have data for, the state experienced a 2.6% decline in private sector employment from 15,200,000 to 14,800,000 jobs. What we term enforcement states experienced an overall downturn of over half a million private sector workers between January 25 and January 26 versus the rest of The U. S. Gaining over 1,100,000 workers.
When we looked closely at monthly changes, we found that job declines were associated with periods of escalated enforcement but not before or after. Enforcement states experienced private sector worker gains before escalations, declines during escalation periods, and partial rebounds following escalation periods. And this trend held for California. Table 3.2 demonstrates monthly trends in enforcement states in the rest of The U. S, and the periods of escalation are bolded.
When we look closely at monthly trends in California, we can see that California experienced a decline in June and July after immigration enforcement escalations but before the TRO took effect. When the TRO took effect, between the CPS reference weeks in July and August, California's private sector employment rebounded, not completely, but mostly. Then in September, after the Supreme Court placed a stay on the TRO, enabling the roving patrols and racial profiling to continue, employment declined again by 1.9%. In contrast, the rest of The U. S.
Experienced slight private sector job gains between 0.10.5% during California's periods of enforcement escalations and declines. Figure 3.3 visually represents the multiple declines California experienced in private sector jobs compared with the rest of The US during the escalation periods. So this is a big question. How common were California's private sector job declines during its periods immigration escalation periods? Going back and examining forty three years of data, the furthest back we can go with this type of data we're examining, we found that California's May decline in 2025, which was 4.9%, was unprecedented.
In fact, it was over one and a half times that of the next highest year. When we look at California's August 2025 jobs declines of 1.9%. This also far surpassed the previous worst years on record. Okay. So, policy.
What should we be think thinking through? During historic periods of economic downturn, policymakers have mitigated economic crisis with stimulus bills. We saw this with the Great Recession and, the COVID pandemic. And if I can reference the previous conversation with the previous panelist, you know, the question was, what industry should we be keeping an eye on? You know, what what is this telling us?
And California's budget depends in large part on capital gains because it has a progressive tax structure. The wealthiest people earn from invest investments in stocks rather than working. And so we can have like, during the pandemic, we can have the stock market growing a large budget with without workers seeing that benefit in employment. And, you know, one of the things we should be mindful of is with public monies, what is in the public's interest? And so the jobs that, so many immigrants, concentrate in, that are being affected by the downturn, agriculture, construction, these outdoor jobs that have been have a history of being racialized, but also to where people fear being outside if roving patrols are happening.
Right? In construction, we have models of how we attach labor standards to public monies, to awards, right, to contracts. In agriculture, California hasn't done that yet. The USDA did it with the Farm Labor Stabilization Protection Pilot Program, which our work informed the development of. And so they gave $50,000,000 of public subsidies to growers that showed they were raising their labor standards.
But California has not yet devised something like that. So something to think about in terms of policies. But I'll be talking right now specifically about with regards to this presentation. There are two general approaches to infusing cash into economy during a downturn. One is to say, let's subsidize businesses, let's help businesses, and there will be a trickle down effect.
Another is to think about the workers that are impacted in wage replacement programs because workers who need money, who need meet need to make ends meet, they will immediately spend the money, buy household essentials, and that has a multiplier effect. It goes through the economy. So it has the effect of of benefiting the the broader economy. And so the the state is confronting an economic uncertainty right now, along with humanitarian concerns. And so what we knew before the crisis is that the majority of children living in noncitizen households, more than six in 10 children living in noncitizen households, already subsist on less than a living wage, the amount needed to avoid chronic and severe housing and food insecurity.
And this crisis has only worsened that situation. But yet, not all workers are eligible for unemployment benefits. Undocumented workers are prohibited from accessing federally funded benefits, such as unemployment insurance. In the past, some states have created solutions to stimulate the economies of those communities where undocumented households have been impacted by economic disruptions. So New York created the a temporary fund during the COVID pandemic, the Excluded Worker Fund.
And two years ago, California established a permanent wage replacement system for excluded workers called the Benefit Recovery Fund. So the last thing I'll say is California could also consider creating a wage replacement system for excluded workers. Doing so could help mitigate the economic and humanitarian crises associated with the federal administration's escalated immigration escalated immigration enforcement actions. Thank you.
Speaker 1
Thank you very much, mister, Flores. Thank you. And our next panelist, is Shannon, Sedwick. She is vice president of research for the LA County Economic Development Corporation. Ms.
Sedgwick, you can proceed when you're ready.
Speaker 5
Good morning, Chair Smallwood. Can you hear me? Okay. Good morning, Chair Smallwood Cuevas and members of the committee. Thank you for the opportunity to speak today.
My name is Shannon Sedgwick. I serve as Vice President of Research at the Institute for Applied Economics at the Los Angeles County Economic Development Corporation, or LAEDC. Today, I'll briefly summarize the findings from our recent analysis examining economic impacts of intensified federal immigration enforcement activity in Los Angeles County during 2025. Our research was commissioned by the Los Angeles County Department of Economic Opportunity at the direction of the county board of supervisors. And the goal of the analysis was really to quantify how enforcement activity, may affect the regional economy.
So it's labor markets, businesses, and economic activity across communities. Los Angeles County provides a useful case study because it contains one of the largest and most diverse labor markets in The US with a substantial immigrant and specifically undocumented workforce participating across many of our key industries. To begin, it's important to to understand the scale of immigrant participation in our county economy. Los Angeles County is home to approximately 3,500,000 immigrants, representing about 35% of our population. Within the labor market, the USC Equity Research Institute, which we collaborated with, estimates that nearly 950,000 undocumented workers participate across a wide range of industries.
LAEDC's economic modeling finds that these undocumented workers generate approximately 253,900,000,000.0 in annual economic activity, including indirect and induced effects. That's representing roughly 17% of countywide economic activity. This activity supports over a million jobs, including both direct employment and broader supply chain effects, and contributes about 80,000,000,000 in labor income. So these figures illustrate that undocumented workers are deeply integrated into the regional economy, they contribute significantly to economic activity across our various sectors. Turning now to enforcement activity.
Federal immigration enforcement in Los Angeles County intensified, in the first you know, in especially in June 2025. So using federal enforcement datasets, estimate that over a 3,100 ICE arrests occurred just through July, representing a 143 increase year over year. The data also indicates that enforcement activity expanded beyond cases involving individuals with criminal histories and increasingly occurred in community settings, such as workplaces and residential areas, and this was the impetus for the commissioning of this study. Our analysis also examined where economic impacts are most likely to occur geographically. So to do this, we developed the LAEDC Immigration Enforcement Vulnerability Index or the LAEDC IEVI.
It combines multiple demographic and labor market indicators into a single score for each ZIP code across Los Angeles County. So this map shown here highlights areas where economic activity may be particularly sensitive to enforcement disruptions. Communities with higher vulnerability scores included Mission Hills Panorama City, Bell, Pico Rivera, Southeast Los Angeles, and neighborhoods surrounding Downtown Los Angeles. So these communities tend to have higher concentrations of immigrant workers and industries that depend heavily on in person labor. So, across these areas, the industries most exposed include retail trade, construction, manufacturing, and accommodation and food services.
A key finding of our research is that the economic effects of immigration enforcement extend beyond the individuals directly targeted. So our analysis indicates that enforcement activity can reduce labor supply in sectors that rely heavily on immigrant workers. These disruptions can then translate into business impacts, workforce instability, and changes in consumer behavior. We also find that these effects reach beyond undocumented individuals themselves. So more than 2,000,000 residents of Los Angeles County lived in mixed status households, meaning that they're either undocumented or live with a family member who is undocumented.
So because of this changes in mobility, employment participation, or consumer spending can ripple through our communities and and local economies. Another important dimension of our analysis is industry dependence on undocumented, labor. So certain industries rely on this workforce at significantly higher levels. For example, undocumented workers account for approximately 31%, of the workforce in agriculture and nearly 29% in construction. They also represent significant shares of employment in manufacturing, wholesale trade, and retail trade.
When we look at the distribution of undocumented workers across industries, the largest concentration occur in retail trade, construction, personal services, and manufacturing. So together these sectors account for a large share of employment opportunities in the regional economy and are particularly sensitive to workforce disruptions. So to better understand business impacts, we conducted a survey of businesses across Los Angeles County and supplemented it with interviews and community engagement sessions. The results indicate that many businesses reported operational disruptions during the enforcement period. And among respondents, 82 reported being negatively affected, 52% reported reduced daily sales, 51% reported decreased customer traffic, and 67% reported workforce disruptions.
Nearly half of respondents indicated that they were very concerned about the long term viability of their business. In interviews with small business owners and community organizations, a recurring theme emerged, changes in consumer behavior. Many businesses reported customers staying home, avoiding certain areas, or reducing spending due to concerns about enforcement activity. Our research also examined broader economic indicators that can reflect changes in community activity. One example is public transit ridership.
We analyzed ridership patterns on metro bus routes and found that lines serving high vulnerability communities experienced an average decline of about 17,000 monthly riders during the peak enforcement period. We also examined trends in international passenger traffic at Los Angeles International Airport. Year over year passenger changes in 2025 were mostly negative, suggesting reduced international travel compared with the previous year. Global perceptions matter. While multiple factors influence travel patterns, these indicators illustrate how economic activity and mobility patterns can shift during periods of heightened enforcement.
Our analysis also included a focused case study examining the economic effects of a temporary disruption. Following protests in June 2025, the city of LA imposed a one weeknightly curfew in Downtown Los Angeles. So using economic impact modeling, we estimate that the curfew produced approximately, 840,000,000 in lost economic output and impacted, 3,900 jobs over the course of a year. That's associated with about 312,000,000 in lost labor income. Under scenarios where disruptions persist longer, losses could reach up to, 2,500,000,000.0 in economic output affecting nearly 12, thousand jobs.
So although the curfew lasted only one week, it affected one of the most commercially commercial commercially active areas of the region and demonstrates how these localized disruptions can translate into measurable economic losses. So to conclude, analysis really highlights several key findings. First, undocumented workers represent a core component of the Los Angeles County labor market, and they contribute significantly to our overall economic activity. Second, business disruptions have been widespread, particularly among small businesses and service oriented industries. Third, workforce instability is emerging in sectors that depend heavily on immigrant labor.
Fourth, consumer behavior shifts and mobility changes appear to be amplifying economic impacts. And finally, the data shows that economic effects extend beyond the individuals directly targeted by enforcement. They're affecting businesses, workers, and communities across the regional economy. So thank you for your time, and I appreciate the opportunity to share these findings with
Speaker 1
the committee. Thank you very much, Ms. Sepp, for that overview, and, appreciate both of your presentations. I see my good colleague, senator Cortesi, has arrived. I will we'll start with questions.
I don't know, senator, if you have comments or questions you wanna make, and then I have some that I'll raise later. Okay. Thank you. So We hear and we saw, we witnessed, we bear witness to to the immigration enforcement and saw the havoc that it wreaked on the lives of those individuals who were confronted with such brutality and lawlessness. But what you have presented is what we didn't see, which is the ongoing, repercussions of those actions on our economy and particularly, on our force and on our small businesses.
And I really wanna thank you for bringing what was in the dark into the light and giving us a sense of the scale. Professor Flores, I I wanna start with you on some of my my questions because we know, in LA is my county, and Los Angeles, is my city. I represent South Los Angeles and Culver City, and we had enforcement actions across the region, but particularly in our in our downtown areas in our South Southeast Side. But our mayor was very clear when the first troop the first set of troops hit the ground that LA was the first point of contact of federal action that this would be happening. They were testing this model out on us, and they would be taking it across the country.
I'm curious, your data and and what you saw happen here in California, what did it look like in places like Illinois and Minnesota? Was this the surge in enforcement? Did those communities experience some of the same, impacts in terms of just the overall unemployment levels, the surge? What I'm as you were speaking, was thinking yo yo, the yo yo effect of having a workforce one day and disappear the next, and then having to find that workforce to put it back you know, and folks coming forward and getting their lives together and trying to go back to the normalcy of work. What did that look like?
Speaker 4
Well, the the downturn in private sector work, the number of people having reported working in the private sector during the CPS's reference week, it wasn't the highest in California. But in terms of looking at the past forty three years, the year to year comparisons were unprecedented for both of California's downturns when the raids immediately happened and then when the Supreme Court placed the stay on the TRO. So I think that's what jumped out in the data. In Oregon as well, you know, the downturn was unprecedented. In the other places, in some cases, like Washington DC had a greater month to month downturn when the executive order went into effect when Trump federalized the the police.
But looking at the historical record, you know, it was unusual but not unprecedented. But but with California and Oregon, what we observed was unprecedented.
Speaker 1
One, because we have such a sizable workforce, and two, we have such a diverse economy base that so many different sectors were impacted at the same time. So I could totally, understand, that the the the the distinction, but also how we experience the brunt and the hardest part of of that enforcement action. You know, I you you touched on this point about, you know, obviously, the unemployment, but also the loss in local tax revenue. And I'm curious, what is the projected net net loss in our state and local tax revenue, particularly when we think about sales tax, and we talked about what what immigrants spend in in our communities in terms of income tax, particularly for cities where we have a higher population of of of targeted workers. And in 2025, we saw these trends of of mass voluntary and involuntary departures as well, and I wonder if there's any data that also sort of hints or points to what that also has in terms of the overall tax revenue loss as a result of these
Speaker 4
Yeah. Unfortunately, we don't have any data projecting, you know, expect to be the tax revenue loss. Mhmm. But but as I had mentioned, California has a progressive tax structure. And so we can see economic growth.
We can have a budget that grows at the same time that workers are not seeing their share of of that of of the growing economy. And so as a comparison point, when, you know, the downturns that we saw in California's economy just in that first month in June matched what we saw in the first year of the Great Recession, and only it was only surpassed by the second month of the COVID pandemic. And in both of those cases, during the Great Recession and during the COVID pandemic, lawmakers knew they had a a crisis on their hands and worked to develop stimulus packages. And so we think that's the next logical step is for the state to begin thinking about what does it look like to have to create some kind of stimulus plan. We know that DHS has gotten record funding that what they did back in June, they're only intending to scale it up.
And that it's a matter of time before it happens again, and we don't know when that will be. So for that for those reasons, you know, those are the considerations we think through. We we don't have a crystal ball, but we know the the dynamics that are at play and and what we should begin considering.
Speaker 1
And because of your work, we know the impact and where we may need to shore up, tighten up, and figure out ways to reinforce, with with services and programs and resources that protect workers. Thank you so much, mister Flores, for for the for the presentation. Miss Sedgwick, I I had a few questions for you. And the thing that I was thinking about, and I know I have some prepared questions, but I was thinking about the small the micro business, the small businesses that rely on this population of workers, who who spend almost a 100% of everything that they earn and who, have proximity, meaning they shop local, they support, merchants that, they can do business with, whether it's language, whether it's bringing goods that, you know, are familiar to them in in their community. Can you talk a little bit about the impact on the small businesses and those kind of micro businesses that were in and around that incredible grid that you showed in terms of where these actions took place?
Speaker 5
So we actually partnered with, Leaf. They're out of, Cal State LA. They have established relationships with a lot of these, small and micro businesses that, are either owned by immigrants or catered to the customer base that is comprised mostly of immigrants. And it was intentionally done to leverage that sense of trust that they have already built by engaging with these companies to understand and and get a little bit more clarity, about how the enforcement, increased enforcement was really impacting them. So they, interviewed close to 200 businesses.
And when I just recently spoke with them, I think it was about 15 of them have already closed their doors since our engagement with them in August. So it it does have real impacts. And there are certain parts of Los Angeles that activity has significantly declined in terms of customer activity. So if think about the economy in terms of GDP, right, that's about 60% of our GDP is based on consumption, right? So when you're thinking about changes in consumer behavior, changes in investment in businesses looking to potentially expand, all of the instability that's happening is influencing those behaviors, and they're going to have a direct effect on our economy because of it.
In each individual business is experiencing, the effects in in different ways, whether it be from their workers who are afraid of coming in, or, as I said, from from the, customer traffic. But I I do wanna highlight, too, that it's not just the undocumented that are feeling unsettled and that are reducing their activity. It's immigrants in general.
Speaker 1
Ms. And you captured some of this impact in your report in finding that the 44% of affected businesses reported revenue losses exceeding 50% during the raids. And I was curious about sort of thinking where where this impact hit the hardest. And so can you explain the factors that contributed to the losses and which factor was the most impactful? Because the enforcement action has so many elements to it, both for just the, presence and then the actual removal of individuals and then the returning of individuals and then the the curfews.
So is there a sense of where you saw of all of of all of the sort of sequence of these actions? What had the most impact on businesses, would you say, on the losses?
Speaker 5
I think the longer lasting effects are what affect businesses more. You had when you're thinking about the curfew, it was a week long. Because of the curfew really hitting during the hours of operation that were busiest for a lot of these companies that were there, restaurants, bars, that type. When you close an area down at night, that's where they have the largest amount of revenue associated with sales. But it was a one time impact, they're able to come back.
But when you have this climate of fear that has a longer term influence on activities, then that's what's gonna impact businesses because it's that, compounding, that cumulative, like, effect of decreased activity that's gonna impact their bottom lines and affect their solvency.
Speaker 1
And I know we did a lot of work in the state to sort of think about, small business and to ensure that the programs that we had to support those businesses that we did all that we could to to maintain those. But have businesses been able to recoup much of these losses, especially when you look at the the impact of just that one week? And and how long did it take? Is it still have is recovery still happening, or was there sort of a period or a timetable for recovery?
Speaker 5
Sure. We created multiple scenarios because we understand that activity doesn't just bounce back So we came up with multiple scenarios, which is how we came up with the immediate short term impacts versus long term. We looked at foot traffic data to understand who's frequenting these places, and the decreased activity, and that guided our scenarios. And, you could see that even though that curfew was lifted, you still had depressed levels of activity. And those, you know, would last until the end of the year, we we estimated.
So there's not a complete rebounding as long as that sense of uncertainty and instability is still there. So even now you have just the decreased activity in these areas that have higher concentrations of immigrant populations. And and even, you know, Los Angeles County really went through it in 2025 with its exposure with the wildfires, our exposure to the uncertainty and stability of tariffs, and then immigration, increased immigration enforcement. And so because construction is one of those industries where there's a large share of of immigrant labor, there's a lot of speculation on the negative effects that's gonna have in terms of our ability to rebuild post wildfires as well. And so you have anecdotally, you have stories that are out about how ice is moving through these burn areas, and basically your workforce dries up and disappears.
So we're we're still feeling it as long as there's that climate of fears and uncertainty surrounding what's happening at the federal level.
Speaker 1
Yeah. And I think that's as we we we don't know when these resume, when we as we look at what it will take to recover, that process is also unprecedented. And the reality is that cities and counties, you know, should they choose to participate in increased detention, which, you know, we'll we'll see how long term this will be. And we know that these are nonreimbursed costs that are be associated with managing higher detention numbers as well, particularly if using private contractors. Is there is there a sense that is is there a sense that the the long term effects of cities and counties engaging in the in these detention programs?
And I don't know, you know, as we think about, those impacts, you know, is there is there a sense that the business community is preparing long term for what will be the ways to educate businesses, to provide technical assistance to businesses who are maybe dealing with this yo yo effect longer term? Just how how does the business community prepare for that and prepare its workforce?
Speaker 5
I think, you know, you had asked previously what, you know, what we saw moving forward or what's kind of the ray of hope, right, of the whole situation. And I'd have to say that, the reaction of our our local governments and the business community and our residents just in general, to to what has taken place is is pretty inspiring. So, you know, the work that we have done, our analysis, in partnership with with DEO, you know, to the development of the LA Region Small Business Resiliency Fund. And that was to help businesses who are going through some of the disruption related enforcement, to help weather some of the expenses associated with that. You know, we part of our our study, we created in collaboration with the EO a resource guide for businesses and, individuals.
So if something did take place, they knew where to go for resources. There's a business toolkit that was developed to help businesses again prepare or know how to react to certain situations that they can encounter. Were Know Your Rights recorded webinars that people accessed. So there's there's really you know, there was a a huge showing of, individuals that took to protest what was happening. And so there was grassroots act actions and local jurisdictional actions that took place through the county and some cities that I think are inspiring to help really kind of bolster and support and mitigate some of the negative effects that are associated.
I want to thank you, Ms.
Speaker 1
Sedwick, and thank you, Professor Flores, for, this informative discussion today. We know our work will continue as we figure out how to support workers and businesses through this very difficult time. Next, we will prepare for our third panel, because as we have heard the data and what is happening in the overall economy, what is how it this is impacting federal actions are impacting our businesses and impacting, our overall workforce. It's important that we have an employee response. And so our third panel, I would like to invite some of our worker representatives and organizations to step forward to the table.
From this panel, we will hear employee representatives who will share their firsthand experiences. First, we have Flor Melendrez who is gonna be joining us remotely. She is the executive director of the Clean Car Wash Workers Center. Our our panelists let's see. We have the California Nurses Association, and, UAW, and as well as our American Federation of Government Employees.
You all can just have a seat at the table. We are gonna start with our remote panelists first. Miss Flor Melendrez, can you hear us? And we see you. Great.
Please begin when you're ready.
Speaker 3
Yes. Hi, everyone. My name is, Flor Melendrez. I serve as the executive director of the Clean Car Wash Workers Center, and I wanna share my screen for my presentation. So please let me know if you can see this.
Speaker 1
Yep. We can see it. I don't think it's in slot. Oh, there it goes. Perfect.
Speaker 3
There. That's better. Okay. So I wanna talk a little bit more about, you know, the the car wash industry trends and what we have seen in the reports that we just heard just a few minutes ago really relate to what we have seen in the ground, and I wanna make a little bit of a focus in the car wash industry. And before I jump into that, I just wanna share a little bit about who we are.
CLEAN is the country's first car wash worker center transforming the lives of thousands of car washers in one of Los Angeles' most exploitive industries, hand car washes. Throughout direct organizing at Clean, car washers lead outreach and advocacy efforts around job safety, workplace hazards, wage and hour loss, environmental protection, and community health initiatives. Clean unites car washers to a growing and innovative worker center movement who aims to improve the quality of life for all working people. I wanna talk a little bit about the the key facts about the industry. And some of those key facts are, as we heard in some of the reports, right, employers are typically immigrants.
There are approximately about 2,500 car washes in California. Most of them are considered small businesses, sing single owners. The workforce is largely monolingual to Spanish immigrants and indigenous. I wanna talk a little bit more about addressing the current crisis. Since June 6, over a 109 car washes have been targeted by federal agents.
Clean has been able to identify at least 372 car wash workers that have been kidnapped from their workplace during these raids. We have done a lot of outreach to employers since to provide them with information about their constitutional rights. We have done worker outreach. We have connected with over a 500 car wash workers. We were able to connect with over 450 workers to provide them with resources or connect them with resources.
And we, since then and until now, continue to provide rapid response. We have been able and, obviously, we cannot do this alone. So we have been able to activate over a 100 volunteers to adopt a car wash and help deliver either groceries or to directly to workers' homes or provide on the ground support for workers and employers. Out of those 372 car wash workers that have been kidnapped at their workplace with many struggles and a lot of community support, we have been able to successfully bring back 35 workers back home to their families after fighting their deportations. This image that you see here are some of those workers who behind those spaces comes a horrible experience when their car wash was raided.
There are many different car kinds of car washes, and we have seen a focus on the raids in hand car washes, tunnel car washes, and mobile car washes. We understand that there is a hierarchy of the car wash, but the workers most affected are usually workers who are considered front of a house, like the dryers, the workers who are the, drying and and and giving back the the vehicles, you know, who are more most exposed. As we all know, the car wash industry is created to be able to walk in and walk out, drive in, drive out. And I think that has been one of the major focus, for these rates when rates take anywhere between five and seven minutes. When agents are approaching, the car washes, covering all entrances and exits, and taking anyone that they can find, usually being those front of the house workers.
There's many violations to the industry. I won't focus a lot of time on that, but just know that it's an industry that, you know, has been considered tips only industry that have daily rates, sometimes going from anywhere be be around 75 to $100 a day involving that nine to ten hour workday, having a peace raid, not having rest breaks or meal breaks, having retaliation, unlawful deductions, many health and safety exposures, and suffering from harassment and discrimination. We have focused our efforts since the initial of the Clean Car Wash Workers Center on helping workers collect stolen wages, and we do that through education and outreach efforts, ensuring that car washes continue to register, that they have a surety bond, and that workers are able to collect from the restitution fund. But the immigrate the impacts of immigration rates on the industry have been large. Many car washes have shut down.
I had just a few named here to share in the last since June till now. There's been a lot of automation of car washes, and there's been definitely a change in in the demographics. Due to the ongoing raids, many workers have been pushed out of the industry because they don't feel safe at their workplace, many of them not being able to go back. They have managed to go mobile to try to continue make ends meet, but also many employers don't have the same workforce that they used to rely on before. So they are now targeting a younger workforce.
We've seen that last summer. With a younger workforce, we know that they're more most likely to continue to be heavily exploited. And I think this is, given all the changes in the car wash industry, the Clean Car Wash Worker Center will continue to play a key role to connect car wash workers to resources, provide them updated and trusted information, and to continue to be a driving force for echoing the voices of the car wash workers. We understand that the industry requires training and know not only know your rights, but on the job hands on training to connect to knowing more about the rights in the industry. This is why we urge the legislative legislature to do everything in its power to protect Californians from the federal administration's discriminatory and violent attacks and to support the families who have been harmed.
Several bills have been introduced this year to do just that. And I like to note a particular bill, a b twenty two seventy one by assembly member Robert Garcia, which would provide financial benefits directly to families whose who have lost income as a result of the DHS activity. This will be vital for car wash workers and many others fighting to keep food on the table because of federal administration and the devastating attacks. I heard the reports, and I hear the many industries that are under attack, but I come to talk about how the car wash industry continues to be one of those industries that it's been the main target for the last few months and that continues to be heavily affected with the ongoing effects of living in fear. Thank you.
Speaker 1
Thank you very much, miss Melendrez. Next, we will hear from our panelist, Gutierrez Vogue, President of the California Nurses Nurses Association. You may proceed. Michele Michele Gutierrez
Speaker 7
you. Good morning. Thank you for having me in the nurses' voice today. My name is Michelle Gutierrez Gutierrez Vogue. I am a Vice registered nurse of twenty nine years and president of the California Nurses Association.
Can you guys hear me? Thank you. We represent over 100,000 RN members across the state. As nurses, our duty is not just to care for our patients, but to protect and advocate for them during their toughest times. And as you just heard from the previous witnesses, times are extremely tough and about to get a lot tougher.
In health care, one of the biggest threats comes from the budget reconciliation bill that Congress and Trump recently passed. HR one is a cruel piece of legislation that will have disastrous consequences for health care workers and our patients. Current projections show that the bill's $1,000,000,000,000 in cuts to Medi Cal and covered California subsidies will result in up to 3,400,000 Californians losing access to medical care. Also, the Trump administration can fund ICE and give trillion dollar tax cuts to their billionaire buddies. The consequences of these cuts will be dire.
More than 400 nonprofit and community hospitals nationwide, including 53 here in California, are at risk of service cuts, and eventually, potential closure if swift action isn't taken by the legislature. Hospital closures and service cuts devastate communities, and we see that front line and center as nurses. Hospitals are often major employers providing meaningful, stable employment with opportunities for career advancement, particularly in rural areas of our state. Allowing these hospitals to close or reduce services would mean a devastating loss of employment and care, endangering the well-being of workers and patients across the state, and overburdening remaining health care facilities. The patients do not go away.
They just have to drive further. And most of the time, these closures are deadly. They are deadly across lifespans. This downward spiral will result in deteriorating working conditions for nurses across the state. As I mentioned, nurses I mean, the patients don't go.
They just have to go somewhere else. We'll see more hospitals with unsafe staffing levels, with sicker patients entering emergency room doors. Hospital employers will demand that nurses do more with fewer resources and in unsafer conditions. These federal cuts are being felt already across the state. Today, we are already seeing health care facilities announce plans to cut services or lay off staff.
Nurses are fighting back against Watsonville Community Hospital's plans to close its intensive care unit and against Contra Costa Health's imminent budget cuts that would eliminate 46 public health nursing positions and other vital patient care services. Federal health care cuts come in combination with other federal attacks on the nursing profession. Just last month, Trump advanced a proposal to exclude graduate nursing students from federal professional loans. This would make it harder for nurses who are pursuing graduate degrees to become nurse practitioners or other positions requiring an advanced degree, which threatens the supply of essential rural health care providers and nursing school faculty. With increased federal immigration enforcement funding, ICE agents are entering hospitals to kidnap our patients, bringing fear and violence to places of healing.
ICE's presence in hospitals endangers our patients, inhibits our ability to do our jobs, and puts everyone at increased risk of workplace violence and injury. And I know everyone has seen how these situations are so highly emotionally charged. And that is what we are at risk of in our patients every day, every single day with ICE's presence in the communities. And nurses are facing an all out attack from this administration on our science based practice, including on vaccines, which are an essential part of our collective defense against deadly infectious diseases. Nurses are on the front lines of every pandemic, and Trump's attacks threaten our our very lives.
And it is absurd that this is happening just when we are just now getting over the COVID pandemic. These threats can feel overwhelming. I know many of us lay awake at night wondering what will happen to our patients, our coworkers, our neighbors. We saw many of our coworkers die when all they wanted to do was wake up, give the best care to the patients that we have. And a lot of us didn't make it through that pandemic and our coworkers.
But I also know that is exactly what they want for us to feel so overwhelmed that we are frozen into inaction. But nurses refuse that option. Nurses are working to pass CalCare AB 1,900 to establish a single payer health care system that would guarantee comprehensive health care to all Californians. CalCare would finally take health care off the bargaining table for union workers and untie our ability to get health care coverage from our jobs. Nurses are also supporting placing a temporary moratorium on hospital closures and renewing the distressed hospital loan fund for facilities that are truly in financial need.
This would stabilize hospital finances so we do not lose the critical health care infrastructure and jobs that sustain our communities. Now is the moment for California to lead the way. Nurses are also advocating to support the health care workforce that cares for our most vulnerable rural and underserved communities with legislation to support new graduate nurses and increase Song Brown funding for nursing programs. As with any emergency in our hospitals and clinics, nurses are jumping into action, ready to help our patients and save lives. But returning to the status quo before the federal cuts is not enough.
California must have a vision of a better world where nurses can provide our patients with the care they need in safe and healthy working conditions and in good union jobs. I'd like to highlight a few areas which have significant detrimental impacts to nurses in our communities. As I've said, now more than ever is the time for CalCare. In the last year, Trump and Republicans in Congress have gutted lifesaving health care programs like Medicaid and the ACA. Millions of people in California risk losing their health care coverage if no action is taken.
California leaders can fight back against Trump's health care attacks by passing CalCare. From prop 50 to Zoran Mamdani, voters across the country have made it clear they strongly support a bold response to the right wing billionaire agenda and a transformative vision for this country. Voters support CalCare. A January 2026 poll commissioned by the California Nurses Association found that 58% of likely twenty twenty six voters, including 86% of Democratic voters, support a proposal for a state single payer health care system, with 64% of all voters saying that our health care system needs major reform. What CalCare would do?
AB 1,900 would enact a single payer health care program, which is CalCare, for all residents in the state of California. It would include medical, dental, hearing, vision, mental health, reproductive, and long term care. Every person living in California would be included, regardless of income level, immigration status, prior health conditions, or ability to pay. Undocumented Californian residents would be included. CalCare would be care guaranteed free at the point of service.
Nearly all individuals, families and businesses would save money with no co pays, no deductibles and no premiums. CalCare saves money. Under CalCare, California would spend less money on health care every year than we do under our current system while providing comprehensive care to all Californians. In its April 2022 final report, the Healthy California for All Commission found that under a single payer model with no cost sharing and long term care for all, California would save between $32,000,000,000 to $213,000,000,000 over ten years compared to our current system. And I do just want to note, I've been a nurse for twenty nine years in a private sector organization.
And I have witnessed the evolution of health care in this country because I work in adult family medicine, which is a primary care department. And I can tell you, more and more, my patients, our patients in the communities work two to three jobs to pay for health care coverage, health insurance that they have no intentions of using until they are dying because the deductibles are so high. What kind of life is that? That is not sustainable. In regards to hospital closures moratorium, California has experienced decades of rising hospital closures and service reductions with maternity care, behavioral health, and other essential supplemental services especially vulnerable.
These trends disproportionately harm rural areas and low income communities with already limited options for care. Hospitals commonly cite financial losses, inadequate reimbursement, and rising operational costs as reasons for reducing services or closing facilities.
Speaker 1
Ms. Gutierrez, though, I just want to let you know you've gone past your five minutes. So if you want to start to wrap up, we'd appreciate that.
Speaker 7
Yes, ma'am. More importantly, hospitals have warned that anticipated federal cuts under HR1 will trigger further reductions and closures. Nurses advocate for strengthened oversight of hospital closures and service reductions and a temporary moratorium on hospital closures and service reductions. On the nursing workforce, we want to make sure to be very explicit. There is no nursing shortage.
There is currently half a million registered nurses in California with active licenses who are not employed as RNs because they are too scared to go back into the workforce because of unsafe working conditions. And I know California can do something about that. In regards to I've already talked about the oh, in regards to ice. Ice poses a major public health threat. Everybody here has already mentioned it.
We had a nurse who had encountered a patient with tuberculosis, which is a highly infectious disease. And the patient did not want to disclose contract tracing for fear of exposing other immigrant patients. Other than that, the removal of nursing degrees from professional loans. We want to make sure that everybody who have interest in entering the nursing profession are able to afford entering the nursing profession. And that is it.
I know that was a lot, but thank you for hearing the voices of the nurses.
Speaker 1
Absolutely. And thank you for sharing that comprehensive update. Next, we will hear from our next panelist, Rafael Jaime, President of the UAW four thousand eight hundred and eleven.
Speaker 8
And I just use this? Okay. All right. Well, thank you, senators Manuel Cuevas and members of this committee, for the opportunity to speak before you on the impacts of federal funding, policy on California's health care and innovate and innovation economy. My name is Rafael Jaime, and I'm the president of UAW forty eight eleven, union of 60,000 higher education workers at the University of California.
Since the start of the Trump administration, California's higher education and scientific research industries have been under attack. The federal administration has proposed cutting billions of dollars in federal funding that fuel vital parts of California's economy and drive its future. To put this into perspective, here's how federal funding cuts are impacting the University of California, one of the largest state's largest employers and the driver of California's $226,000,000,000 research and development industry. What you see here is a table from the National Institutes of Health, one of the largest granting federal funding granting agencies in the world. And what you see there is the average grants that the NIH has awarded from 2015 to 2024, broken down by areas of research.
In the next column of under 2025 is where you can see the funding that is allocated this year, and then the and, of course, the change on the last column. And so, here's just some of the areas of research, minority health, which has seen the largest cut in funding. Mental health is also one of these that has been impacted. And, of course, you know, we can it's not given Trump's rhetoric, it's not surprising that minority health has suffered many cuts. But it's also other very basic types of research, cancer, heart and lung and blood research, aging diseases that get across all identity types, and yet these have been cut from the NIH.
And I will and we'll say NIH is just one of dozens of federal granting agencies that have suffered major cuts over the last year. And the way that this is translating to the University of California is that currently there's about $230,000,000 in research activity that is on hold at the University of California, and there's over $1,000,000,000 in funding that is under threat. And this is important because for every dollar in NIH funding, generates about 2 and a half dollars in economic activity. And these cuts are already having a real impact on thousands of workers, who form the backbone of the state's economy. All right.
So I want to zoom in now and focus on a very specific group of workers at the University of California, postdoctoral scholars. These are early career scientists with eight to ten years of higher education training, who conduct cutting edge research on anything from new treatments for cancer and Alzheimer's to the next generation of supercomputing microchips and fire resistant materials for home construction. Their contributions to science generate billions of dollars for the economy, produce thousands of patents, and result in thousands of new startups in the state, and UC employs thousands of them. As you can see from the this graph, year after year, the number of postdoctoral scholars employed at the University of California has increased, a reflection of the vital vitality of this sector of the economy. However, this trend, changed dramatically over the past year.
As you can see from this graph, last year alone, the number of postdocs at UC decreased by 10%, and further funding disruptions are threatening even more job cuts. I mean, you can see the top graph year after year, and then sudden sudden drop. A job loss of this magnitude will have severe long term impacts on the on California's ability to remain a worldwide leader in the research and development industry. These are highly skilled workers with over ten years of training and education who are being pushed out of the UC, out of the state, and even out of the country, and they are taking with them skills that cannot be easily replaced. It's also important to know that what is happening among postdocs is an early indicator of what will happen to other groups of workers in the r and d sector.
Postdocs are directly funded by federal funding grants, so they are the first to go when grants are cut. But there are also there are also hundreds of thousands of other jobs that are indirectly supported by federal funding grants that will also be impacted. Now I wanna zoom in further and focus on the stories of the workers and the communities that are being impacted by these cuts. So this is Nicole, who's a graduate student researcher at UC Berkeley. Nicole studies PFAS, or forever chemicals, from airline and airplane fuel near airports, with the goal of understanding the basic chemistry of these compounds that pose serious health risks to communities that are constantly exposed to them.
Her research has been funded by the EPA and the NSF, National Science Foundation, but these agencies have experienced massive funding cuts, and many of the grants that funded Nicole's lab have been cut. Now Nicole's career is under threat. This is Metzli. Metzli studies how people's blood vessels change as they age in order to develop new therapeutics to treat cancer and other diseases. Metzli also works at a training center at UC Merced that works with K through 12 students in the Central Valley to educate them about careers in science.
This center has trained over a thousand students, but the NSF recently cut funding, and now it will likely close at the end of the summer. Next is Sita, who's a graduate student researcher at USC. Sita studies inequities in colorectal cancer outcomes for Latinx communities, working directly with Latinx cancer patients in the LA area. Her lab had their funding reduced because their research relates to racial diversity, and the lab has had to now has had now had to lay off staff and can no longer work with as many patients as it did before. And now, over the past year, UAW workers have been organizing to protect public funding for scientific research.
The fight to defend federal funding, scientific funding is ongoing, but we, as Californians, must find other ways to ensure that public funding that is so vital to California's economy continues to produce jobs and the scientific innovations that Californians depend on. This is why UOW workers are supporting SB eight ninety five, which would put a $23,000,000,000 bond measure on the on November's ballot to fund health and scientific research disrupted by Trump's funding cuts. S b 95 is vital to California's future, and I encourage everyone in this room to support it. Thank you.
Speaker 1
Thank you very much, mister Jaime. Next, we will have Wallace Wade with the American Federation of Government Employees, and I know at the table is also vice president of that union, Kendrick Roberson. Mister Wade, you may proceed.
Speaker 9
Hi. Can you hear me? My name is Wallace Wade. I'm a TSC employee for over eighteen years and a member of the American Federation of Government Employees. I won't be using a lot of flashy slides.
I appreciate everybody that was up here. The situation that we do have is rather unique within the context of the discussion today. We are considered at TSA. There are two classes of workers. The working class that I'm involved with, they were called basically essential federal offer officers.
What this means is is basically that no matter what happens, whether it be natural disaster, federal closure payment with with with building, anything like that, we're expected to be at work. We're no different in most aspects to law enforcement, government protectors, etcetera. One of the things that we endure during these times, however, is the fact that we are not paid. We cannot miss work. We cannot go to doctor's appointments.
We cannot go take care of vacation issues that were preplanned. Everything is shut off. What they expect us to do is to be at work and work our shifts, regardless of anything else.
Speaker 9
a government shutdown happens and everyone comes to hear the first announcements, we get the, oh, well, you know, this is the situation that we were employed to, and they they warned us about. What a lot of folks don't understand is that these situations are now becoming commonplace. We are pawns in a much bigger game. The last major shutdown was forty three days. That's forty three days without paychecks.
We got one half paycheck two weeks into it, and then afterwards, we received nothing. Folks have to pay bills, So we have to dip into savings, and then we have to dip into retirement funds, and then we have to dip into loans. Then we have to rely on family and our own coworkers to be able to get through the day to day. Gasoline, food, medical expenses, you name it. But we are expected, and it is demanded that we be at work.
I listen to everyone, and I totally understand their situations. Ours is just a wee bit different. We don't have we're guilt by association. We are part of the same the same organization, unfortunately, which is causing no end of trouble for a lot of folks that are sitting at these tables. That, senator, you have listened to their testimonies.
And the first thing we'd like to say that is that is not us. We rely on the same people that you do every day to help us get through our days. And we find it adhorrent that these people are being treated in the way that they're being they're they're treated. However, we are different in one major situation. We have no other choice.
Forty three days. The last one before, thirty seven days. Right now, we're into three weeks. Shutdowns have become to the point in these these issues that it's become commonplace. This was never the way this law the law that was signed during the late seventies was to be implemented.
And the whole situation goes is now I look at folks that have been working with us for three to five years that are coming into their own, spirits of growth. That can't feel comfortable because they can't meet the simplest requirements for their own personal lives, enable to secure well, basically, security in in in their own lives. You can't pay bills. You can't afford childcare, food. We had to run food banks to help take care of people in our organization, And that we appreciate everything that outside folks have done for us.
It is now getting to the point where they look at it some that is like, why do you keep in doing this? We have no choice. It is not an easy thing for me to come here and discuss this, but it is necessary. I commend senator Smallwood Kervis for SB1155 to look at our situation and help us protect our own abilities to stay in the places we live. Because once we have to determine how we're going to take care of the funding that we have, our own bank accounts, sometimes we can't afford payments.
And it seems that there's a small amount of people that seem to be preying on the point that they're counting on we can't pay our rent. So they can evict us and move their properties forward. But again, this isn't a situation where we're in control of what's happening. It goes far beyond us. And so this bill basically says, hey, these folks are federal employees.
Maybe we should stop for a moment and say, look, because you're going through what they're going through, maybe we can work with them and help them get through. Everything will be resolved, hopefully, within a reasonable amount of time. But until then, let's take a moment and think about what we're doing to them. Again, we're a small group in this. But that small group is responsible for a whole lot of things that go on in the side point of your lives.
We're getting ready to go into spring travel period, which is a big vacation. Already noted on TV, there have been reports where airports have reported, and passengers have purported their uncomfort that the fact that they have to wait for hours upon hours to be able to board their plane to go on their vacations. My heart goes out to them, but my heart also goes out to those people that are trying to do the job with reduced capabilities that are showing up in trying to help these folks get to their leisure time activities. And I can't go on vacation. So what to do?
How do we handle this? What positions do we take? I appreciate you the fact that you're from Southern California and you've looked at this and then decided to submit and and try to help us with the situations. I questioned the representatives of my own area here in the North and why they have not contacted us and said, hey. We need to be aboard this situation.
I also have problems with the way that we are treated. We are not the, if you excuse the quote, redheaded stepchildren that they so easily promote us to be. We're responsible adults. Some of us have been there, as I said earlier, eighteen years plus. You're suffering from a drain, just as the other organizations are, from intelligent personnel that can no longer function in positions where they receive no support, either from the public, who likes to harass us constantly because they feel that it's not necessary for them to follow simple basic safety rules, to our current management, who has been insanely derogative towards us.
We've been called names. We by by people who we are supposed to support openly.
Speaker 1
And, mister Wade, I just wanna say you're past your time. If you could wrap up, we'd appreciate it.
Speaker 9
Thank you. Appreciate your time. Used to be a middle class career that could be relatively proud of what we do. We're beginning to question this. Their move towards privatization is an issue.
We have spent a lot of time and effort training people who have left us for jobs in food preparation because at the time, they realized they can make as much money and not have to go through the issues that we've gone through. We have had to protect our people and provide for our people in ways that we never thought, and this is via the union, that we never thought we'd ever have to do. We tend to wonder. We need to basically structure better protections. We're not trying to deal with partisan gain blame here for the simple reason that both sides need to come to the table and actually figure out what they need to do.
What we need to do is we what we're asking you to take a look at is preparations for health care, for folks that need to be you know, need the assistance in small groups for small amounts of time. Loans situation, there is a small movement to trying to get a 0% loans and everything else. But people need to understand that we are not openly trying to find handouts. We're looking for solutions. We want to remain a vital part of this entire state.
But we feel that sometimes it's difficult being a federal operative to provide, you know, or actually to inquire for state help.
Speaker 1
Thank you, Mr. Wade. Thank you very much for your testimony. I wanna especially say thank you, to you, mister Wade, and and mister Roberson. Feel free as we ask questions to to to to weigh in on responses.
I wanna say to you, mister Wade, as a working person who is here with us today, thank you for making the time to be with us and sharing that incredible story. It is horrendous what you and your coworkers are going through as all of the worker organizations who who spoke today. We had done so much to go so far to raise wages, to ensure and expand our health care systems, to bring equity into our research capabilities, to ensure that car wash workers had basic dignity and respect. And here we are because of this administration having to have all of our protections rolled back in so many, detrimental ways. And I just wanna say thank you to your members that you represent, the work that you do, to protect all of those workers, And we are here to help and support that.
I will turn it over to my colleagues and I will ask my questions last but senators would you have questions or comments for this panel?
Speaker 6
I too want to thank everyone who has spoken. And to see the diversity of the work that you do for the economy is really great because a lot of times we don't have that personal knowledge and connection with the people who are doing it. You know, you show up as a number here, a number of employees here, the economy is affected by this, another number. So it's great to have you here and especially, madam chair, your and and, you know, having people working in so many different parts of the industry that we just take for granted. So thank you all for your work you do, but also for being here and sharing.
Speaker 12
Senator Senator Thank you, Madam Chair. I just also want to say thank you for what's really been heartfelt testimony. I appreciate that. It's, you know, not that common in these kind of hearings where folks just, you know, kind of open up about what's happening on the ground in terms of real human impact. And that's been a concern, I know, for the elected officials that are here on the dais because we work closely together a lot on the kind of issues that you've been presenting on.
And I think we come at it from mostly from that place. What is the human impact really? Not to say that the previous panel wasn't also important where we take a look at the actual economic impact of some of these actions. In fact, when you look at the reduction in GDP or GST, I guess, at the state level and see these multibillion dollar astronomical cascading impacts, not just on the state government or local governments or local employers, but really taking all ships down. I mean, it's a tide that's going down as these things are happening.
But then what is the human impact of it? It should be always issue number one. And so appreciate that. I think the two areas of further bad news fall under the category of the difficulty that the state has trying to keep up with clawbacks and cuts and impact, you know, putting our finger in the die cast. The old metaphor goes just because of the fact that we have to have a balanced budget and we can't keep up with an entity that has basically put trillions of dollars out there by printing money and then turn around and pulling the rug out from under people afterwards.
So, you know, those of us up here, and I don't want to try even attempt to speak for our broader set of colleagues, although I trust that most of them see what's coming. But you're actually, and this is the bad news part of it, think really testifying on the tip of the iceberg of what's coming. And that urgency to right the ship at the federal level and also to just try to keep doing what we can, I think, you know, Medi Cal figuring out how to bring in revenue that would go back into the Medi Cal system, for example, is something that is real? And my two colleagues here have especially worked very hard on that. There are some things we can do.
So I'm not trying to throw up my hands and say, Sorry, it's a, you know, a federal problem. It's hurting us all, and we can't do anything about it. But the areas that we're going be able to help, perhaps, like Medi Cal, are going to be these very surgical pieces of a much larger catastrophe that's starting to set in, you know, economically, you know, unless we change the political winds at the federal level. So again, appreciate your comments. Know that we understand the gravity of the situation.
What you're seeing and testifying to is, we understand is not only not exaggerated, but again, just an indication of just how badly things can unravel, you know, if we aren't able to turn the ship around. So we'll keep working on it and, know hope that the state's own fortunes in terms of its budget go in a better and better direction so that we do have more resources at a minimum to help people who are falling off because of these problems with safety net resources. I mean, that's the one area that we have some significant control over, you know, so long as we have resources available to us. Thank you. I apologize.
I'm not a presenter. Didn't mean to make a monologue, but I don't really have a question. You've answered the questions. Think it was just wanting to let you know that we're hearing you. I have been.
Thank you.
Speaker 1
Thank you, senators. Really appreciate those comments. And I do we still have floor? Yes. Still on online?
Okay. Just wanted to make sure she was there. I I I do have a question because part of this hearing was, I think, to your question that you asked, senator Cortese, is what's coming. And we know, from COVID, we know from the great recession, we've learned a lot about how, small things can turn into huge fiscal and financial, disaster for our state. And and so, you know, as we had the panel before talked about the yo yo effect, each of you shared the multitude of ways in which the administration is impacting your sectors and and and your work.
What can you share, each of you, just to say in a snapshot of what is coming. I heard the call for revenue. I heard the call, and I'm very proud to to sponsor, the bill that is supporting federal workers to protect them against eviction. I heard, you know, what this is happen what's happening with our young research, workforce and, currently and and certainly the devastation of the car wash sector, and the lives of those workers. But we haven't felt the full impact yet of these things.
And so if you and we don't have a lot of time, so if we could keep our answers short, as we think about what we have to backfill, as we think about what we have to prioritize, as we think about these, larger policies that we've been working for a long time toward, you know, what can you say about what's coming that will create more urgency for us as legislators to really say, why we need to move in a particular direction to to remedy these situations versus saying, let's see, you know, what happens. You know, let's let's see what happens with the administration. Maybe we don't have to take these major steps now. But if you could give me a sense of what you think is coming in your sectors that we need to be paying attention to, I think that goes a long way to helping us understand what to prioritize. And so, I'll start with you, Vice President Groverson, and then come down.
Thank
Speaker 13
you. Hey, everyone. I appreciate you all. My name is Doctor. Kendrick Groverson, National Vice president with the American Federation of Government Employees, and I really appreciate all of your support.
But to answer the question directly on a couple of things that are coming down the pipeline, two, I wanna talk about the shutdown and then, one, on the amount of federal workers that are left here. So here in California, we represent we represent 100,000 federal workers that are throughout the state. That's part of our bargaining unit. And what we've seen is we've seen a lot of folks nationwide, over 300,000 federal workers have left the federal workforce, and that has major impacts for places like California. And it also means places in particular like the VA, and the VA hospitals and the VA centers, call centers.
We're actually seeing a lot of workers that have left, but then seeing that because of the hiring freezes, these jobs are not being filled. So you're going to see a lot of veterans who are going to be in, you know, having longer and longer wait times and there's gonna be a needed pressure on the federal government to ensure that they're staffing fully staffing these VAs across the nation and and specifically here in California. That's something that we're gonna see coming down the pipeline. And then the other one with the shutdown and the shutdown impacts, as you heard with TSA in particular, a lot of these folks right now don't have the funds or resources to pay their bills, and they're relying on their relationships with their with their their their landlords, right, and with their loan service providers to say, hey, can we, you know, work out a deal in the meantime, in the interim time? And like Wallace was saying earlier, there are many who are trying to use this as an excuse to get out of their lease agreements with their with their tenants.
And so we're gonna see that coming down the pipeline. But then also, as we continue to see some of the longer effects, the longer range effects, you have this brain drain where people who are tired of experiencing shutdowns, tired of figuring out how they're gonna pay their bills, how they're going to survive and feed their families, They're leaving the federal government because it's such a toxic work environment when these types of things are occurring. And when that happens, you then now have an entire system that has to be rebuilt. And then you're talking about safety concerns because now it's like, hey, if you've got these people leaving the workforce and you have to train up a whole bunch of new people, well now, these new people have to get up to speed very quickly in order to fill in the gaps that are left from from these issues. So these are a couple of things coming down the pipeline that could be, of impact.
Speaker 1
Thank you. And the the shorter answers, if we could keep it to one minute just so that we can get through the next panel, I appreciate it. Mr. Wade, would you like to add anything?
Speaker 9
Well, he brought forth the answers for federal administration and said what we were going through, basically. You should also understand that we not only respond to them, but Social Security and their particular issues, dealing parallel with Veterans Administration. Thousands upon thousands of jobs have been eliminated. Your response times have been increased. Getting appointments and everything else, has just become much more difficult.
In certain counties, it's now ridiculous for people to try to get through, to do the basic things. I bring this up also because I'm looking at retirement. I'm over 65. I have to address these issues like everybody else, and I'm becoming incredibly frustrated by answering simple questions about Medicare and Social Security and a few thousand other things. We look at what people are going to have to go through as far as, you know, stability.
Speaker 1
Thank you. Thank you. Thank you, Mr. Wade. I'm sorry, but I've got to hold it to one minute I understand.
We don't lose our next panel. But thank you for that thought.
Speaker 8
Yeah. So, now, that are in limbo for the University of California, both in that are going through Congress, but also in the courts, as you saw Trump tried to freeze hundreds of millions of dollars. And what that means is that there are thousands of jobs that are at risk at the University of California now and into the future. And what this means is a reduction in the pipeline of from, you know, Californians who can come to the University of California to get trained and then get have good paying jobs in these kind of industries that then produce thousands of new jobs through startups and patents. All that is under threat.
I mean, the immediate threat is very clear, but also the long term impacts of this kind of brain drain from California is really going to be a threat to our ability to remain a world class leader in science and development. And so I think that's really what we need to pay attention to and think about ways that we can ensure that this California's leadership continues.
Speaker 7
I'm a nurse, so I'm going to focus on the community first and then the nurses second. So we want support on CalCare AB 1,900, and that will enact a single payer health care program for California, all residents of California, and it includes medical, dental, hearing, vision, mental health, reproductive, and long term care. Every year we've done this, we're getting more and more support from Californians. And as you can tell, especially with this administration, there's less and less people that have access to health care every year, and this is devastating. And if you are a nurse and you are on the phone and you're trying to bring in somebody that's having a heart attack and they don't wanna go because they don't have the money for a $200 EKG, but this is a this is a life and death situation.
This is no joke. California needs to do better. The second thing that we need also is for the, nursing workforce. We need California to put more. For example, in twenty twenty five, 'twenty six funding cycle, Song Brown primary care residency programs received $33,000,000 in funding, while RN prelicensure programs received just $2,725,000 a 91% gap.
We need California to invest in ADN graduate programs to make sure that we get everybody to become a nurse.
Speaker 1
Thank you. And we will close out with where we started. Miss Melendrez, please, closing thoughts. What what's coming?
Speaker 3
I think, it's a reality to say that workers continue to live in fear. And when main providers are not able to provide, it has a ripple effect in our families. And for that, in our communities, we need to continue to fight back and continue to be the California we know we want to be and that we can be. We need to invest in permanent change in organizations like CLEAN and others who are a home, a safe place for workers. We are the bridge to resources for workers and the only training safe space for what's coming.
And, of course, the investment in a b 2271. Thank you.
Speaker 1
Well, I wanna thank this panel very much for your information, for your courage, and for what you do every day to protect workers. We so appreciate it. Thank you. Next, we will be having our fourth and final nope. Fourth.
Not our final. Near final. So this is not last but least, but but but getting getting to our fourth panel, which is an employer response. As we've heard about the federal impacts on California's labor market, this panel, will include, the California Retailers Association, the California Grocers Association, the California Farm Labor Contractors Association. We will first hear from the retailers.
President Rachel Mishlin, please begin when ready.
Speaker 14
Alright. Thank you. Let me see. We're still morning. Good morning, chair and members of the committee, and thank you for the opportunity to participate in today's discussion about how federal policy is affecting California's labor market and workforce.
If you want to understand what's happening in California's economy, one of the first places to look is the retail sector. Retailers are on the front lines of the economy every day. We see it in real time when costs rise, when supply chains shift, and when California families are feeling pressure at the checkout counter. My name is Rachel Michelin. I serve as the president and CEO of the California Retailers Association, the statewide trade association representing brick and mortar national and regional chains, franchisees, main street businesses, grocery and food retailers, retail pharmacies, specialty retailers, and online marketplaces.
Our members operate in every legislative district across California, employing workers and serving customers in communities large and small. Together, retail makes up one of the largest private sector employment engines in the state, supporting more than 3,000,000 jobs. Our stores are also one of the most accessible entry points into the workforce, with nearly one third of retail employees under the age of 25, making this industry a critical launch point for young Californians beginning careers. Beyond employment, retail businesses generate hundreds of billions of dollars in economic activity each year, supporting local communities and providing the goods Californians rely on every day. Because of that reach, our industry often serves as a real time indicator of the broader economic climate affecting businesses and customers alike.
Today, our members are navigating a period of significant economic uncertainty at the federal level. Shifts in federal trade policy and the continued use of tariffs have created real challenges across global supply chains. Retailers operate in a very intensely competitive environment with very tight margins. When tariffs are placed on imported goods, from apparel and footwear to electronics and everyday household products, costs increase throughout the supply chain, and those costs simply do not disappear. They are absorbed at multiple points and can ultimately translate in higher prices for consumers or reduced resources for businesses to invest in hiring, technology and expansion.
For grocery retailers, these same pressures affect the cost of everyday staples families depend on, which is especially concerning when we know that three in ten Californians report cutting back on food to save money. Federal legislation like H. One is reshaping programs such as CalFresh and Medi Cal. The legislature's own analysts have warned that hundreds of thousands of Californians could lose some food assistance or coverage as new work and administrative requirements phase in. When you put these pieces together, higher costs at the grocery store, reduced federal support, and a lot of uncertainty about what comes next, it's not surprising that many of our customers and employees feel that economic security is out of reach.
On top of that, tariffs have not only raised costs, they have been imposed and adjusted in ways that are hard to predict. We have seen changes announced and revised within very short periods of time, and the recent Supreme Court decision limiting presidential tariff authority has created new questions about how long existing arrangements will last and what may replace them. For retailers, this volatility makes it harder to plan inventory, sign long term contracts or commit to new investments in stores, technology and workforce. But even as we confront that uncertainty from Washington, D. C, California has an opportunity to respond in ways that support workers, employers and the state's fiscal safety net.
We may not control federal trade or safety net policy, but we can make choices here at home that lower the cost of living and make it easier for employers to keep investing in California communities. One important place to start is by looking at the cost of regulatory compliance for businesses operating in California. Retailers are committed to meeting California's high standards in consumer protection, environmental responsibility, workplace safety and data privacy,
Speaker 14
our members invest heavily to meet those standards. At the same time, they often face a complex web of overlapping statutes and regulatory requirements, sometimes administered by multiple agencies with different timelines, reporting structures, and enforcement frameworks. Even the employers who are fully committed to doing the right thing navigating these overlapping systems can be costly and time consuming, particularly for our small and mid sized retailers that do not have large compliance departments. When compliance becomes unnecessarily complex, or duplicative but not stronger, just more complicated, those costs ripple through the economy and ultimately affect prices. That's where California can directly help counter the uncertainty our members feel from Washington.
We cannot control whether tariffs are going to go up or down, or the full extent of cuts coming from Washington, D. C, but we can give employers more certainty here at home by streamlining how they comply with state rules. If retailers know that California's regulatory process is clear, predictable and coordinated, it makes it easier for us to keep investing and hiring in the state, even when federal policy is sending mixed signals. California has an opportunity to improve coordination across agencies, streamline the regulatory processes and address conflicting requirements, while still maintaining the strong protections that Californians expect. Here are some specific steps that would make a meaningful difference.
Maybe include aligning the reporting timelines and formats across agencies so employers can submit one consistent data set, or creating a single centralized compliance portal for small businesses and proactively and this is something I think the legislature can do review new statutes and regulations for conflicts with existing rules with a clear mechanism to resolve those conflicts quickly. These kinds of streamlining efforts don't just help businesses, they help the state's bottom line. When agencies share data Ask your five minutes. Okay. Reduce I'm almost done.
Reduce duplicate paperwork and use clearer processes, it lowers administrative costs, reduces litigation risks, and allows staff to focus on the highest value enforcement and program work. At a time when California is preparing for potential reductions in federal support for health care, nutrition assistance, and other safety net services, every dollar this state saves by running its regulatory and administrative systems more efficiently is a dollar that can be used to protect core services and cushion the impact of federal cuts. Thank you.
Speaker 1
Thank you very much. Next, we will hear from the Grocers Association, Mr. Louis Brown.
Speaker 16
Good morning, Madam Chair, members of the committee. My name is Louis Brown, here today on behalf of the California Grocers Association. California Grocers Association is a statewide association representing California's grocery industry. We represent the large national change, regional supermarkets and independent grocers that are reside in your districts. Our employees live in your districts, and we serve every district in the state of California.
We also have a number of supplier members and, as Ms. Michelin said, others in that supply chain. I share a lot of the comments that Ms. Michelin said and don't really want to take time to duplicate a lot of those statements because our members are saying a lot of the same. The grocery industry in California employs just over 700,000 people.
And I think a positive coming out of this is that we've actually seen a nominal increase in employment in California over the last three to four years. I say nominal, 3% to 4% increase in employment, because I think it could be more. And we hear that from our members on a regular basis. 25% of our employees are union employees, primarily coming from our large national chains. And we are proud to still offer our employees the opportunity at a livable wage with health benefits and really believe that we, like Ms.
Michelin was saying, offer that opportunity for people to have that middle class income in the state of California and something that they can count on. With that being said, Americans spend about 5% of their disposable income on groceries, just a little bit more of that on restaurants and takeout food. With all that being said, California has the highest grocery prices in the nation. And not a lot of that is driven by the federal policies that we've seen. A lot of it is driven by some of the issues that we just recently heard of.
If we have one issue with the federal policies, it is the inconsistency, the lack of transparency, as was stated. And it's been stated prior to this, is businesses need consistency. We purchase with long term contracts. We try to prepare for a variety of issues that our consumers need, and having that inconsistency and lack of transparency make that much more difficult. If there is one issue that definitely has concern from our members going forward are the potential change or possible changes coming with the SNAP program.
Last year, when there was questions about whether or not SNAP would be fully funded, it created significant concerns for our customers and our members. On average, 33% of the customers at California grocery stores are either on SNAP or WIC or some type of federal or state program. Some of our smaller independent grocers in rural areas have that number go up significantly higher, some as high as 85%, 90%. So when we have questions about eligibility, when we have questions about funding of those programs, it creates significant problems for our grocers and our customers. I'll just wrap up by saying that I do think that we can work together to address the affordability issue with grocery prices in California and looking at a number of the issues that have already been stated.
The major cost drivers for California grocers are energy, regulations, transportation and litigation. Most of our members have line items for litigation. And addressing some of those issues going forward would really help us address some of the high grocery prices in the state of California and hopefully take us off that list of being the highest in the nation. Thank you.
Speaker 1
Thank you very much, Mr. Brown. Next, we'll have Kimberly Clark, Executive Director of the California Farm Labor Association.
Speaker 17
Good morning. It is still morning. And first, thank you so much to the chair and all the committee members for your time this morning. Yes, I'm Kimberly Clark, the Executive Director of the California Farm Labor Contractor Association. So similarly, our members are all over the state wherever there's agriculture.
And actually, FLCs, provide over 40% of the state's agricultural labor. The most common concern that we hear from employees and employers is fear and uncertainty. It's an issue in its own right, of course, but it's also one that is particularly difficult to plan for. Agriculture has seen a handful of high profile immigration enforcement actions, though the industry has not experienced large scale worksite raids. That said, individual enforcement actions have had some impact.
Stories spread very fast via social media, much faster than fact checking can keep up. So reports of enforcement in the Central Valley can affect how many people show up for work or school or even medical appointments on the Central Coast. While we have seen workers miss time in response to enforcement activity, the majority are returning within two to three days. In response, here at CFLCA, we focus on educating employers about their rights and obligations, how to support employees, and training on private property rights, field access, and worker rights. Workforce concerns remain significant in ag, availability, fitness, and upskilling among them.
And we may have expected to see greater labor shortages, if not for other factors that are actually reducing demand. Some of you may have heard about California peach farmers whose long term contracts were canceled following Del Monte's bankruptcy. Canned fruits have struggled due to shifting consumer preferences, but a 50% tariff on steel certainly didn't help. For these farmers, it isn't just about the $550,000,000 in lost sales, but also the investment. Do you tear out the trees and replant?
How long until they mature to produce? Four years? Six? Eight? Many of you are also aware of the challenges in the wine market, with thousands of acres of vines torn out and many grapes left on the vine to rot.
A market correction may have been coming regardless, but Canada's boycott of The US wine compounded the issue given that Canada previously accounted for 35% of California's wine exports. China is another top export market for California agriculture, typically representing 1,500,000,000.0 per year. But in 2025, that number fell to just 554,000,000. Some commodities have found our alternative markets. Tree nuts, for example, have shifted to India rather than China.
But developing new markets and partnerships, of course, takes time and comes with real costs. The federal government has at times offered relief to farmers, but assistance has historically prioritized row crops like corn and soybean over specialty crops that define California agriculture, which crops that are labor intensive and higher in value. During the last admitted Trump administration, $23,000,000,000 was distributed to US farmers, but California received less received less than 2% despite producing 11.5% of the nation's agricultural output. So what can we do here in California? I'll echo Rachel and Louis' comments.
We can partner better with employers rather than just focusing on regulation, but involving employers in the process, actively collaborate collaborating with businesses and supporting local CBOs that are trust and trusted grassroot groups that can really connect with workers most effectively. Simplifying the regulatory regulatory landscape. Because when even expert attorneys struggle to interpret laws, employers have very little chance of understanding or implementing them properly, particularly small businesses. And when federal, state, and even local laws conflict or give diverging guidance, it's even worse. If we can streamline and clarify rules so compliance is achievable and with a focus on the real principle goals rather than quotas or revenue streams, I think we're on the right track.
And similarly, reducing administrative and compliance costs. Navigating state regulations, protecting an increasingly litigious environment consumes an ever increasing proportion of businesses' budgets, making it harder to weather external pressures and invest in their workforce. Thank you.
Speaker 1
Thank you, Ms. Clark, and thank you to everyone for your testimony and sharing those impacts in such detail. And, I I was curious, and I I have a question, I'm gonna turn it over to my good colleague, senator Cortese, if he has a comment. But, for you, mister Brown, the SNAP percentage, you said it was 33, and in some places, 85% of the, populations are relying on those benefits. What does that comprise in terms of your overall revenue in your sector?
Is it is it does it play a significant role? So when so it's obviously those families not having benefits, but that means those goods are not purchased and sold and part of your
Speaker 16
Right. Madam Chair, if the issue would not have been resolved last fall where the federal government was not going to fully fund SNAP, we had estimated that was going to cost. This was from our federal program that they were saying that the impacts for California at that time could have been as much as $40,000,000,000 in lost sales. Now, I don't know that we've fully forecasted what the changes from H. R.
One will mean going forward, but that was the potential loss from the impacts from last year.
Speaker 1
Very, very helpful to see the significant impact that that has on on business bottom line and revenue that could then be reinvested in workers. I guess my question that I have for both of you of you is just trying to think about the workforce. And it seems that the reduction in workforce is still being determined, and it's also kind of a moving target. So I'm wondering, how have you put practices, policies in place in your businesses, in your members' businesses to help to deal with what may be a reduction in workforce or a two or three day absence and then workers returning? How do businesses adjust, when you're seeing the reductions sort of fluctuate like this?
Speaker 17
Thank you. So, of course, in agriculture, it's not like in many other industries where you can say, oh, well, we'll just do this next week. Right? It very much it's very weather dependent. And you're when the fruit is ready, it doesn't really care what's going on with the business, with the the enforcement actions going.
And so in some cases, in emergency situations, you can't really adjust, honestly. As far as workforce, because we have these other market pressures that have made it so actually there's not as many, there's not as much demand in the wine market, the peach market, in other areas. We've actually seen the in the the employees that would normally be in those jobs because they don't have them at the at this time, they're actually looking for work elsewhere. They're looking in different parts of the state. They're looking for work in different commodities.
And so we actually for the first time that I've heard in agriculture, honestly, I talked to a lot of employers who actually have too many people asking for work right now because they're coming over from other industries. So in the the moment, in the emergency moment, if you can't get people out in the fields, you can't. But on a larger picture, when you're looking at months, we're actually not seeing really that lack of workers yet in the field at this time.
Speaker 14
I concur. I think in retail, first of all, we're very seasonal. So, you know, we're just coming out of holiday season, so there's always a large group of hires happening there. We start October till probably January as kind of holiday season. But same kind of thing.
I think we are seeing more folks coming in from other industries that are more impacted, and we're actually able to provide them work. We're not seeing a huge reduction in our workforce. I think for retail, it's very diverse, too. There's a number of jobs in the industry. So you might see folks in the store.
We've got folks running on marketing online. You've got folks doing shopping in the store for pickup on the curbside. So we offer a lot of diversity. The other thing I will say is we invest a lot in a program called Rise Up with our federal trade, which actually helps train folks to come into the retail industry. And so we work with I work with a group of folks with developmental disabilities.
We're helping them get into the retail industry. We're working with community colleges. I have member companies that are investing in Los Angeles with teen tech centers, where they're training young people on all of the aspects of retail. Because retail is not just going to check out and purchase your products. There are so many opportunities within the industry that a lot of the member companies are also looking to see how we can train our current employees to up train them into new jobs within the industry.
So to Kimberly's point, we're not having that same issue at the moment.
Speaker 16
Yeah, I would agree with the same. You know, the grocery industry is still one of those where you can start as a bagger and work your way up to store manager, work your way to a distribution center, work your way to the corporate headquarters. And so I think because we offer that opportunity for people to continue to grow and see different benefits from being part of the company that we don't necessarily see the depression in employment like other sectors might see. So it's not an issue that we hear much from our members about.
Speaker 1
I appreciate that and and hearing how it sort of impacts each of these sectors. We had an earlier panel that sort of looked more at the aggregate, and, the picture is not as as rosy, but it is one that we are all gonna have to continue to watch and work together to ensure that we protect our workforce, from whatever federal action will come, and do that in partnership with our businesses. I wanna turn it over. Senator Cortese, do you have a comment before we move to the next panel, please? Yes.
Speaker 12
I have questions this time. Thank you, Madam Chair. Me just ask two questions. For Mr. Brown, when I was a retail developer before I got into full time politics, one of the best business persons I've ever encountered, a guy named Bob Piccinini who started with one Save Mart store and built that into basically an empire of grocery stores, not only in the Central Valley, but when he came to the coast, I got to build his first and flagship store in East San Jose.
I took him on a tour of the radius around that property, and my bias was, admittedly at the time, to show him every affluent neighborhood I could find in that area, which those do exist even in an area that has a lot of lower quartile income households. When we finally came full circle and came back to the parking lot of the property where we were going to build a new 55,000 foot store, he said he hadn't made that decision yet, but he said, why did you show me the households that you showed me? And I said to him, I wanted to make sure he knew there was disposable income here to support a 55,000 foot store. And he laughed. And he said, you don't really know what to look for.
We don't our business model is not based on disposable income per household. It's based on household. Because as long as we have a population of folks around us, they all need groceries. But my question is this, he was counting this 33 to 85% in his calculation, in his business model, right? He's saying every household is going to come in for groceries.
So I don't really care if they're affluent or in the lower quartile of poverty. They're still going to buy groceries. They have to. At what point does the industry have to level set if this trend continues to go in the direction it's going? You know, with SNAP and with subsidies, what we call safety net here for those households that are in those lower quartile neighborhoods.
At some point, doesn't the industry have to, in effect, I don't want use the word redlining because they're not that wouldn't be the reason for it, have to essentially shut down stores where up to half or more of your revenue is no longer coming in and locate and refocus the business model more along the lines of what I was trying to sell Mr. Piccinini with. You know, you need to locate where there's disposable income. Does the industry I mean, how much longer can we go? Is it one more federal administration?
Is it eight more years, twelve more years?
Speaker 16
Well, I think that obviously, Senator Cortese, great question. And I think that comes back to a little bit of the consistency that we were talking about, how do we prepare for those changes. Our federal counterparts are working on these issues daily to try to address these through Congress. And if we can make some changes to the SNAP program through a potential farm bill and use other opportunities that are available in Congress to, you know, provide some security in those programs, that's where our focus is right now. Our focus is trying to right that ship so that our consumers aren't as concerned about losing those benefits.
And then at the same time, then we can plan our businesses accordingly. So I don't think we've gotten to the point yet of white flag and saying that we need to refigure our business model. We're right now focused more on the policy side on how can we make the corrections necessary so our consumers can still benefit from those programs.
Speaker 12
Yeah, I appreciate that. And this is a policy question, you know, a story or a financial question, an economic development question only on my part. But, you know, there's our assessor in Santa Clara County, pretty big county, Silicon Valley, sat down before Speaker Rivas and I a year ago and said in ten years there won't be bricks and mortar retail in this county at the rate we're going. And that does become something that we need to be aware of the policy side as we start thinking about how we want to approach non bricks and mortar delivery, retail, how we want to approach our own safety net decisions in terms of we want to try to reverse that from happening by doing whatever we can to augment, you know, programs that put something in people's hands so that they can go purchase their groceries? That's really the broader,
Speaker 16
I think. Well, and we've I still believe that our focus and is brick and mortar. And we do believe that if we're given a level playing field, then brick and mortar can compete. And we believe our customers like that. They like to go to their local grocery store.
They like to see the clerks that they've known that have been there for a while in the produce, in the butcher. But all we need is a level playing field to compete with that so that we can continue to serve communities. And that's where I come back to some of the rules and regulations that we were talking about that seem to create a disadvantage for those that want to continue to invest in brick and mortar.
Speaker 12
Yeah. I hope you're right because I have a lot of constituents, some of them very close to my heart who are depending on that to happen. Mhmm. And I know know our chair is hoping that those humans will continue to be there to greet people in those bricks and mortar stores when they come in and out. I used to be one of those, as you know.
So it somehow went from there becoming a guy who builds stores instead of bagging groceries. Those relationships really count when people come in the door and have the same person, the same butcher, the same produce manager, the same checker in checkout line that they're comfortable with. And I think especially if they're underserved because there could be a certain stigma sometimes to that that really doesn't get called out when there's a relationship there. The other thing I want it's really not a question but a comment on the farm labor side. It seems to me that the percentages of individual folks who so far have left and come back and have been subject to raids, which have been going on in California farm labor since I was a kid at some level.
So there's always been that. But with your particular representation here always been Senator D'Arrazzo and I were talking about this just earlier in the week. It's always been the farm labor contractors who had to have the certainty that they were going to be able to provide the workforce that they were guaranteeing to the farmer. And it seems to me as that gets undermined, it can, you know, I'm not here to just do doom and gloom, but it can lead to a much more significant undermining or collapse of the worker supply, the workforce supply itself. If contractors all of a sudden are finding themselves unable to perform because a significant percentage of their workforce is not, they're not able to deliver.
And so it's something I hope you will keep us apprised of as hopefully again it doesn't happen. That's really the hope here is that things start we get somehow we get the ship turned. But if not, think those are important things for us to know policy wise all during the year, this session, the next session, or whenever it may be happening. Thank you.
Speaker 1
Thank you so much, senator Cortese. And I just wanna agree and echo with those points that strong businesses ensure a strong workforce, and these disruptions have the potential to really undermine the the protection, sustainability, of workers across California. And so I really appreciate, you sharing the information today, and, we look forward to working with you on ways to ensure that, we do all that we can to protect California, particularly our workers and workforce. So thank you. Thank you.
We are going to move to our next and final panel in this long and flowing conversation, where we started with the impacts of federal action on our economy, our workforce. We heard from workers. We heard from our businesses, and now we will hear California's response. In this panel, we will talk, with our department representatives who will walk us through some of our workforce plans and how we recession proof our state in the face of some fairly consistent and strong headwinds from the federal government. We will hear from Nancy Farris, who is our director of employment development department here at the state, as well as Ailey Terry, who is the senior economist with EDD.
I want to thank you all, and I think we have one other the California Workforce Development Board, my favorite board, with us today to talk about what we are doing in terms of preparing and supporting our workers. So we will start with you, Director
Speaker 18
Farris. Thank you. Good morning, Madam Chair, Member of the Committee, Senator Cortese. Thank you so much for the opportunity to appear before you today. My name is Nancy Farias.
I am the Director of the Employment Development Department, affectionately known as EDD. I wanted to also thank Senator Laird, who I know is not here, but we are here because of his bill, SB three ninety, and that's the update that I'm going to give you today on the recession plan. As you are aware, EDD implements some of the state's most vital programs for workers: unemployment insurance, disability insurance, and paid family leave as well as for employers. We collect the most income tax in the nation, second only to the IRS, and assist those seeking employment through our Workforce Services branch. I want to thank the almost 9,000 state employees at EDD who do all of the work: answer the phones, collect the taxes, determine eligibility.
I am incredibly grateful for their dedication to the department, as well as to the state of California. I also want to thank the former panels that were here. It is for their perspective, I think that EDD is just one piece of the labor market puzzle, and I think it's really important to hear from the other perspectives. And I really appreciate that they were here, and I really appreciated their remarks. So, today, I just want to focus on how recent federal policies shift how the recent federal policy shift interacts with the Employment Development Department's recession planning framework, specifically how EDD plans to respond to an increase in unemployment insurance claims during a downturn.
Our approach is deliberately structured and data driven. It's not built on speculation about any single federal policy. It's built on indicators. Under Senate Bill three ninety, EDD developed and updates a comprehensive recession plan that evaluates lessons learned from prior downturns and establishes measurable triggers tied to workload and economic conditions. At the core, we monitor objective economic signals and scale our operations in phases when those signals reach defined thresholds.
First, what do we monitor? Recessions reveal themselves through a contraction in economic activity. They are usually not defined in advance. EDD tracks national and state indicators, which Ellie will go into briefly in her remarks, with the most important indicator being California's unemployment rate. Federal policy can influence these indicators through monetary policy, fiscal actions, trade shifts, immigration policy affecting labor supply, or health care funding that affects household and income stability.
EDD does not attempt to attribute cause. Instead, we assess impact if national instead, we assess impact. If national economic conditions begin to deteriorate, California's labor market will reflect that, and our triggers respond accordingly. The unemployment rate is our primary operational indicator. Historical analysis shows a strong correlation between rising unemployment and initial unemployment insurance claims volume.
Our response plan has three operational phases tied to specific unemployment rate thresholds. At 6% unemployment, phase one is activated. This phase increases capacity using existing staff. We authorize overtime, prioritize workload based on service level agreements, reduce discretionary time off during peak demand and maximize determination schedules. We will also start to prepare for further escalation.
We are not there yet. If unemployment reaches 8%, phase two begins. At that stage, workload demand is projected to exceed existing staffing capacity even after phase one actions. We implement structured hiring plans, deploy retired annuitants, and utilize cross branch support for less complex workloads. If unemployment reaches 12%, phase three is triggered.
At that point, temporary vendor staffing resources may be activated, of course, contingent upon funding, similar to surge models used by other departments during operational periods. This framework reflects lessons learned from both the Great Recession and, of course, from the COVID-nineteen pandemic. The Great Recession unfolded gradually, allowing time to scale. The pandemic was sudden and extreme. This plan is designed to handle both gradual deterioration as well as rapid shocks.
A key improvement since 2022 is the establishment of the Unemployment Insurance Command Center division and its workload forecasting unit. This unit integrates historical data, Department of Finance forecasting and modeling to project workload effects. This includes not just initial claims for benefits but also determinations, appeals and contact center volume. Our forecasting infrastructure allows us to translate economic signals into staffing and operational decisions. The plan exists with the reality of federal structural constraints on states.
Federal administrative funding for unemployment insurance lags economic conditions. In response, we maintained some reserve capacity through cross training and flexible staffing. We strengthened hiring processes, improved training road maps, and reduced oversight ratios to preserve quality under expansion. We adopted modern solutions customers want, like live chat, online eligibility questionnaires, and simplified applications for programs like WorkShare. Importantly, the plan provides for altered policies and procedures if claim volumes become significant.
These modifications are predefined and tied to measurable thresholds. Federal policy shifts that contribute to broader macroeconomic volatility ultimately matter to EDD if they affect California workers. If they influence the unemployment rate in California, those effects will appear as in the indicators that we monitor. When they do, our response is operational. We scale according to data.
California cannot control national macroeconomic conditions, but we can control how prepared we are to respond when labor market conditions change. The 2024 recession plan is designed to ensure that when objective thresholds are met, EDD moves in a disciplined, phased, and accountable manner. Thank you. I look forward to your questions.
Speaker 11
And thank you, madam chair, committee members, and staff, for your time and your interest in EDD's recession plan. My name is Ellie Terry. I'm senior economist at EDD. I'd like to provide a bit more detail about the recession risk indicators that the EDD monitors and what those indicators are currently showing. EDD closely tracks economic conditions at both the national and the state level.
At the national level, we monitor a set of consumer, business, and financial activity measures that are identified in the state recession plan. Tracking national conditions is essential because California is unlikely to enter a recession without a broader national downturn. As of January 2026, these national measures overall do not show that the national economy is contracting. We also closely monitor state level measures because shifts in the business cycle can appear in California's data earlier than in the national data. So at the state level, EDD closely monitors several quarterly forecasts of state level economic conditions, the unemployment rates, and initial claims for unemployment insurance benefits.
These latter two indicators are particularly important, because while every recession impacts the economy in slightly different ways, all past recessions have been characterized by a rapid rise in unemployment. So further, the earliest signal of a potential rise in unemployment is initial unemployment insurance claims, which are released with only a one week lag. So they're very timely data. However, UI claims can also be volatile. They may rise briefly and then fall without a corresponding increase in the unemployment rate.
So for that reason, UI claims are informative but not sufficient on their own. So together, these indicators guide EDD's operational planning. And as director Farias mentioned, the department activates phase one of its recession plan when California's unemployment rate reaches 6%, and we are not there yet. It's also not clear that we're heading that way. California's unemployment rate has been relatively stable since 2024, fluctuating between 5.35.6%.
Further, the last data point we have showed a decline from 5.6% in November to 5.5% in December. In February, initial unemployment insurance claims were down year over year, indicating no upward pressure on the unemployment rate at this moment. In summary, the national and state level data are not currently pointing to an imminent need to activate EDD's recession plan. However, we will continue to monitor for signs that EDD is so that EDD is best positioned to respond to a potential recession. And I also wanna add that the labor market data the EDD produces, including the state's unemployment rate, has a broad purpose beyond monitoring recession risk.
EDD compiles and generates a wide range of detailed labor market data for California. This information does help lawmakers, state agencies, workforce boards, educational institutions, employers, and economic development organizations make informed policy decisions. And analysts use these data to track labor market trends by industry and by region, see how wages vary by occupation, and assess projected changes in demand for various jobs. And the data EDD produces is available to the public on our website, including an easy to read dashboard format. Ultimately, these data are not are used not only to monitor for signs of deteriorating economic conditions, but also to identify opportunities such as high growth industries and to help prepare individuals for in demand careers.
And I want to thank my fellow colleagues at EDD's labor market information division who work hard to produce California's labor market data. That concludes my overview, and I'm happy to answer any questions.
Speaker 1
Thank you very much, and especially because our federal government is no longer keeping accurate labor data. So we are very grateful to the researchers for keeping California's data. Thank you, Ms. Kelly. We are now going to turn it over to Executive Director Kaina Parra from our Workforce Development Board.
It's my favorite board because I'm on it, so I work very closely with Kaina. So please proceed.
Speaker 10
Well, good afternoon and thank you, Madam Chair, distinguished board member of my Board, the California Workforce Development Board, of which I am proud to serve as Executive Director. My name is Kainan Pereira and I thank you for the opportunity to address this committee. Over the past year, our Board members and myself have been traveling through the 13 regions of the state to understand what these effects are from the local board perspective and from the over 200 AJCCs who see people every day. It is quite interesting that at this time, we are looking at ways to improve communications to share best practices and understand the effects of federal policy because they have yet to take full hold. Understanding that as we continue to provide that technical assistance to those 45 local boards and the 200 AJCCs, especially in the shifting environment as the folks coming in, are often folks who have never experienced job centers themselves.
We're seeing declines in areas that have higher wages than previous and are not typically those that come into the doors of the AGCCs on day to day basis. It is happening especially in Senator Cortese's area of Santa Clara and San Jose more recently. As benefits shocks ripples through the workforce system, our AJCCs will see an increase in need for the potential workers, but will also need to increase their collaboration with the health services agencies both locally and with the state to understand how those benefit changes need to change their intake policies, their intake practices, how they deliver their folks to those other opportunities to improve their ability to meet the worker expectation requirements of eighty hours per month. We're also seeing the dramatic need for upskilling as it relates to certain shocks and disruptions in the ecosystem, particularly in the tech industry, as I mentioned before. Our ability to improve that responsiveness and to understand what those shocks will be for both the workers on the benefit side but also in the work readiness side is really where we're principally focused on delivering those technical assistance opportunities.
As we were doing these tours, we were able to meet with a ton of businesses in the areas too and seeing how there are effects effects on them in terms of their delay in hiring certain workers until some of these effects are more well known. And so at this point, I think a lot of our organizations are in a sort of a waiting game to try and understand what the full effects are. But I will say at the local board level, there is deep consternation about the lack of monetization available for the increased service load that they will have to handle, increased number of intakes, increased number of handoffs to health services or support agencies, and the increased influx of folks coming through the doors. Thank you for the opportunity to address this, and looking forward to any questions.
Speaker 1
Thank you very much for your testimony. Senator Cortese, do you have any comments or questions you want to end?
Speaker 1
and and I really wanna say that why this part of the discussion was so important is because we don't know what the federal actions will be and what the sort of convergence of them will have in terms of the aggregate impact, but we do know what California feels like when we have an economic downturn. And, very important for us to understand how we monitor that, how we track that, what are the warning signs and warning signals. As you heard from the earlier panel, you know, businesses, you know, trying to, make adjustments, but, you know, they they don't have the capacity to to to do all of it. And so I think this this panel is very important. I wanted to just ask you, director, Ferris, about and or anyone else on the panel who wants to comment.
In terms of our unemployment insurance rate, are we seeing any concerning trends there?
Speaker 1
Yes. Yes. In terms of are there certain sectors where we're seeing higher numbers of unemployment? Are there some that remain steady, that are consistent? Are there others that, you know, are we're fine and we don't have any challenges and concerns?
Speaker 18
So, if I can remember, and I don't have the information in front of me, and I'm happy to get it to you, but I do know that the health care sector and the education sector are two areas that will are continuing to hire, as well as hospitality. I'm not sure the sectors that are not hiring. I don't know. Do you know, kinda? Or
Speaker 10
There's been a substantial number of warrant notices from the tech industry as have been indicated previously. But in in many cases, we're not seeing that in terms of folks coming into AJCC level because often their earnings are too high to be able to qualify for a lot of the services that are available in those centers. But we are seeing, you know, some upticks in those, particularly the tech service industry and software development.
Speaker 18
And I will say, as far as the warn notices go, thank you for that reminder, you know, we do collect the warn notices through our Workforce Services branch, and they are all available online. It's not necessarily compiled probably in the way that, you'd wanna see it maybe, but it does show the sector. But there is there there can be a discrepancy in what a company says that they're going to lay off and what actually happens. So it's not always 100% accurate, but it there definitely has been, as we've all read in every newspaper article from the New York Times to the New York Post, about the the, technology sector.
Speaker 1
Sure. Decline. And and that I I guess that's one of the the concerns we've all had, that's just how do workers access information? What is the technology that we have that can make improvements and investments? I know we did a lot during the pandemic to be prepared for, you know, whatever a downturn brings us and that Californians would be protected.
I know within the EDD next sort of investment and improvements that support the UI program in unemployed workers during the downturn. Can you talk a little bit about what those improvements look like and how we've made those adjustments to that system to be able to accommodate any sort of surges that we will need to prepare for?
Speaker 18
So lots of what we did during the pandemic. You know, we did over 200 IT projects during the pandemic in UI, and now our focus is on DIPFL. But in UI, we did things that were just basically automating the process, which we still have a paper application process, but we even automated the paper application process where, when there's an application, it comes to EDD, and it gets automated at EDD, not automated for the consumer or the customer, so to speak, but more automated for EDD. But we have done so many things. We have translated we have simplified the application.
We plain languaged the application. We have translated the application. We have automated many, many things.
Speaker 18
have improved our contact center. So and there's a lot there's many more self help availability. There's much more self help availability. There's a claim status tracker, which was, if you remember during the pandemic, there was, you know, 14,000,000 calls in a week or something. And it was mostly just about where's what's the status of my claim.
And so we have, anyone who does UI online, which is 85%, 87% of population, they can have they get the status of their claim in a minute. We have a chat bot that is a live person chat bot, so we use our state employees to answer questions that way. And so, we've just made it a little bit more accessible. We've listened to our customers. We have a customer experience team that talks to customers, real customers who have come to EDD or potential customers that that may need to come to EDD, and we've asked them what is helpful for you.
And the automation really is one of the biggest things that I think we have done that if there is a downturn in the economy and the unemployment rate does go up, I feel confident, you know, pandemic notwithstanding, that's that was a little nutty, but but, you know, any sort of a downturn downturn, as I've just mentioned, that I do think that we would be prepared for anything in the realm.
Speaker 1
Thank you for that response. And I'll ask you kind of a question. And and this is just how you are looking at the state's workforce plan. And as you're doing these surveys and all of these federal actions are creating new scenarios that we have to prepare for. How is that?
How are drafting of the changes coming and what are stakeholders sharing with you around what we expect to see when you talk about you for question.
Speaker 10
Yeah. So we have recently finished actually the modifications to the state plan and are in the process of submitting to the Department of Labor and we'll hopefully get their responses pretty quickly, especially considering just about every state has asked for a delay on the modified state plan to be able to address some of the concerns raised by HR1, raised by the intake procedures, raised by the changes in the ETPL policy federally as well. At this point, we've received very, I would say, very minimal public comment on the modified state plan, maybe because there is a lot of overhanging questions about what the effects will really be. But I think also because we were well ahead of some of the issues that understanding that this change in administration would probably cause some consternation at the local board level, I think that they were diligent in ensuring that we understood what those impacts could be. And we're also in a process of obtaining waiver requests from the local boards on how to adjudicate some of these issues and to work within the system as it's being redesigned for them, but also how to do it in a way that maximizes benefits for the people who come through the door.
I think the bigger concerns that we were hoping to outline in future considerations of the state plan is the modifications related to the eighty hour work requirements and understanding, like, I have principal questions around certain types of jobs. For example, the creative economy. Right? What what amount of time goes into work in the production of something that is of physical nature that can then be sold? You know, similar in the education space, where one hour of training typically needs an hour or two of substantive training outside of the training environment to really get the skill developed well.
How are we able to track that amount of time in a way that is beneficial to the worker who needs to be have have the supports necessary to go through the training? And that comes from the benefit side. So making sure that the trainings meet the expectations for the skills that are being need, but also for their eligibility requirements. And that's something I think we still need to figure out, especially what counts as work, what counts as community service, because that's another component which I assume that our AGCCs will have to take on to a certain extent, especially for folks who are having more difficulty finding gainful employment or finding fine trainings in career paths or in career pathways that lead to, you know, family supporting wages. Wages?
Speaker 1
Well, I'm glad to hear there wasn't overwhelming concern that surfaced through the public comment of the process. And I asked that question just because I know so many particularly workforce providers that are in communities of color that have particular programs that that target vulnerable workers. And, you know, the the federal funding mix has been difficult for certain folks, but it sounds like in the workforce space, the federal dollars are continuing to flow. We're not seeing
Speaker 10
One silver lining there is that EOA was reauthorized at nearly the same level as previous. It doesn't change the amount of intake that they're going to have to do, which is going to rise substantially, which means their capacity challenges are still going to be persistent, and the pressure on the amount of funds that will be available for training or be available for the career services will potentially decline because of the number of folks that they have to serve. That is something that was definitely raised by a number of local board directors as we did the tour and is something we're looking to see how we can address.
Speaker 1
And then I have one final question and I because my time here going into my fourth year, so I haven't lived through those those those, downturns. But this question of health care and HR one, from your vantage point, I know you all are looking at the overall economic workforce conditions of workers, but how does HR one impact? What what are you anticipating? Should should these proposals, the work eligibility require all of the things, come to bear? And, of course, the state hopes to intervene to protect as many workers as we can, to keep folks with their health insurance.
But what what are some of the implications for you all of this this bill?
Speaker 18
From from an employment perspective? You know, I mean, I think that if I don't know, Kaina, do you have a better answer than I'm gonna mumble something out?
Speaker 10
So I I think that from our perspective and from the local board's perspective, it's gonna require an increased understanding of the nuance, right, from the case manager perspective. How do you do the intake to understand what level of care they had, what requirements they're now going to have to succeed, what trainings could be available for that. But then also looking at it as a holistic care of the individual to ensure that they have the right contact at the health service agency locally to be able to understand that they've met those requirements. It's also going to require a data sharing element between health agencies and the local boards so that they know when somebody's coming in what service rendering they already have so that they can ensure that the trainings will meet the expectation to continue to receive those benefits. The workforce boards are charged to get people able to work and trained and ready to work.
And so in a lot of sense, how that handoff from health services to the workforce board will matter, but also if they are unable to do certain trainings or unable to do how do we hand them back in an efficient and effective manner? Because I think at the end of the day, it's about, yes, the the work readiness is what our charge is, and so we're gonna do everything to ensure that they're able and capable of going into trainings to upscale for the jobs that are in demand. That being said, they're going to have a different intake procedure because of it. They're going to have to ask different questions than they've ever asked before. They're probably going to have to go a little bit deeper.
The inclusion of FAFSA as a requirement for the workforce Pell will also lead to a different set of questions and a different set of forms that they'll have to assist and fill out with. So I do see there will be an increase in the amount of time in the case management space more particularly. But what they're doing is not gonna change that dramatically. It's really just gonna be a lot more boxes to check, if you will, and a lot more connections to maintain. And then the data sharing element, which is always a challenge, especially when we're talking about labor data versus health data and understanding that one's governed by HIPAA and one is governed by, you know, the SSN and SSI data.
So, like, how do we marry that without creating exigent risk on the data sharing principle itself?
Speaker 1
Well, no, I appreciate that answer because we know many of our Medi Cal recipients are working, and they're working more than one job. And we also know that these eligibility requirements and increasing the frequency of the eligibility process ensures that people are gonna for sure lose their health care and does not necessarily result in more employment. So you're right. It's a bunch of busy work that's gonna cost us a lot of time and energy, but with very little results. But on that happy note, I want to say thank you to this panel for sharing our plans, our indicator strategies that we're watching, and the legislature will certainly stay in close contact with you as we, prepare for what we know will be, in the fall, sort of a landing point for all of these policies.
And, we wanna make sure that the state of California is for ready for what for whatever that will bring. And, certainly, what you've shared gives me a lot of hope that we are, in a in a in a good place. So thank you so much Thank you. For your testimony. And I believe that oh, did you wanna comment.
Okay.
Speaker 18
Because it really did make a huge difference, and it will make a huge difference in the recession if there is a
Speaker 12
stabilizing things. Yeah. Because I was in one of those offices back in the day, and I won't say much more about that, but trying to do casework Yeah. Of the thousands. So we appreciate that.
Yeah. You're ready for the next
Speaker 1
Thank you. Thank you. So we now have concluded all of our panels and testimony, and we will now open it up to the public to give public comment. If you would like to provide a public comment, please step to
Speaker 1
mic. I believe you have one minute, and we are trying to keep folks to the one minute because this room has to shift into a new committee in a few moments. So please state your name, organization, and one minute.
Speaker 15
Thank you so much, senator. My name is Christian Ramirez. I'm the political director at SDIU USWW. I'm here with, members of, our union. These are Save Mart workers and, who were their contract was taken away.
From one day to the next, they went from making $22 an hour to minimum wage. They lost their benefits. They've lost their pension. They lost their union protection. All of all those things were won thirty years ago.
We literally said back the time thirty years, and these are workers impacted across Northern California. Unfortunately, this pattern of corporations preying on American workers is not exclusive in Northern California. Just yesterday, NBC Universal Studios laid off 200 janitors, and now those workers are working without union protection. This is a growing trend in our state, and we must put an end to it. And these workers will give more testimony on that.
Thank you so much.
Speaker 15
is Pedro Toscano. I lost my union. I was working there for three years at State Farm Lucky Stores, and I'm proud of my family. I raised two strong boys. One is a in the navy, the other one's a deputy sheriff in Contra Costa County.
And the many workers like me who started who formed our union thirty years ago lost their contract as well. And many families will be impacted like I am. Thank you so much. Corporation. My name is Victor.
I work for I used to work for Save Mart. We had a really good contract that had full medical benefits. And one day from the next, it took our union away, and they left us without any protection. And I'm here to ask for your help and your support because this can be a matter of life and death. People could literally die because they need medical coverage.
Thank you so much.
Speaker 19
Hello. Hello, everyone. My name is Latasha Reed. I'm a security officer in the East Bay. And while we're here fighting for our own contract, we're also here in solidarity with our security, with our janitors.
Janitors lost their coverage and all their wages and everything overnight. It is really, really unfair. So we just need you guys to support them, and please, please help them. Thank you.
Speaker 15
My name is Ana Messa. Just make peers. I'm here to raise my voice because they've taken away our contract. We're raising our voice today because we desperately need our medical health our health coverage. We depend on it.
Our wages now. We're making half of the last wages that we were making before. Thank you. I worked for Lucky's for twenty seven years, and in one month, our health care will disappear, and we're not going to have wages anymore. I'm very proud of being a member of my union, USWW, for twenty seven years because thanks to my union, we have a great contract that we still have, but we're about to lose.
Imagine the pain that I feel when you you reach my age of 56 years old, and from one day to the next, they tell you you lost everything you fought for. And 46 of our my coworkers lost their job because this company decided to hire a nonunion company that pays minimum wage with no benefits and no protections. Please do everything you can for us and our families because we're gonna we're going to lose our health
Speaker 20
Good afternoon. I'm Tim Shattuck with the Warehouse Worker Resource Center speaking on behalf of the California Network for, Immigrant and Worker Justice, which we are a member. First of all, thank you so much, chairwoman Smolod Cuevas, and other members of the committee for holding this hearing today. I think it really brought to light a lot of what our coalition members have been seeing on the ground in terms of the devastating impact across multiple industries of the federal administration's discriminatory and unconstitutional attack on our communities under the guise of immigration enforcement. I wanna highlight something that I think came up, in one of the earlier panels, is the compounding, nature of this harm.
Not only are we seeing our members and families suffering the trauma and the violence of the militarized enforcement, we also then often have members who are losing a primary wage earner and suffering extreme hardship. And many of these families are also not eligible for unemployment benefits because of status. This is a huge problem that our coalition has been fighting for years on to figure out how we can, as a state, expand our unemployment safety net to cover all workers regardless of status. This is a huge gap in our safety net. It creates a lot of hardship, and it really undermines the promise that California has made to apply workplace protections to all workers.
Secondly, we would wanna highlight that this year, we're
Speaker 20
I will. Thank you We're so working with Assembly Member Garcia on AB 2,271, which would create an emergency program to provide direct financial benefits to families who have been impacted and lost income because of the federal administration attacks. So we really hope we can get your support on that bill. Thank you.
Speaker 21
Good afternoon, Madam Chair and members of the committee. My name is George. I am the Workers' Rights program director at Valley Voices, a community based organization serving, the community of Kings County. I wanna echo the comments made by my colleague today about the urgent need for a robust, safety nets for workers across the state. We know that the testing ground for enforcement was not in LA, but in agricultural communities like Bakersfield and Camarillo.
In one tragic incident, a farm worker named Jaime Alanas Garcia lost his life amid the chaos created during the ICE enforcement action. Agriculture drives California's economy, and this industry relies heavily on undocumented workers, yet these workers have no access to unemployment. In Kings County, we are already seeing the impacts of federal immigration policies in our community. We are seeing an increase in our local unemployment rate. We are seeing an increase in food insecurity, long lines at our local food distribution and a growing fear of employer retaliation, which makes it harder for workers to report workplace violations across the state.
We ask that the take that the state take action to protect California workers and California families. Thank you.
Speaker 1
Thank you so much. I think we have heard all of our public comment today. I will turn to the dice. Is there any closing remarks or comments you wanna make, senator, before we conclude?
Speaker 12
Oh, just just to thank you for your leadership as as chair of this committee and, of course, your committee staff for making sure this happened. It's very important, you know, across a number of topics that are going to impact not only the state but our decisions this year on budget and on policy bills. So it's very much appreciated. Thank you.
Speaker 1
Thank you. Thank you, senator Cortese, for being here and sharing your really insightful comments. And, again, I also wanna echo your gratitude to the staff for putting this, amazing hearing on today and to all of the presenters and and panelists and particularly to the workers who spoke, we stand with you. And when we hear about a contract being busted and more workers being forced into a safety net, it it it means that we have to do a lot more to ensure that we're protecting bargaining rights, we're protecting union contracts, and that we are fortifying the safety net, which unfortunately seems to be growing more and more. You know, the the statistic that sticks with me was in our first panel where they talked about the overgrowth of low wage jobs, the overgrowth of jobs that don't pay enough to allow workers to make ends meet, the lack or stagnation of jobs, at the middle, and the extraordinary number of jobs that are created, at the high end.
And I was looking at a report this week that showed, you know, CEO pay, for example, is about 530% times higher than what the average worker is earning. And so as our economy is growing, it's only growing in one top one, top half percent while the rest of us who work, and that's all of us who work, those on this dais, those in the audience, those who are watching, find it harder and harder to to to make ends meet. And I think today's panel did give us a lot of information and insight on what we can do, what indicators we need to watch, what are the conditions that are worsening right now when we think about the federal workers and that they are now in their second, working while not being paid due to to federal actions. It's incumbent upon us in the state, to take the necessary steps, to deal with the suffering and to make sure that under this Trump administration, California stays true to our values, ensuring that all workers are protected, all workers have access to the safety net, and all have the opportunity to be able to work and then provide a real life of thriving for families and communities.
So we will not be deterred in fighting this administration and fighting for our values. And it sounds like Californians are with us. There was also a recent study done that shows, you know, almost half of Californians say we need to raise some revenue in this state. We need to raise some taxes, and we need to make sure that our wealthiest corporations and wealthiest individuals pay their fair share. So our sustainability and our protection as a state is going to be a shared responsibility, and I know many of us here on this committee are very much committed, to ensuring that, the most vulnerable, and low lowest wage workers will not bear the burden of these federal attacks.
California will stand up. So with that, thank you for your participation today. Thank you for, sharing your stories. And and for the workers who testified, thank you for your courage to share your story, not just for yourself, but the other workers who you will never meet, but who will benefit from your testimony today. Thank you.
And with that, this oversight hearing is adjourned.
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