TL;DR: Money printing makes stuff more expensive and immigration reduces you wage. The difference between the cost of stuff and your wages grows wider creating the affordability crisis.

It is has become undeniable that America has become a county of haves and have nots and that is especially true in California. Our state ranks as one of the most unequal and poorest in the union, and it is just not sustainable.

The question is how did we get here.

The economy is like the ocean. Individual drops of water act on their own, just like individual people, but we can step back and see how the collective direction in the wave and the tides.

Economic policy is similar. Tax, spending and regulatory policy are like the waves of the economy. They may have dramatic effects but they are short term as the economy adjusts. However, monetary policy and immigration policy are the tides of the economy. They are slower to act but have massive effects over time. Monetary policy controls the cost of things, namely housing and immigration policy controls the supply of labor and therefore wages.

The politicians like to spending money. They use it to exert influence in the population and reward their friends. However, they can’t raise taxes enough to pay for it, because no one likes paying taxes. So the difference between the money raised and the money spent become debt. This debt is purchased using dollars created out of thin air, raising the overall money supply. This extra money in the system raises the cost of capital goods, and you can see it most clearly in the price of housing. This is why people who rent need to be much more concerned with the federal deficit than people who own houses. It is pushing the American Dream of owning a home further and further away.

Raising the cost of housing would be fine if your wages kept up with inflation.

However, the federal government has flooded the labor supply with foreign labor beginning in 1965. By importing more labor that the economy demands wages, especially working class wages, have not kept up with productivity. This is by design, and why Bernie Sanders refers to open borders as a ‘Koch Brothers Policy.’ As the economy rebounded post pandemic, wages rose 40%. This significant increase to wages is why the Biden administration began importing working age people, to drive wages back to Obama era growth. However, even with the 40% wage growth, working class wages remain significantly below their productivity.

Therefore the combination of monetary policy to allow the government to live beyond its means and mass immigration has created the unsustainable and unconscionable level income inequality we experience today.

Moreover these trends are worse in California because we experience higher rates of immigration than other states. Middle class Californians leave to Texas and Florida and foreign low cost low skill labor moves in. This is the model that has sustained California's population level, but has created the immense economic challenges we face today.

What can we do on a state level to change the direction of our economy?

First, we must exert our power as voters on our congress members and senators to solve the problem where it originates, at the federal level.

But more practically, we do not have control over the federal budget so dealing with inflation is likely out of reach.

However, California does set labor policy and it is imperative that California take steps to shrink the labor supply. This would increase the power of working Californians in the market place and raise wages.

In order to shrink the labor supply California, we must get illegal labor out of the market place. The USDA estimates that 40% of California’s farm labor has no right to work in the United States. This holds down wages for farm workers and since illegal labor does not have labor protections creates workplace health and safety issues. We must hold businesses accountable for immigration fraud. Currently the law requires actual knowledge that someone is working illegally, but most workers don’t arrive with their immigration status written on their foreheads. We must expand the standard to include reasonable suspicion. Don’t ask, don’t tell isn’t good enough.

Secondly, I have never worked a 9-5 job, but I have worked a lot of 8-5 jobs. California must require that breaks be paid and counted towards the 8 hour work day. We still refer to 9-5s even though they haven’t existed for a long time, and it is time to go back to that standard. This would shrink the available man hours, while also providing additional personal time to workers.

Ultimately, California must match its labor supply to the economy’s demands. We have gone too long with more people looking for jobs than available jobs, and it is driving the state apart.