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California’s troubled economy and high jobless rate are dominant issues in the nasty governor’s race between billionaire Meg Whitman and former Gov. Jerry Brown.
This story first appeared in the November 2, 2010 issue of WWD. Subscribe Today.
The fashion retailing and manufacturing industry in the most populous U.S. state wasn’t spared as consumers reduced spending and the costs of materials, labor and energy increased. Major employers, including Los Angeles-based American Apparel Inc., cut back amid financial troubles and California-based chains such as Mervyns and Gottschalks closed. The economic headwinds also caused specialty stores like Tracey Ross to shut.
“Even if [consumers] do have money, they’re holding it tight to see what happens next,” said Alden Halpern, chief executive officer of 4Whatitsworth Inc., a junior denim company based in City of Commerce, Calif. “It’s a shame.”
Retailers in Southern California are just surviving, said Mark Goldstein, owner of boutiques under the Madison, Madison Gallery and Diavolina nameplates. “I think 2009 was the bottom; 2010 is a little bit better,” he said. “It’s just going to be kind of somewhat flat growth for quite a few years.”
Political newcomer Whitman, a 54-year-old Republican who amassed her fortune and her reputation as the president and ceo of eBay, has spent more than $141 million of her own money in the campaign — the most ever in a non-presidential race — but is trailing in the latest polls.
Brown, 72, a Democrat and the son of the late Gov. Edmund Brown, is the antithesis of a political neophyte, having served two terms as governor from 1975 to 1982. He is the current state attorney general, a former mayor of Oakland and three-time presidential candidate.
The winner on Nov. 2 will inherit from Republican Gov. Arnold Schwarzenegger, who hasn’t endorsed either candidate, a state budget deficit that is estimated will rise to more than $12 billion. Corporate tax revenues as of Sept. 30 were down about 23 percent to $1.49 billion from a year ago, and personal income tax revenues rose more than 5 percent to $10.09 billion, according to the state controller. Revenues from retail sales and use tax climbed by almost 4 percent to $6.63 billion.
California’s unemployment rate climbed to 12.4 percent in September compared with 12.1 percent a year ago and a national rate of 9.6 percent. Real estate research firm MDA DataQuick reported that the number of Californians entering foreclosures increased almost 19 percent in the third quarter from the second quarter. However, the total of 83,261 default notices issued in the third quarter reflected a decline of 26 percent from a year ago and a drop of 39 percent from the peak reached in the first quarter of 2009.
“Find me a job” could be the voter slogan for this election cycle, said Sherry Bebitch Jeffe, a political analyst and professor at University of Southern California’s School of Policy, Planning and Development. “Jobs and the economy appear to be the most important issues for Californians.”
Whitman and Brown have diverged on job creation and immigration policy. The centerpieces of Whitman’s job growth program include cutting an $800 filing fee for start-up businesses, increasing the research and development tax credit for businesses to 20 percent from 15 percent, and cutting the so-called factory tax on manufacturing equipment. Brown wants to appoint a renewable energy jobs czar to oversee the building of localized electricity plants, setting up transmission lines for renewable energy and erecting solar panels along state highways, among other projects. He has set a goal of creating 500,000 jobs through funding for renewable energy.
Larry Berman, a political science professor at University of California, Davis, said Whitman’s “whole economic development plan is based on making California more competitive as a state.” Brown doesn’t favor “large tax breaks to the rich. He is arguing that we invest in green energy and technology jobs.”
On immigration, both candidates emphasize their tough stances on border security, but that’s where their agreement stops. Brown argues for comprehensive immigration reform and advocates a process that would lead to citizenship for undocumented workers. Unlike Whitman, he supports allowing U.S. high school graduates who are illegal immigrants to become legal residents after two years in college or in the military.
Whitman opposes amnesty for illegal immigrants, while advocating English-only education, workplace inspections modeled after drug seizure raids to root out illegal workers and prohibiting undocumented immigrants from having driver’s licenses. She wants the federal government to finish building the fence along the Mexican border and favors using the National Guard to patrol the border. She promises to ban undocumented students from state-funded colleges and universities.
Berman said Whitman’s “point is that illegal immigration is illegal, and Brown’s is…they are here and we have to figure out something to do.”
The issues alone won’t decide the race. Voters’ perception of the candidates matters, too, and Berman said trust is a critical element. “Do you trust a career politician, a man who has lived his entire life in politics?” he said. “Or do you trust a billionaire ceo who has spent $150 million [and more] to become governor?”
JERRY BROWN, DEMOCRAT
Nickname: Gov. Moonbeam
Job Experience: California governor 1975-1983, Oakland mayor, state attorney general
Campaign Misstep: A Brown staffer was recorded calling Whitman a “whore” in reference to a political deal.
Endorsements: Barack Obama, Bill Clinton
Celebrity Donors: Ron Burkle, Steven Spielberg, Jeffrey Katzenberg, David Geffen, Tom Hanks, Warren Beatty
MEG WHITMAN, REPUBLICAN
Job Experience: Former president and ceo of eBay, executive positions at Walt Disney, Stride Rite, FTD and Hasbro
Campaign Misstep: Her housekeeper for nine years said Whitman fired her after learning she was an illegal immigrant and refused to help her gain legal status.
Endorsements: Dick Cheney, Michael Bloomberg, Rudolph Giuliani
Celebrity Donors: Rupert Murdoch, Terry Semel, Michael Ovitz