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Center for Labor Research and Education

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Study: State Budget Cuts Will Swell Unemployment

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KCBS

SAN FRANCISCO (KCBS) — The budget cuts Gov. Schwarzenegger proposed in the May revise could wind up costing California the equivalent of 330,000 full-time jobs, according to researchers at UC Berkeley.

The UC Berkeley Labor Center estimates the greatest losses come from cuts in Health and Human Services the governor is considering to close a nearly $20 billion deficit.

The researchers conceded that even new sources of revenue such as higher taxes would also cost the state jobs.

“Most measures designed to reduce the deficit will have a depressing effect on employment and economic growth in the state,” said Ken Jacobs, the UC Berkeley Labor Center Chair.

By those models, the state’s unemployment rate, hovering above 12 percent for the last several months, would under the existing proposal increase another 1.8 percent.

Jacobs said new sources of revenue, while they also would blunt job creation, would have a much softer impact on overall employment.

Higher taxes on upper income Californians for example, would cost the state 13,000 jobs. Increasing corporate taxes would also affect job creation.

The Labor Center models also considered a ten percent “oil severance tax” that would cost California an estimated 400 jobs.