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When it comes to jobs, not all budget solutions are equal

Berkeley Blog


With 2.3 million Californians out of work, the California legislature should take care to minimize harm to the State’s economy as it works to close an estimated $20 billion budget gap. When it comes to jobs and the economy, not all budget solutions are equal. Social service and health programs like In-Home Supportive Services (IHSS), Medi-Cal Healthy Families and CalWORKS bring in significant federal matching funds. Low-income residents spend a greater share of their earnings and spend more locally than higher income residents, so programs that provide income to lower-income families will have a greater multiplier effect than those that improve income of higher earning families.

The following chart from our recent policy brief provides a good picture of the differences in job outcomes from various budget solutions.

The state cannot afford to get this wrong.

The full report can be found here. Leighton Ku makes a related point about the stimulus effect of federal health care matches in Health Affairs blog here.