Jobless Rates and Housing Woes

Unemployment soars to seventy-year high, while home prices rise — but maybe not really.

So is the housing slump over? Is the recession easing? It’s hard to
say, because contradictory economic reports are coming out almost
daily. First the good news, such as it is. The median home price in the
Bay Area rose in May for the second straight month, jumping 9.6 percent
in comparison to April. According to the San Francisco
Chronicle, the Bay Area median home price increased to $337,000.
However, that’s still only about half what it was at the peak two years
ago, when it stood at $665,000.

Some market experts also warn that the increase in prices in the
past two months may actually be due to a large number of more expensive
homes being sold, which would skew the median upward. In addition, the
more expensive homes are selling at discount prices, in comparison to
what they were worth in 2007, which could indicate that the housing
market remains depressed. Also, banks apparently are holding lots of
foreclosed properties off the market out of fear that if they put them
up for sale, it will decrease housing prices even more.

Now for the bad news. Unemployment keeps worsening. In fact,
California’s jobless rate reached 11.2 percent in May, the highest in
nearly seventy years, according to the Chron. In the East Bay,
the unemployment rate jumped to 10.4 percent — 10.7 percent in
Alameda and 10.0 percent in Contra Costa. That’s the highest local
jobless rate since 1990.

And if that were not bad enough, the statewide average for gasoline
topped $3 per gallon, according to AAA. Gas prices have shot up nearly
20 percent in the past month, thanks to rising oil prices. Gasoline
averaged just $2.52 in mid May. But even with the sudden, steep
increase, it’s still way below its height of $4.61 per gallon one year

Democrats and Taxes

State Democratic leaders announced last week that they want to raise
taxes to help fix California’s massive deficit. According to the
Chron, the Dems want to increase taxes on cigarettes from $.87
to $2.37 a pack, institute a 9.9 percent tax on companies that extract
oil from California, and raise the state vehicle license fee by $15.
However, none of those proposals appear to have a chance of passing.
Governor Arnold Schwarzenegger strongly opposes tax hikes, and the
Democrats don’t have enough moderate Republican votes to override his
veto, let alone get their plan through both houses of the legislature.
All of which raises the question: Why are the Dems wasting everyone’s
time? Well, the Oakland Tribune had a possible answer: It might
all be a charade aimed at making liberal constituencies happy. The
paper quotes an anonymous Dem, who indicated that party leaders
proposed the tax increases to please progressives but will ultimately
give up on the idea when the governor and Republicans refuse to approve
them. If true, it’s a pathetic attempt to appease liberals. Then again,
we can’t vouch for the Trib story because its sourcing appears

The Democrats, meanwhile, also rejected the governor’s plan to
borrow $2 billion from cities and counties and they oppose
Schwarzenegger’s proposal to close 219 state parks and slash vital
social services, according to the Chron. But without the tax
increases, it’s hard to see how the Democrats can live up to their
budget promises. They have, however, agreed to nearly all of the
$20-plus billion in cuts proposed by the governor. So even if the
recession is nearly over, government services are about to get a whole
lot worse.

Dellums Agrees to Pay Cut

In Oakland, Mayor Ron Dellums offered to do his share by taking a 10
percent pay cut. He also proposed slashing his office’s budget by 20
percent. The mayor’s proposal came in response to a call by four city
council members to cut his office by one-third. Dellums said his plan
was fairer because council members had offered to cut their own staffs
by 20 percent, too.

And in a bit of one-upmanship, Dellums proposed eliminating
slush-fund accounts, known as “pay-go,” from both his own office and
those of the eight city council members. He labeled pay-go as “not good
policy” that “perpetuates parochialism.” Some council members have
historically used the slush funds to improve their individual
districts, as opposed to supporting programs that benefit all of

Three-Dot Roundup

Speaking of Dellums, it’s not clear whether he plans to run for
re-election. But it does appear that Councilwoman Jean Quan will mount
a campaign against ex-state Senator Don Perata. … Perata, himself,
was back in the news when the man who carjacked him and accidentally
shot and paralyzed a ten-year-old boy was sentenced to seventy years to
life in prison. The boy, Christopher Rodriguez, now twelve and in a
wheelchair, stunned the courtroom when he forgave the shooter, Jared
Adams, and shook his hand. Perata later saluted the kid, but said he
couldn’t do the same. … A new study says teens are cheating in school
more than ever, using cell phones and other electronic devices in
class. … A federal judge in Oakland ruled that the military can
recruit teens as much as it wants, striking down two Humboldt County
laws that tried to stop the practice. … In Fremont, Bloomberg News
reported that the NUMMI plant may begin producing Priuses … The
owners of the Elmwood Theater in Berkeley may reopen the shuttered
Cerrito Speakeasy Theater in El Cerrito. … And a BART strikes looks
increasingly likely as management and labor fail to reach a deal to cut
employee compensation.


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