California Crisis, Not One Cause from 1992


By Editor – 1992

While the media continues to blame California’s problems on defense cutbacks, they fail to mention the true causes of what have led to the “welfare states” demise. I don’t intend to downplay the fact that there have been defense cutbacks, but the straw that broke the California business’s back is far more than just defense.

In previous issues of Speak Up America, I have pointed out that excessive environmental regulations have done much of the damage. Companies can’t get out of California quick enough. In the October issue of Speak Up America, I pointed out that 227,000 jobs had been lost in Southern California alone, attributed to excessive environmental regulations. But environmental regulations aren’t the only thing killing the once golden state.

Attacks on business don’t just come from environmental regulation. In an article that appeared in the fall issue of Friendly Exchange, and written by Farmers Insurance Chairman and C.E.O. Leo Denlea, entitled, “Worker’s Comp – A California Crisis,” the author points out that California’s workers compensation costs have increased 250 percent between 1981 and 1990. That translates to an increase from $4 billion to over $10 billion per year. The causes are as startling as the statistic itself.

In California if an employee can prove 10 percent of a stress condition is job related, he or she, or it, can receive workers compensation. Imagine that, all you have to do is prove a 10 percent job related condition and you’re home free. As a result, stress claims have increased 700 percent in the same time period.

Mr. Denlea further points out, in his article, that “fraud mills” employ people called “cappers” who approach laid-off employees outside unemployment lines and convince them that “they can make big money by filing workers compensation claims against their ex-employers.” Authorities in California estimate 20 to 30 percent of all claims are fraudulent. This in turn has resulted in a 187 percent increase in medical treatment costs between 1980 and 1988.

Peter Ueborroth, the man Mayor Bradley called to rebuild Los Angeles and who also headed the Council on California Competitiveness, issued a report that stated, “Dueling doctors who often render extreme positions at the behest of dueling lawyers on either side of a litigated case, can add thousands of dollars to the cost of handling a workers’ comp claim.”

Along with opening California’s doors to any new arrival, who wants some form of welfare, from any other state, California has dug its grave real deep over the years. Pete Wilson, California’s governor, inherited the mess and you can be sure the people who created the mess are now blaming him.

Not letting any grass grow under their feet the environmentalists have just won a major battle over water. The $18 billion a year agriculture business was handed a blow when President Bush signed into law a new Western water policy that will end up cutting California farmers water as much as one third. Why? So the salmon down stream can have an improved spawning ground.

This means fewer fruits and vegetables will be grown and prices will definitely go up. But what the heck, you can afford it.