How bad are California’s employment and quality-of-life indicators? Let’s consider a few illustrations of failure.
The Associated Press reported the recent unemployment numbers: March jobless rate dips to 12 percent in Calif. Yep, a disastrous 12 percent unemployed is an improvement here in the post-Golden State, where the official jobless number has been 12 percent or above since June 2009 except for one month. (See the Sacramento Bee’s interactive map since January 2008.)
The national unemployment rate for March is 9.2 percent according to the National Bureau of Labor Statistics.
One reason for the miserable rate of employment is the state’s anti-business climate. The Orange County Register reported the exit stampede of dozens of firms just this year: 69 more firms move jobs, facilities out of California.
Another problem of course is legal immigrants and illegal aliens taking American jobs. If the eight million jobs held by illegals (according to Pew Hispanic) were liberated by universal E-verify, then those positions would open up to citizens and a substantial portion of the jobs crisis would be solved. But liberal Sacramexico would never go there.
A bi-partisan group from Sacramento visited Texas last week to learn the secrets of job creation (less regulation, illegal immigration and taxation, perhaps?), as reported by AP, Texas governor, Calif. lt. gov. tout job creation. No wonder the pols wanted some hints, since Texas has added 165,000 jobs during the past three years while California has lost 1.2 million jobs, according to the group’s leader, Assembly Member Dan Logue.
Have the politicians never asked business owners why they are leaving? Many have voiced their complaints but Sacramento hasn’t seemed interested. In 2009, Gov. Schwarzenegger reluctantly released a state report showing the enormous regulatory burden in California (nearly half a trillion dollars annually), but Sacramento’s liberal leadership snoozed through that warning sign as well. (Listen to John and Ken’s program on the headache-inducing study about state regulation.)
A long-time observer of California’s propensity to chase out job creators is Joseph Vranich, the Business Relocation Coach. He was interviewed by the John and Ken radio show on Friday about a recent article describing how employees now ask their bosses to leave the state. Diversity is not mentioned, although one person wanted to avoid the Los Angeles school system.
Employees Now Asking Companies to Leave California, Fox and Hounds Daily, April 14th, 2011
If I hadn’t heard it from clients I wouldn’t have believed it – Californians are asking their companies to leave the state.
Some time ago a decision-maker told me he had evaluated the benefits of moving his department out of Los Angeles. He said: “When I discovered how substantial the savings would be, I quipped in front of my staff, ‘We should move to Texas.’ I was surprised by what happened next – people approached me one by one, came in my office, closed the door, and asked that we move to Texas. Once I saw the employee reactions, I’d like for the relocation to occur.”
Businesses relocate generally for cost factors (taxes, the burdens of excessive regulations, high rents) but people move for life-style reasons. Here is a sampling of employee motivations:
- “I lived in Texas before and I’d like to go back - fewer traffic jams and I can afford to buy a house there.”
- “When the owner told me about the move to Nevada I jumped at the chance to go. The company can grow better there and I’ll have more opportunity to stay in this field and move up.”
- “One reason the owner liked Colorado was because of the better schools. I thought, well, we’re going to have kids and we don’t want them in the Los Angeles school system.”
- “My company is fabulous. I will move wherever it decides to go. If it’s someplace that’s cold, I’ll get used to it!”
What is the “staying power” for Californians in new places? I don’t know. But a manager and his wife who grew up in Huntington Beach moved to Pennsylvania and love it so much that she said, “We’ll never go back.”
I’ve heard “I’ll never go back” from a number of people.
The message isn’t getting through in Sacramento. For example, this week the Public Policy Institute of California (PPIC), will issue a report about why the state fares poorly in many published state-level business climate rankings or “indexes.” The organization doesn’t like it that California often ranks at or near the bottom of just about such rankings. One of PPIC’s arguments is that “California’s poor ranking among the business climate indexes focusing on taxes and costs is offset by natural advantages (in particular, good weather), and these favorable factors enable California’s economy to perform reasonably well.”
Yes, California has good weather.
For those of you who plan to read the new PPIC report, print out this list – Why do Companies Leave California? Here Are Ten Reasons (Updated) – put the documents side-by-side, and decide for yourself which is more relevant to the state’s future.
Disclosure: I’ve written before about how PPIC’s work on the state’s business environment is poor – see New Think Tank Report on California’s Business Exodus: Useless.
While Sacramento remains fuzzy-headed about California’s hostile business climate, the state is experiencing the fastest rate of company out-of-state and out-of-country relocations since I put a specialized trackingsystem into place two years ago. Activity from Jan. 1 through April 12 of this year shows that 69 California company disinvestment events have occurred, an average of 4.7 per week – greater than the 3.9 average per week last year. See more at Calif. ‘Disinvestment Events’ Reach New High As Companies Opt for Other States, Nations posted yesterday.
By the way, the number one location for California companies to relocate to, or to divert capital for facilities that in the past used to be built here, is Texas with 14 such events.
My list doesn’t overstate the case (we probably learn about only one out of every five company departures), but others understate the problem. One state agency employee in meeting with a moving company CEO said, “Claims of businesses leaving are exaggerated. All we lost last year were seven companies – here’s the list.” The executive read the list and said, “Do you realize you don’t have written down here even one of the companies that we moved out of the state last year?”
This week, when PPIC issues its report, something more important will be happening.
At any time during this week that I want to feel optimistic about California ending it’s business-hostile ways, I won’t think of the PPIC event on Wednesday. Instead, I’ll focus on the activities on Thursday and Friday when Dan Logue, a member of the state Assembly, and his colleagues meet with Texas Gov. Rick Perry and also conduct a hearing on business issues.
He and some of his colleagues are taking the self-financed trip to Texas to learn what California is doing wrong and what Texas is doing right. The Orange County Register did a nice job explaining what the trip is all about in California politicians to check out Texas business.
The fact-finding delegation will probably get an earful from former California business owners who fled the state’s excessive regulations and high taxes. But I wouldn’t be surprised if some rank-and-file employees also showed up to say why they volunteered to leave California – or even encouraged it.