California business climate weakening- Nearly 40 percent of the California decision-makers plan to relocate jobs to other Western states

CALIFORNIA WEAKENING

California has always ranked high in worker productivity,
concentration of science and technology workers and venture
capital money. Yet in spite of these attributes, California may
not even make it on the list when a company is looking to expand
or relocate its operations, says the California Business
Roundtable.

The report surveyed more than 95 percent of the state’s industry
sectors and included both small and large businesses. It found
the business climate to be atrocious. For example:

o Nearly 40 percent of the California decision-makers
participating in the project plan to relocate jobs from
California (mostly to other Western states, with Texas the
preferred location).

o Furthermore, half of the companies interviewed have
explicit policies to halt employment growth in California
while less than 5 percent of companies have retention
policies in place to keep jobs in California.

o The cost of doing business in California is 30 percent
above the Western state average; 6 percentage points of
this gap stems from state regulations alone, with
regulatory costs 105 percent higher than other Western
states.

o The state’s regulatory environment is the most costly,
complex and uncertain in the nation; for example, in the
area of labor law, California enacted 15 statutory changes
per year between 1992 and 2002, which is four times the
average for state legislatures nationwide over that same
period.

The report argues that California would be doing much worse, but
the dot-com boom of the late 1990s masked over these fundamental
weaknesses. The report concludes that California must now
implement significant reforms or suffer increasing losses to
other states.

Source: "California Competitiveness Survey," California Business
Roundtable, Bain & Company, February 2004.

For executive summary:
http://www.cbrt.org/PDF/CCP%20Exec%20Summary.pdf

For more on Economic Issues
http://www.ncpa.org/iss/eco/