California is driving away jobs.

[1IDVET]

State driving away jobs, study says
Almost 60% of California business leaders have policies against growth here.

By SAM ZUCKERMAN
San Francisco Chronicle


SAN FRANCISCO ? Discouraged by high costs and strict regulations, just under 60 percent of California business leaders interviewed for a new study said they have policies to restrict job growth in the state or move jobs to other locations in the United States.

The study, conducted by the consulting firm Bain & Co. for the California Business Roundtable, marks one of the most ambitious efforts yet to analyze the political hot-button issue of the state's business climate. It is scheduled to be released Thursday.

The Roundtable, representing large corporations in the state, has been at the forefront of the argument that California is hostile to business, driving companies away and destroying jobs. Although it worked with the Roundtable, Bain said it wasn't paid for the study and reached its conclusions independently.

The consulting firm interviewed chief executives or senior managers of about 50 small, medium and large companies with extensive operations in the state.

About 40 percent said their companies have an explicit policy to move jobs elsewhere in the United States, with Texas cited as the most frequent destination. Not counting those companies that must stay in California, such as retailers or health-care providers, the proportion of businesses that said their policy is to move jobs rose to 55 percent. Another group of executives, just under 20 percent of those interviewed, said their policy is to avoid adding jobs in California, except when absolutely necessary.

The cost of doing business in California is about 30 percent higher than in the average Western state, largely because of higher wages and benefits, according to the study.

Bain also attempted to measure the cost, uncertainty and complexity of California's environmental, labor and other regulations. It constructed what it called a regulatory hassle index that took into account such factors as compliance costs, the threat of lawsuits and delays in obtaining permits that hamper operations.

The index showed that "California is far worse than any other state in the union, by a very significant margin," said Jeff Melton, a partner in Bain's San Francisco office. "California is going to lose jobs," Melton added.

University of California, Berkeley, economist Michael Reich, who has been skeptical of the hostile-business-climate claim, said the Bain study overlooks the fact that employers have been moving jobs out of California for decades. For example, high-tech manufacturers such as Intel and Hewlett-Packard put most of their U.S. production in such lower-cost states as Idaho, Arizona and Oregon years ago. As a result, California has become a center of highly productive and valuable activities, such as research and development.

"Our high costs are symptoms of success, not failures," Reich said.

OC Register

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Ain't it wonderful?
Not a wonder how this state is so ate up.