Uh-Oh: Failed Again!
California ranked next to last in latest business climate study
SACRAMENTO - California has received another failing grade in a recent competitive economic study comparing its business climate with that of 15 other states around the country.
Ranking California next to last on the list, the study - published by the Coalition for California Jobs (CCJ) and conducted by The SAER Group, an economic research firm - "demonstrates the sad truth that many employers have known for some time," said Allan Zaremberg, president of the Sacramento-based California Chamber of Commerce and co-chair of the CCJ.
"California's business climate," he said, "is not competitive with other states. For years the legislature has added burdens, costs and mandates that have taken their toll. When companies look at the business climates of the major states with which we compete, we just don't fare very well. The result is that existing companies are tempted to leave and new businesses are created elsewhere."
The SAER Group report looked at a variety of economic development factors and analyzed the business competitiveness of California and its major competitors.
The group used data from 2000 to compare factors across the 15 states. The data analysis was conducted in order to build a business scorecard to readily identify where California is superior or inferior to other states.
Factors that went into the evaluation included demographic characteristics, workforce measurements, business costs, and personal quality of life issues.
New York ranked last among the states and, along with California, was given an F.? Colorado and Utah ranked the highest with each receiving an "A" grade.
Simply put, the state's business climate is "suffering because of a number of factors including rising worker's compensation costs; increasing utility costs; a high cost of living; California's overall tax burden (as measured by share of personal income); and a complex and contradictory regulatory structure," the report concluded.
The report also alludes to a recent nationwide study that ranked California the 49th worst business-tax climate in the entire country, nestled between Arkansas (48th) and Mississippi (50th).
"We are already in bad shape from a competitive standpoint, but that's only part of the news. The rest of the story is that the business climate in California has deteriorated since 2000, and the legislature has just passed numerous job killing bills that will make the situation even worse," said Larry McCarthy, president of the California Taxpayers Association and co-chair of CCJ.
"It is imperative that Governor Davis veto the job killers that have been sent to him. The first step in turning our economy around is to do no more harm. If the Governor is serious about making California competitive again, he will veto these bills."
In a recent edition of the Pasadena Star-News, Grant Hartman, chief financial officer for Cal-Mold Inc., a Mira Loma-based custom injection molding company, was asked for his opinion of the study and his feelings on the current business climate in the state.
Cal-Mold, which employs 150 workers and operates out of a 167,000-square-foot manufacturing facility, is paying shockingly higher workers' compensation costs, said Hartman.
"If we were paying the same rate we paid in 1999, our workers' comp for this year would be $25,000,' Hartman told the Star-News. "But we're going to be paying $200,000 and if we'd stayed with the same insurance company we were using before, our costs would have probably been about $280,000."
According to the report, workers' compensation costs in California have increased from less than $9 billion to more than $25 billion in only two years.
"As if existing financial burdens weren't enough, a bill just enacted by the state Legislature will require almost every business in California to provide health insurance to all employees. The resulting statewide cost of $5.7 billion will be paid primarily by small businesses," it said.
California's job losses have also had a significant impact on the state's economy.
In fact, if the state recovered only half of the estimated 150,000 jobs lost over the past two years, the improved business climate (boosted by additional personal income) would yield about $1 billion in the next two fiscal years alone, according to the report.
The study was conducted in cooperation with the Sacramento Regional Research Institute, a joint venture between the Sacramento Area Commerce and Trade Organization (SACTO) and California State University, Sacramento.
The CCJ is a broad-based coalition led by the California Chamber of Commerce, the California Manufacturers & Technology Association, the California Taxpayers Association, the California Business Roundtable, the California Retailers Association, and the AeA (formerly known as the American Electronics Association) among others.
For a copy of the economic study, go the California Coalition for Jobs at www.cajobsfirst.org
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