Studies not stories: Businesses are NOT leaving California

 
Sep 23, 2010
By Mike Young

You hear it all the time -typically from corporately-backed Republican candidates running for office: "California's regulations are a job killer. Companies are leaving California to do business elsewhere." This is the argument that Texas oil companies are using to promote Prop 23, which would basically kill California's sole prospering business sector right now: clean tech. But here's another important question: are there more of them than there are new companies coming in or starting up locally? 

Turns out, there actually have been studies on this issue like this recent one from the Public Policy Institute of California. In fact, they historically have demonstrated that the vast vast majority of businesses aren't leaving California after all. Sure there are some companies that leave, and some people decide not to start a business in California, but the percentage is negligible, so much so that California suffers less from this problem than other states:

Gubernatorial candidate Meg Whitman and other Republicans contend that California's poor business climate is driving employers and their jobs out of the state, but an updated study by the Public Policy Institute of California found otherwise.
 
Relocations account for a tiny percentage of the state's job losses, the PPIC study found - just 1.7 percent from 1992 to 2006 and never more than 2.3 percent in any one year.
 
"Few businesses move into or out of California," says the report, written by PPIC's Jed Kolko. "From 1992 through 2006, about 16,000 jobs annually moved into California and about 25,000 jobs annually moved out of California. The annual net employment change in California due to relocation - a loss of about 9,000 jobs - represents only .05 percent of California's 18 million jobs."
 
Furthermore, Kolko's research found, California's losses from employer movement are well below the national average of the states. Washington, D.C., suffers the biggest such loss, 6.9 percent of its total employment decrease.
 
"In California," Kolko continues, "74 percent of job gains and 68 percent of job losses are homegrown. Most job gains are due to the births and expansions of locally owned businesses; most job losses are due to the contractions and deaths of locally owned businesses.
Gubernatorial candidate Meg Whitman and other Republicans contend that California's poor business climate is driving employers and their jobs out of the state, but an updated study by the Public Policy Institute of California found otherwise.
 
Relocations account for a tiny percentage of the state's job losses, the PPIC study found - just 1.7 percent from 1992 to 2006 and never more than 2.3 percent in any one year.
 
"Few businesses move into or out of California," says the report, written by PPIC's Jed Kolko. "From 1992 through 2006, about 16,000 jobs annually moved into California and about 25,000 jobs annually moved out of California. The annual net employment change in California due to relocation - a loss of about 9,000 jobs - represents only .05 percent of California's 18 million jobs."
 
Furthermore, Kolko's research found, California's losses from employer movement are well below the national average of the states. Washington, D.C., suffers the biggest such loss, 6.9 percent of its total employment decrease.
 
"In California," Kolko continues, "74 percent of job gains and 68 percent of job losses are homegrown. Most job gains are due to the births and expansions of locally owned businesses; most job losses are due to the contractions and deaths of locally owned businesses.
Gubernatorial candidate Meg Whitman and other Republicans contend that California's poor business climate is driving employers and their jobs out of the state, but an updated study by the Public Policy Institute of California found otherwise.
 
Relocations account for a tiny percentage of the state's job losses, the PPIC study found - just 1.7 percent from 1992 to 2006 and never more than 2.3 percent in any one year.
 
"Few businesses move into or out of California," says the report, written by PPIC's Jed Kolko. "From 1992 through 2006, about 16,000 jobs annually moved into California and about 25,000 jobs annually moved out of California. The annual net employment change in California due to relocation - a loss of about 9,000 jobs - represents only .05 percent of California's 18 million jobs."
 
Furthermore, Kolko's research found, California's losses from employer movement are well below the national average of the states. Washington, D.C., suffers the biggest such loss, 6.9 percent of its total employment decrease.
 
"In California," Kolko continues, "74 percent of job gains and 68 percent of job losses are homegrown. Most job gains are due to the births and expansions of locally owned businesses; most job losses are due to the contractions and deaths of locally owned businesses.

Now, once every few years, you'll see these studies reported, but they all fall on deaf ears because the emotional fairy tales that pro-polluter groups like the Howard Jarvis Taxpayers Society and the Chamber of Commerce like to tell make more memorable stories that they repeat over and over again. 

The thing is, as the SacBee notes: 

What Kolko's research does not - and cannot - show, however, is whether the state's business climate is a significant deterrent to new job-creating investment. There's no objective way to determine why investments are made inside or outside the state, since investors don't reveal their reasons for such decisions.

There's the rub. Without a way to determine for sure that the state is truly over-regulated or if they're just making stuff up, these polluters and large corporations make unfounded claims that fit the message they want because they can't be supported or denied. Like their philosophy on toxic chemicals, they put the burden on you to prove them wrong instead of demonstrating they're right. In fact, it's not even worth them trying to find a way to prove their claims are true because spending money to figure out something that might prove them wrong just isn't going to make them money -and really, that's what it's always about. 

 

 
 
 

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