The Myth of a Business Exodus from California.




They’d have you believe California businesses are leaving by the hundreds, by the thousands, taking great jobs with them. They’d have you believe that our crippling taxes and regulations are the cause of this, and that these businesses are leaving for the parched deserts and lunkheaded workforces of Texas and Arizona, because those states’ “business climates” are so much better. And they want to be SURE you believe that this is the reason you or your cousin are having such a hard time finding a job.

One small business departing California.
The Register will be sure to interview him.

And who is “they?”  The same people who tell you that cutting taxes further for the very wealthy will trickle down to you, who tell you that climate change is a myth invented by scurrilous liberals, who tell you that second-hand smoke can’t hurt you, that Obamacare will pull the plug on your granny, and that corporations can best regulate themselves if they’re just left alone.  You know, the people who will lie in your face to steal your last dime, and their useful, true-believing tools.  I’m not being clear?  Our insatiable corporate overlords and Republican politicians, who dream of NO taxes and NO regulations.

Just last week here, Brother Larry put up a version of the story, called “Top 10 Reasons Companies Are Leaving California,” which he took from a group called Americans For Prosperity (AFP.)  Hey, I remember that group!  They’re the Astroturf group founded by oil billionaire David Koch, that does exactly all the things I mentioned above!  (And it’s comical how they come up with “ten reasons” – after the obligatory taxes and regulations, they bring up such gripes as “harsh treatment,” “unfriendliness,” “misery index [?]” and finally even “worst state to do business.”)

As Cruickshank wrote the other day, the story is “bullshit, lacking any basis in evidence whatsoever… If our political culture prized truth and accuracy it would have been dead and buried a long time ago.” So, what are the facts?

Last week, our beloved re-elected Treasurer Bill Lockyer co-wrote an invaluable column in the LA Times with economist Stephen Levy, blasting this myth and some others.  They point out that “companies build new facilities, and move or close other facilities, all the time. If you compile anecdotes and look only at the folks who leave, it is easy to buy the ‘business is fleeing’ mantra. But the Public Policy Institute of California reports that from 1992 to 2006, business relocations to other states accounted for just 1.7% of California’s job losses. Nationally, an average of about 2% of job loss in states was due to businesses moving out.”

They evenhandedly break it all down:  California has lost a lot of manufacturing jobs, but so have many other states, some even more than California – and they are mainly lost to other countries, not other states.  The main cause of our unemployment is the bleak state of our construction industry.  On the other hand, our film industry has been growing despite propaganda to the contrary, and most notably in the realm of venture capital investment we “continue to tower above all other states,” meaning that “venture capitalists believe California is still the best place in the nation to find innovative entrepreneurs and productive workers.”

Cruickshank shot back at skeptics in Calitics comments:  “There’s been a ton of business expansion in CA over the last 10 years, including Siemens, who makes all of its urban passenger rail vehicles for the Western Hemisphere in Sacramento – and plans to expand to build high speed rail traincars if they get that contract. Alstom set up a traincar refurbishing plant on Mare Island recently.  In Fremont, Solyndra has significantly expanded its operations in solar energy, including putting up a new building. Tesla has set up shop at the old NUMMI plant. There are plenty of similar examples…”

Well?  Um… but don’t we have the problem of not being “business-friendly?”  Ah, that’s nonsense.  Like Ezra Klein wrote last year, “Whether we’re friendly to business or not, businesses are certainly friendly to California, and the proof is that the most important industries of the past few years made their home in the Golden State.”  Our “high taxes” are greatly exaggerated:  The average American pays 11.23% of their income in state and local taxes;  the average Californian pays 11.73%.

Then there are the supposedly burdensome “regulations” which are actually a point of pride to us Californians, as we showed last Nov. 2 when we overwhelmingly defended AB 32 by defeating Prop 23.  The regulations California has are the envy of the nation and what make our state great.  And when these whiners go on about too much regulation, listen if they can name off a single one they’d admit to wanting to do away with.  They won’t.  They can’t.

Finally, even for businesses who would prefer a little less taxes, a little less regulations, there are still overwhelming attractions drawing them to California, keeping them in California:  our climate, our infrastructure, and our well-educated workforce (although we are beginning to endanger the last two with our budget cuts.)  A commenter in Texas says:

California has 7.5 times more biotech companies than Texas. I know that for job opportunities in this area, that I plan to go into next year, I am better off leaving Texas. Cutting taxes and relaxing regulations can only go so far when schools are being cut and the state government, especially the school board, is stacked with fundamentalists!


About Vern Nelson

Greatest pianist/composer in Orange County, and official troubador of both Anaheim and Huntington Beach (the two ends of the Santa Ana Aquifer.) Performs regularly both solo, and with his savage-jazz quintet The Vern Nelson Problem. Reach at, or 714-235-VERN.