Wednesday, March 3, 2004
Page 7
AFFAIRS OF STATE (Column)
Business Owners’ Opinion of State Should Not Be Ignored
By DAVID KLINE
If you were opening a business and had the option of putting your 100 employees in any state of the union, would you set up shop here in California?
Probably not, according to a new survey conducted by a global consulting firm on behalf of the California Business Roundtable.
The survey, based on interviews with the owners of small and large businesses in this state, is full of statistics that should be real eye-openers for the men and women serving in the Capitol. A particularly jolting statistic: almost 40 percent of the business owners said they plan to move jobs out of the state.
Why would employers send jobs out of this sunny, beautiful, open-minded state? Because employment costs are far higher here than in other states. In fact, the California Business Roundtable reports that “the cost of doing business in California is 30 percent above the Western state average.”
“A typical small manufacturer in California with $20 million in revenue and operating income of $200,000 would be earning more than $1 million if it were located in a lower-cost state like Nevada, Georgia or South Carolina,” the survey said.
State lawmakers ought to mull that one over for a minute. Choosing to run a business in Nevada instead of here could result in an $800,000 windfall.
Some more telling statistics from the survey:
•About 27 percent of the jobs in California are in mobile sectors, meaning they can be moved to other locations fairly easily—jobs in the entertainment or computer industries, for example.
•The mobile jobs tend to have very high wages, and thus provide a good deal of tax revenue to their home state, and a decent amount of consumer spending in the communities where the workers live.
•Interviews found that 55 percent of the employers in mobile industries plan to move jobs out of the state, and 50 percent of employers in all industries have formal policies against adding jobs in California.
The film industry is cited as a microcosm of California’s competitiveness problem. Decades ago, Hollywood was not just the center of the movie universe, it WAS the movie universe. Then, producers discovered they could take their films elsewhere and save a ton of cash thanks to lower wages and less burdensome regulations.
The term “runaway production” was coined, and it was “hasta la vista, baby” for many films, including those starring our current governor. As noted in a previous column, Arnold Schwarzenegger has made 22 movies since becoming a star with some pull in Hollywood, and Web sites which document film locations show that just four of those were filmed entirely in California.
Schwarzenegger wasn’t the only one. The business survey found that since 1997, the number of film production days in California has fallen 60 percent, and at the same time has increased significantly in Texas, Ireland, the United Kingdom, Australia, New Zealand and Canada.
“Because location decisions are made with greater frequency in the movie business [than in other industries],” the survey said, “this industry should be viewed as a leading indicator of what is likely to happen over time across many of the mobile sectors.”
This survey may be sponsored by an organization with an agenda, and may not be entirely scientific, but government decisions on environmental regulations have been based on less. Several businessmen in Sacramento said their experiences in California indicate that the survey’s findings are right on the money.
So what is the solution? What should state officials do to encourage employers to keep their tax-producing, family-feeding jobs here?
For starters, they can quit trying to regulate every nuance of every business. The state enacted 15 changes in labor laws per year from 1992 to 2002, and each change heaped more paperwork, spending and legal liability on businesses. Just keeping up with the changes is a full-time job.
The state also should quit increasing the mandatory minimum wage (another increase is being pondered in the Legislature even now) and should take steps to make workers’ compensation insurance more affordable.
Then, it would be wise to quit catering to the trial lawyers with bills like the current proposal to increase employers’ financial liability for problems caused by customers —people who aren’t under the owners’ control or authority.
Other states are getting by with far fewer business regulations, and their workers aren’t living in Third World conditions. Nor are their job-creators heading for the exits, as they are in this struggling state.
—Capitol News Service
Copyright 2004, Metropolitan News Company