CEOs Rank CA Worst State for Business
May 5, 2011
By JOHN SEILER
Once again, California garners the booby prize for business climate:
For the seventh year in a row, CEOs rate Texas as the #1 state in which to do business and California as the worst. North Carolina maintained its #2 rank, while Florida rose three positions to the #3 spot.Tennessee fell one slot from last year to #4 while Georgia climbed two positions to claim the #5 rank.
Chief Executive magazine’s annual “Best & Worst States” survey takes the pulse of CEOs on business conditions around the nation. For the 2011 survey, 550 CEOs from across the country evaluated the states on a broad range of issues, including regulations, tax policies, workforce quality, education resources, quality of living and infrastructure.
“A handful of states have made business-friendly policies a priority,” says J.P. Donlon, Editor-in-Chief of Chief Executivemagazine and ChiefExecutive.net. “These forward-thinking states are the exception rather than the rule and include Utah,Arizona, Florida, Tennessee, Louisiana, Texas and Oklahoma.”
CEOs voted California as the worst state in 2011, with New York, Illinois, New Jersey and Michigan rounding out the bottom five.
“ABC — Anywhere But California,” said T.J. Rodgers, CEO of Cypress Semiconductor, a $668 million chip maker headquartered in San Jose, California, and with plants in 10 countries. “It’s expensive, it’s hostile to business, and environmental regulations are more of a drag on business than protecting the environment.” Cypress Semiconductor’s headcount in California peaked at 1,500. It’s now down to about 600.
Seven years on the bottom. That’s also how long Gov. Arnold Schwarzenegger was in office: the same past seven years. So he was just another line of anti-business governors. He only made things worse, especially for the “little people” — the small businesses and middle-class folks that voted for him, mistakenly believed his lies about “blowing up the boxes” of government bureaucracy, not increasing taxes and “cutting up the credit cards” government debt.
And unlike some of these states, especially Michigan, California is not trying to improve its business climate.
The attitude here of Schwarzenegger, current Gov. Jerry Brown, the Democrats who rule the Legislature and socialist media and think tanks is: California would be a wonderful eco-paradise if all those horrible, polluting businesses and people (yuck!) — besides us — left.
Heaviest Government Burden
California, once a business friendly state, continues to conduct a war on its own economy. According to the Pacific Research Institute [CalWatchDog.com's parent think tank], it has the fourth largest government of all U.S. states, with spending equal to 18.3 percent of GDP. The comparable figure for Texas is 12.1 percent. Survey respondents uniformly say the state’s regulators are hostile. “No one in his right mind would start a new manufacturing concern here,” said one California CEO.
Although California is not unique in pursuing policies that prompt wealth and job creators to expand elsewhere, (New York being a good example), the Golden State seems uniquely oblivious to the effect its labor and other regulations are having on its innovative and growth-oriented Silicon Valley. Job growth in the Valley has flatlined. Firms keep their HQs there, but pursue growth in friendlier states. Google, Intel, Cisco and other companies locate new plants in states such as Arizona, Utah, Texas, Virginia or North Dakota.
Sacramento seems to take perverse delight in job-killing legislation, of which the pair of bills known as California’s “Green Chemistry Initiative” that former Gov. Arnold Schwarzenegger signed into law in September 2008 serve as an example. The regulations mandated that “manufacturers seek safer alternatives to toxic chemicals in their products, and create tough governmental responses for lack of compliance.” When the 92-page final set of commands was issued, the “green community” demanded a rewrite with even tougher requirements. Writing in the Washington Examiner, Chapman University Law professor Hugh Hewitt said that the new rules will mandate testing and labeling changes on tens of thousands of products, likely triggering product recalls. “Take whatever you think is the worst regulatory regime out there, and expand it exponentially.”
Then there is the state’s carbon emission law (AB 32), which the Small Business Roundtable and PRI say will cost half a million in foregone jobs in 2011 and up to 1.3 million jobs by 2020. What’s more, it is by no means certain the law will reduce carbon emissions since it only applies to California.
When Will it Get Better?
I keep wondering: When will it get better? When will Californians stop electing anti-business, high-tax governors — we’ve had four in a row now, two Democrats (Gray Davis, Brown) and two Republicans (Pete Wilson, Schwarzenegger)?
When will we get some Democratic legislators who understand that the state has citizens besides environmentalist extremists and union lobbyists?