The new Economic Freedom of North America report evaluating the 92 states and provinces in the U.S., Canada and Mexico for how many obstacles they place on businesses says only one American state — New York — has more such obstacles than California.

The report, assembled by scholars at the Fraser Institute in Toronto, examines the 50 American states, 32 Mexican provinces and 10 provinces/state governments in Canada and compares their differences in government spending, taxes, labor market freedom, legal systems/property rights, sound money, the ability to trade internationally, tax rates, credit market regulation, and business regulations.

New Hampshire, South Dakota, Texas, Florida and Tennessee get the highest marks of any American states. After New York and California, Alaska, Hawaii and New Mexico round out the bottom five.

That means all four of America’s mega-states are in the top five or bottom five, and that the Fraser report is likely to prompt familiar arguments about whether California’s business-unfriendliness is oversold, or whether the higher economic freedoms of Texas haven’t yielded more dividends because talented people value quality of life — i.e., living in California.

Business Insider has upbeat take on California

Last year, in response to CEO magazine ranking states on their hostility to business, Business Insider issued a ranking that evaluated the health of the economies of each of the 50 states. This provides a metric by which one can judge the argument that California’s regulatory climate is or isn’t too onerous.

The CEO survey last year ranked California as the most hostile in the nation for the tenth straight year.

But Business Insider, while acknowledging the CEO critique, had a different evaluation after examining “recent change in housing prices, nonfarm payroll job growth, unemployment rate, GDP per capita, average weekly wage, and state government surplus and deficit.”

It ranked California as having the fourth best economy in the nation, a ranking that might surprise even the strongest defenders of Gov. Jerry Brown’s record, given that many inland counties remain with recession levels of unemployment and underemployment, and given the size of the state’s unfunded retirement benefit liabilities.

But a closer look at the methodology suggests that California benefits greatly from the enormous wealth being generated in the Silicon Valley, a huge plus factor with few parallels in other states. GDP per capita is definitely on an uptick, even if the wages for most Californians are stagnant.

A 2014 Los Angeles Times analysis also provides context on why by one measure, the Golden State seems to be thriving, but not by others.

The fastest job creation has come in low-wage sectors, in which pay has declined. At the high end of the salary scale, a different dynamic has taken hold: rising pay and improving employment after rounds of consolidation.

Most distressing, middle-wage workers are losing out on both counts.

“People talk about it like an hourglass,” said Tracey Grose, vice president of the Bay Area Council Economic Institute. “There are fewer opportunities for people in the middle.”

The tension has been on broad display in recent days as law enforcement unions and police chiefs react angrily to a new law signed by Gov. Jerry Brown that is driven by the assumption that officers routinely act in racially biased ways:

For civil rights activists, Brown’s action was a big step toward protecting minorities from racial profiling.

 

For many in law enforcement, the measure creates a massive new bureaucratic headache that will do little to illuminate the question of whether police treat minority groups fairly.

 

“It’s a terrible piece of legislation,” said Lt. Steve James, president of the Long Beach Police Officers Assn. and the national trustee for the California Fraternal Order of Police.

 

Written by Assemblywoman Shirley Weber, D-San Diego, in response to fatal police shootings of unarmed black men and other people of color, the legislation will require officers to collect data on anyone they stop, including “perceived” race and ethnicity, the reason for the encounter and whether arrests were made.

That’s from the Los Angeles Times’ account of the uproar over the new law. It is certain to be contentious going forward, especially given the likelihood that some departments will simply ignore it and say they don’t have the resources to spare.

Vergara suit based on claims of poor treatment of minorities

A potential for an even bigger rupture lies with the Vergara v. California lawsuit. Los Angeles Superior Court Judge Rolf Treu ruled in 2014 that five state laws protecting veteran teachers’ rights were unconstitutional because they had the net effect of funneling the most troubled teachers to poor minority communities. Treu said this amounted to a de facto segregated school system but stayed his decision pending an appeal.

The deadline for filing “friend of the court” briefs in the appeal was Sept. 16, and the prominence of those who chose to do so reflects the high stakes in the case:

Parties filing in support of the two teacher unions, the California Association of Teachers and California Federation of Teachers, and the state, which are all co-defendants, were Lawyers’ Committee for Civil Rights, Equal Justice Society, Education Law Center, Southern Poverty Law Center, and Advancing Justice-LA, according to a press release from CTA. …

 

Joining a list of education chiefs from around the nation, student groups, business organizations and others who filed briefs supporting the student plaintiffs was [Arnold] Schwarzenegger and [Pete] Wilson, who wrote, “At stake in this case is not only the future of California’s students, but also the future of California,” said the former California governors, both Republicans. “As students who learn from grossly ineffective teachers face lifelong setbacks, by extension, California’s future economic and social success is similarly impacted.”

That’s from L.A. School Report. What’s noteworthy is the absence of Latino groups either supporting or opposing Treu’s ruling, even though its most sweeping findings were largely based on the treatment of Latino students in the Los Angeles Unified School District.

Former state Senate Majority Leader Gloria Romero, D-Los Angeles, has been an outspoken critic of how public education works in California. She has long asserted that Latino state lawmakers are scared of taking on the CTA and the CFT, especially if they hope to end up in leadership positions. Whether that’s true or not, few Latino politicians beyond Romero and former Los Angeles Mayor Antonio Villaraigosa have taken on the unions.

Black lawmaker leading Democratic critic of teachers unions

Instead, the most prominent Democratic critic of teachers unions is the same African American lawmaker who wrote the police profiling bill. Weber introduced a measure this spring that would have required teacher evaluations to include student performance. It was quickly killed in committee, prompting Weber to sharply criticize her fellow Democrats and their union backers.

A Los Angeles Times poll earlier this year showed support for the sort of changes sought by Weber and other reforms, in particular having teacher layoffs be determined by classroom performance, not seniority.

Weber and the California Legislative Black Caucus have also expressed concerns about the implementation of 2013’s Local Control Funding Formula, a state law championed by Gov. Jerry Brown that was supposed to directly help struggling students by providing them with more resources and attention. A January Legislative Analyst’s Office report looked at 50 California school districts, including the 11 largest, and found none had adequate safeguards in place to prevent LCFF dollars from going to teacher compensation or other uses.

The appeals trial in the Vergara case is expected to begin later this year with oral arguments. Plaintiffs have said they expect the appellate ruling by January.