CA Anti-Business Policies Shrink Incomes

A new study by the Public Policy Institute of California, a non-partisan think tank, confirmed that during the 2007-09 recession, every income bracket in California lost income faster than the equivalent brackets in the rest of the United States. Even more disturbing, all but the top 25 percent of earners now make less than equivalent income classes in other states.

Once known as a jobs magnet for its sunny climate, world-class universities and burgeoning high-tech opportunities, California has been transformed into a toxic anti-business state that works hard at drive businesses away.

From 2007, when the recession began, through its end in 2009, family incomes across all income classes dropped by more than 5 percent.  But instead of going up in the recovery, they continued to plummet by another 6 percent in 2010.

The declines weren’t spread evenly across the income classes.  Families with incomes in the top 10 percent saw their family incomes decline 5 percent. But the bottom 10 percent of California’s poorest families saw their incomes plummet by 21 percent.

In surveys, business executives regularly call California one of the country’s most toxic business environments and one of the least likely places to open or expand a new company.  Many firms still headquartered in California consciously refuse to expand their workforce. Brutalized by the bursting of the housing bubble and currently suffering an unemployment rate of 11.7 percent, almost 3 percentage points above the national average, California family incomes continue to rapidly lose ground.

Grim Economy

With already the lowest credit rating of any state in the nation, Controller John Chiang just released his monthly financial report covering California’s cash balance, receipts and disbursements for November. It demonstrated the state’s grim economic circumstances:

“After accounting for November revenues, total year-to-date general fund revenues are now behind the budget’s estimates by $1 billion, but expenditures for the year are over projections by $1.95 billion…. The combined current year cash deficit stands at $21.5 billion.”

The resolve to turn California against business started with Gov. Jerry Brown when he first was elected back in 1974.  Brown saw government’s job as restraining growth, limiting development and expanding environmental regulations.  In 1977, Time Magazine  declared “the California of the 60s, a mystical land of abundance and affluence, vanished sometime in the 70s.”

Sixteeen years after Brown left office in 1983, Gov. Gray Davis, Brown’s chief of staff during the 1970s, became governor in 1999.  Davis signed 33 bills that the state’s Chamber of Commerce called “job killers.”

Perhaps the most devastating was a restructure of workers’ compensation, which drove an increase in payments per worker from $2.30 per $100 of payroll to $6.44. That tripled the annual employment costs to business from $9 billion to $25 billion.

Four years later, voters recalled Davis and replaced him with Arnold Schwarzenegger.  Unfortunately, in 2006 the “governator” signed the AB 32,  Global Warming Solutions Act of 2006 that critics mourn will raise electricity rates in California by another 20 percent.

Toxic Business Environment

In a 2011 poll of various California business groups, 82 percent of executives and owners said that if they weren’t already in the state, they would not consider starting up here. And 64 percent said the main reason they stayed in California was that it was tough to relocate their particular kind of business.

For several years in a row, California has ranked dead last in the Chief Executive magazine’s poll about the business environment of states in the U.S.

Limousine liberals, rich environmentalists, union bosses and their pet politicians that comprise much of the top 25 percent of income earners in California have not suffered devastating income declines in the recent recession.

Responding to the Chief Executive poll, Steve Smith of the Labor Federation of California charged that it represented “little more than corporate honchos throwing around their weight to try to further strip working people of important protections that improve lives.”  But for the 75 percent of Californians not at the top income levels, California’s anti-business environment continues to inflict real pain on the lives of workers and their families.

(Chriss Street’s is the author of “The Third Way” and blogger at www.econservativenews.com. This story was first posted on CalWatchdog.)

Comments

  1. Lionell Griffith says

    A basic moral principle:

    When you repeatedly put into effect a cause that unfailingly creates a given outcome and do it in spite of evidence that the result will happen, you intend for the result to happen. You are morally responsible for the outcome in spite the pretty words you use to sell doing it again nor how many other pretty words you use to explain that you intend a different out come. Once could possibly be a mistake. Twice indicates that either you weren’t paying attention the first time or that you liked the result. Thrice demonstrates you are guilty as charged and wanted the result you achieved.

    Conclusion:

    Our fearless leaders intended and intend to destroy the economy of California and strip its citizens of their individual rights. They are nothing but a gang of thugs dressed up in pretty suits and ties intent on destruction for the sake of destruction.

    The correction:

    To correct the situation all they have to do is stop what they are doing and then repeal EVERY law regulating and taxing the economy they have passed since California became a state The chance of that happening is less than zero. They will continue as they have until the whole show collapses on top of everyone’s head. That time is not far off.

    • Greetings fellow crackpot! We just might see the day soon when California conservatism will be hailed as a virtue, instead of a hindrance.Hard times and scarce money can focus personal perspectives laser-sharp.

      • Lionell Griffith says

        If so, something good can come out of something really bad. Usually it takes at least a generation before the fundamental ideas change. I don’t have that long. I am 74 and likely have only 10 to 15 good years left so I am working to move things along as best I can.

  2. “Once known as a jobs magnet for its sunny climate, world-class universities and burgeoning high-tech opportunities, California has been transformed into a toxic anti-business state that works hard at drive businesses away.”

    Thank God! Although I truly sympathize with those innocents who are facing great undeserved hardship in this state, the aftermath of squandering decades of unheard-of wealth and opportunity chasing pipedreams and employing absurd public policy, is our current fiasco. Everyone can thank California social progressivists (starting with Willie Brown) for this collossal mess.
    Fortunately, the lack of attraction (money) for all this disproportionate opportunism and state abuse will now discourage and ultimately rid us of the folks ‘who know how to live everyone elses life better’. Then the real work of rebuilding our beautiful state into something liveable can begin after this bad patch passes.

  3. I don’t know why this is news all of a sudden, Jerry;s record shows that he has been, anti business, pro taxes, all along…….as governor before, as AG, and as governor now, plus with the state government controlled by the Democrats, there are not now, nor will there be any cuts in spending. Get used to this, because nothings going to change, unless the voters start using their heads, and not their party affilliation when voting. This started with Gray Davis, and has gotten worse every year.

    • pysco. California is called ‘THE GOLDEN STATE’. In my life time, it has been ‘The BROWN STATE . I am native Californian born in 1957. For all but
      1 year I have lived in this state. This means I have had a ringside seat to this progressively down sliding progressivist initiated hell. There is no anonymity or forgiveness with time where I am concerned. Gray Davis was the last hurrah Governor for ‘business as usual’ California socialism. But the true abandonment of sanity for madcap idealism starts in earnest about 1974 with the former Speaker of the Assembly, Willie BROWN would have served California better if he had stayed with his shoeshine box.
      Willie took the prudent, sound initiative of Governor Pat BROWN Sr. ,way-way over the top. After all, the money was there begging to be spent, so why not? Decades later we now know why this was B-A-D.

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