Last week was a very bad week for California’s and Sacramento’s economies.
Comcast is closing all of its California call centers, with a loss of 300 jobs from its Natomas site alone. Vision Service Plan announced it is putting 150 new jobs on hold until a dispute is resolved with state officials and has threatened to move all of its operations out of the state. Waste Connections recently closed its Folsom headquarters, resulting in a loss of 120 high-paying jobs with an estimated $100 million economic impact to the region. And now, after being a staple in the community for the past 65 years Campbell Soup Co. is closing its Sacramento plant and eliminating 700 good-paying union jobs in the process.
These departures have exposed a critical point of debate between some political leaders and the business community. Employers have warned the state for years that the cost of doing business and fiscal uncertainty in California has left many employers with no choice but to relocate to other states. Yet what we heard from our state’s leaders last week in response to these recent losses is that we can’t draw any conclusions about the role California’s business climate plays in these job losses.
The fact is California’s business climate and economic competitiveness have been in decline for more than a decade. In 2011, 254 California companies moved some or all of their work and jobs out of state, an increase of 26 percent over 2010 and five times more than 2009. The state currently has the third-highest unemployment rate in the nation, hovering at 10.6 percent. Just a decade ago, California was the world’s fifth-largest economy, it has since dropped to ninth. This has not only resulted in less economic prosperity and opportunities for Californians, but in less revenue for state and local governments. Creating jobs is a stable and proven way to increase state revenue, and is why state leaders need to make policy changes that will grow jobs and strengthen our economy.
California has long had a reputation as a state that is hostile to business.
Earlier this year, Chief Executive magazine named California the worst state for business for the eighth year in a row on such factors as business taxation and regulation, workforce quality and living environment. These CEOs’ opinions and their perceptions of the business climate matter because they make decisions on where a company will locate, expand or add jobs. Increasingly, that competition is with other states rather than foreign countries.
So what have California policymakers done over this past decade to make us more competitive? They locked in new spending when revenue was temporarily up, and avoided cuts when it was down. They passed new regulations that will increase energy costs of the average family $2,500 by 2020 and created a massive new regulatory authority to second-guess the production decisions of every manufacturer. They continue to increase regulations, pass new fees and taxes, and build up massive debt through borrowing and deferrals, putting an increasingly difficult burden on an economy trying to struggle back to life. All while other states are working hard to make their economies more competitive.
In the 1970s, the decision by Dow Chemical to cancel a major industrial expansion in California spurred a bipartisan drive for regulatory reform.
In the 1990s, loss of aerospace jobs drove bipartisan reforms to regulation, taxes, fees and education. Today’s job losses should also be a wake-up call to Sacramento.
The good news is this year saw the first movement from the Legislature on limited but important reforms such as workers’ compensation insurance and eliminating pension abuses. And Democratic Sen. Michael Rubio led the debate on potential reforms to the California Environmental Quality Act, which the Legislature has refused to amend since its passage over 35 years ago.
What is ahead for our future? California politicians need to make job creation their No. 1 priority rather than issuing statements of denial about our current business climate. Now is the time to show true commitment to pass reforms that enhance our economic competitiveness, create jobs and ensure our quality of life for future generations.
(Rob Lapsley is the President of the California Business Roundtable. Originally posted on Fox & Hounds.)