Red Tape Chokes California Job Creators

As Benjamin Franklin once wryly noted, “In this world nothing can be said to be certain, except death and taxes.”  In the state of California lately, we can add regulation to the certainties that small businesses will encounter as they try to find their financial footing again in these uncertain economic times.

Last week was National Small Business week.  It is a time to examine and celebrate the immense contributions entrepreneurs make to our economy.  Small businesses remain dodged engines of economic growth, even in these challenging times. According to a recent Small Business Administration report, small businesses surpassed large firms in job creation by 75 percent from 1992 through 2010.

But California’s competitiveness and job climate is handcuffed by the overwhelming amount of regulations already on the books, and faces further erosion from the constant stream of job killing legislative proposals.  Small business owners never really know “what’s next?”  This uncertainty keeps them from creating more jobs, or moving out of state to avoid the overtly hostile business climate that exists in California.

In early May, Chief Executive Magazine released its annual business climate survey where California ranked dead last due to CEO’s concerns about the high taxes and overregulation.   CEO’s repeatedly commented that California’s regulatory climate, high taxes and costs of doing business were to blame.  The magazine noted that California was once “the most attractive business climate” but is now in a state of decline.  The Los Angeles times reported that 254 California companies “moved some or all of their work and jobs elsewhere –26% more than 2010.”

An entrepreneur opening a car wash needs dozens of permits before he or she can wash a single car.  Some of the permits are reasonable health and safety obligations, but requiring separate permits for every aspect of the business, from an underground tank monitoring plan to burglar alarms is costly, time-consuming and counterproductive.

Instead of making it so unwieldy for small business owners – truly the engine of job creation in our state – you would think Lawmakers would either create a single source at the state level to offer comprehensive assistance and guidance to the entrepreneur to streamline the process; and/or eliminate some of the excessive red tape that mummifies job creation and economic expansion.  The power of subtracting, not adding to, regulations would provide necessary relief to small businesses.

Nevertheless, no such comprehensive review is on the horizon in our increasingly meddlesome cradle-to-grave Nanny State.  Of that, we can be certain.

(George Plescia is the President of Apex Consulting, Inc. Originally posted on Fox & Hounds.)