IBD: ‘California Still Losing Thousands of Businesses’

Investor’s Business Daily, citing our latest study, begins an editorial by stating, “To hear its media and political elites tell it, California is back on its golden path to long-term prosperity. But a new study suggests the state will suffer as thousands of businesses flee. Both can’t be right.” A few excerpts from the editorial:

IBD Graph Nov 2015 editorial with borderAs America’s most populous and wealthy state, California, has a lot going for it. But a new study from business location consultant Joseph Vranich suggests it is hemorrhaging both businesses and jobs at an alarming rate — even as it remains home to an estimated one-third of the nation’s welfare recipients.

“In California, costs to run a business are higher than in other states and nations — largely due to the state’s tax and regulatory policies — and the business climate shows little chance of improving,” Vranich writes.

The study is impressive for its size — nearly 300 pages — and thoroughness. Vranich focuses on what he calls “California divestment events” — decisions by homegrown businesses to move elsewhere or not to expand in-state, plus non-California firms that changed their minds about coming.

Vranich counted some 1,510 such events from 2008 to 2014 and says that figure probably undercounts actual divestment by a factor of 5-to-1. So the real level is likely somewhere north of 9,000….

In some areas today, including Los Angeles, it’s nearly impossible to build a manufacturing facility because of environmental concerns. So those jobs go elsewhere — to low-tax, pro-business Texas, Nevada, Idaho, Utah, Oregon, the Deep South and, increasingly, to foreign countries including Mexico, China and India. …

[Voters would] be much better off if they stopped listening to progressive politicians who are systematically ruining the state and started listening to those more in tune with economic reality. Like Joe Vranich.

See the complete editorial here.

One focus of this blog has been to address California’s perennially difficult business environment. Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow.