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Dan Walters misses what's important in California Economy

Posted by Gino DiCaro, VP, Communications on April 21, 2009

The Sacramento Bee's Dan Walters opined on Monday that there is no evidence of job-migration out of California and generally that any concern over our business climate is unfounded.  He focused on the following two points:
  1. A 2008 PPIC report that found limited amount of job migration out of California. 
  2. The notion that California's business climate is unchanged from many years ago when the state experienced an economic boom.  I assume he meant the 90's.
At this blog, we focus on the massive opportunities that come from high paying manufacturing jobs for workers, the economy and the state budget -- and how manufacturing employers can succeed in California.  It should always be noted that a manufacturing wage pays approximately $20,000 more than a service job and provides the needed tax base for bold state government programs.  Here are three facts that should be considered in response to Walters' piece:
  1. The PPIC report did not account for decisions being made NOT to come to California (only decisions from companies already existing here).  A key component to backfilling the 528,000 lost manufacturing jobs since 2001 is the myriad of siting decisions being made across the country, where we don't even know if and when we dropped off a company's list in the first place.  Anecdotal information says too many companies decide to forgo the risks of costs and uncertainty in California and the trend does not look good.
  2. Data indicates that California manufacturing job changes since 2001 are worse than all of its western competitor states:

  3. Among many, there are two very significant policy shifts that do not reflect Walters' argument that the business climate remains unchanged since the 90's boom, at least for high wage manufacturing:
    • The expiration of the Manufacturers Investment Credit in 2003 made California one of only three states (with Wyoming and South Dakota) that tax capital manufacturing equipment purchases, yielding an even higher tax burden than the rest of the country.
    • The passage of AB 32 and the ongoing regulatory efforts have created prodigious amounts of uncertainty for any manufacturer looking to grow or site in California.

Policymakers and the media need to divert themselves away from disproving job migration and start zeroing in on what helps the private sector -- especially the high wage portion -- flourish in California.  That's what Nevada is doing ... and Assemblyman Dan Logue -- who Walters admonished for creating a "media stunt" -- is taking a few hours to understand their policies and their success.  That can't be a bad thing.



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