On Friday, NPR's California affiliate, Capitol Public Radio, interviewed Jack Robinson, an editor from the Sacramento Business Journal, regarding California's budget situation.
Robinson was asked if he knew of any bills that California businesses supported in the state Legislature. Robinson responded with one, AB 333, a bill to delay the implementation of a costly cap-and-trade carbon program. While very important and sensible legislation, this bill is surrounded by hyperbole that generates visceral responses among the electorate. Basically it sells. Not one other common sense bill was mentioned.
We don't fault Robinson or NPR. Radio interviews are short and we don't expect Robinson to be able to regurgitate the entire California business agenda on the fly. But the result of this interview with most listeners will be: California business is uninterested in the common good because it doesn't support sensible legislation, and it only works to defeat any bill with a cost.
This is exactly the reason California has ranked dead last for seven straight years among CEO's for places to grow a business, and now ranks among the worst in new manufacturing growth. Employers are presented as irrational obstructionists. This makes it easy to pass costly legislation without any cost benefit analysis, creating an unpredictable and uncompetitive place to invest in new growth.
California's Capitol processes approximately 2,000 bills every legislative session. The only reason the average voter hears about "job-killers" so much is because the rational, often much less exciting bills that employers support barely ever make it past the first committee hearing. Try calling a reporter on a regulatory process reform bill in its first hearing. Crickets.
For example there were 20 sensible business-supported regulatory process reform bills that all died quickly over the past two years (to name a few: SB 400, SB 396, SB 560, SB 688, SB 14, AB 535 in 2011 and you'll find a bunch in this document supported by more than 375 companies in 2010). These were simple bills that, in a nutshell, only asked for more information and cost-benefit analysis on regulations. How is it possible that these aren't getting any traction, especially with the regulatory awakening across the country?
With high costs and unpredictability in California, businesses are fighting even more for good legislation that helps our economy grow. The problem is, most of those bills are boring, not the type of stuff that gets you to turn up your radio. The California media needs to make sure employers are represented for what they are: partners in a better, more employed California.
*** CORRECTION: Previously, this blog stated that "NPR's Morning Edition" -- a series on NPR's national network -- aired the interview. It was not. It was NPR's California affiliate Capitol Public Radio that conducted and aired the piece.
We updated our numbers this week for California greenhouse gas emissions per capita versus the rest of the country. Looks like California is, and has been for a long time, much more efficient than other states.
Earlier this week, I testified before the Assembly Jobs, Economic Development and the Economy Committee in support of AB 29 by Assembly Speaker John Perez. AB 29 would create a state economic development entity within the governor’s administration and has the potential of being the most significant piece of legislation in the last ten years. It could create the structure to jump start California’s job creation machine. But we have to get it right.
The new office must have the full support and authority of the Governor and its leader must have cabinet level status. Anything less would send the signal that economic development was not a high priority for California or for the administration. I learned on a recent trip to Austin, Texas that Governor Perry is the quarterback for his state’s economic development team and demands that every state agency participate in protecting and enhancing the climate for job creation and economic growth.
California needs a plan, too. Every politician in the Capitol will enthusiastically say their top priority is job creation, yet California lacks a clear vision for how to go about the task.
The leader of California’s new economic development agency’s first task should be the creation of a long term economic development strategy including long and short term job creation goals.
Nothing makes a better case for developing California economic development strategy than the 2011 Best Cities for Jobs report published this week by Forbes. The authors, Joel Kotkin and Micheal Shires index the nation’s 398 metropolitan statistical areas (MSAs), or cities, for their job growth potential based on recent, mid-term and long-term employment growth trends using employment data reported by the U.S. Bureau of Labor Statistics (BLS).
The first thing I noticed when I read the report was California’s highest ranked city is Merced at 155. On the way there I couldn’t help but notice the preponderance of Texas cities high on the list. Killeen, TX gets the top ranking for job creation potential. In fact, five of the best six cities for jobs are in Texas. Bismarck, North Dakota is ranked second. I couldn’t stop myself and began highlighting the 28 California cities and 26 Texas cities included in the report.
Here’s what I found. Collectively, California’s 28 cities dropped a whopping 728 places in the past 12 months. Conversely, Texas’ 26 cities moved up a total of 345 places. California’s largest city, Los Angeles, placed 373rd in the rankings while Texas’ largest city, Houston, ranked 14th. California’s lowest ranking city is Oakland at 395. The lowest ranking Texas city is Wichita Falls at 274.
I also looked at how a few other large industrial states performed.
Michigan, the state hit hardest by the recent recession saw 12 of its 16 cities climb to higher ranking in 2011 than they had in 2010 for a collective gain of an impressive 983 rankings. Detroit’s ranking is still a pathetic 384.
11 of 16 Ohio cities had higher job growth potential in 2011 for a collective gain of 404 places. Cleveland was ranked 307.
11 of 14 Pennsylvania cities moved to higher rankings between 2010 and 2011 for a collective gain of 711 places. Philadelphia ranked 58th and Pittsburgh ranked 61st. The lowest ranking Pennsylvania city is Harrisburg at 205.
Only 6 of New York’s 14 cities saw upward movement and New York’s collective position dropped 119 places. New York City ranked 54th for job creation potential.
Forbes' Best Cities for Jobs report makes it clear that most of America is moving up the on-ramp to the job recovery highway, but California is still aimlessly meandering on economic back roads. Some may say everything will be just fine if we're patient because California's natural beauty and our sun, sea & surf life style is all we need to attract investment and rekindle our economy. However, rational observers may say it's time to crank up the GPS to find the jobs on-ramp and create a long term economic development roadmap for California.
If job creation was the #1 priority for California's elected officials last November, how do we find ourselves six months later still talking and not acting?
Last week the well-regarded Daniel Weintraub wrote an accurate but complacency-inducing everything-will-be-ok Orange County Register article based on 2010 job data.
He emphasized that California's job growth, sans the construction and government industries, trended with the rest of the country. Weintraub looked backward, saw some non-momentous trends either way and concluded that the job "numbers bode well for the state's economic future."
California's problems are so big, we can't afford to wait and hope for a large recovery to come our way.
When you're broke and you need to get un-broke, do you look backward, do nothing and wait, or start making good decisions for what lies ahead? You unquestionably start preparing a plan for the future. This is where we must start.
Quick lesson on California manufacturing: Average wage is $69k. Average multiplier effect is 2.5 jobs for every one job. Average employee benefits are far higher than other sectors. The economic upside is enormous. It must play a significant role in our future. Unfortunately California per capita manufacturing growth is currently dead last in the country.
In his piece, Weintraub neglected the strategic actions needed to launch grand-scale economic growth in California. To be fair, he didn't say we should expect better-than-national-average growth, but simply lagging the national recovery is not enough. We'll need a much larger boom than the majority of the country, given our 2 million unemployed, a $20 billion deficit and our Charlie Sheen level cost of living.
Weintraub does not mention the manufacturing industry or California's jaw-dropping lack of a jobs plan. In fact he mentions California's tremendous proclivity for venture capital, but ignores that it translates into very little new manufacturing. For example, California received 48 percent of the nation's venture capital from 2005 to 2009, but received only one percent of the country's new manufacturing investment. It's also worth noting that, of the growing non-manufacturing industries in 2010, the average wage was a whopping $15k less than manufacturing salaries.
California lawmakers proclaim that they are pro-jobs and they get by on words over action because they can. Articles like Weintraub's help provide cover for their auto-pilot mentality.
We need action that includes a strategy with tactics to grow the industries with the highest wages and the highest employment multipliers. Ergo, manufacturing. Everyone wins!
According to an ongoing survey by CMTA and many other industries, 85% of California businesses say they would not locate a business here if they were not already in the state. A large majority of those respondents (and all the manufacturers) listed the possibility of future regulations as a barrier to growth.
(quick note to the Business Journals and writers: we have 500 responding businesses to the survey, we need thousands more. Ask your readers to respond)
Today, the Assembly Business and Professions committee takes up 10 important bills to analyze and oversee regulations for their impacts on our economy. These are forward thinking no-brainers, much like the 25 or so bills that died last year. If California had a plan and a goal to grow our economy -- one that the legislature was accountable to -- many of these bills would be literal silver bullets. Instead the back and forth over mind numbing we're-not-that-bad data points potentially paves the same ol' path toward economy-killing complacency.
Why does a man in Compton, with an oil rig in his backyard and a refinery down the street, pay more for oil than a man in Honolulu?
A large part of that answer is California regulations that come without economic impact analysis.
Democrat State Senator Rod Wright recently posed that question and testified at the State Water Resources Control Board regarding their attempts to finalize very costly California-only stormwater permitting regulations.
"California is continually leading with our chin," said Sen. Wright. "I would suggest that we look at these standards and see where everyone else is going. I would like to see us take this regulation and slow down. Let's look at what Arizona, Nevada, and Oregon are doing. We can't [compete] if our regulations are so stringent."
Sen. Wright made the perfect case for the importance of economic impact analysis on these and hundreds of other bold California regs.