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Texas Trip Confirms: California Needs a Plan to Create Jobs

Posted by Jack Stewart, on April 19, 2011

California has an unemployment rate of 12 percent, lost 11,600 jobs last month and has no plan for creating jobs for the more than two million California workers who are looking for work.  Texas has an unemployment rate of 8.1 percent, created 37,200 jobs last month and has an aggressive plan for investment and job creation. 

Last week provided an eye-opening look at some of the important differences between California and Texas for a delegation of California legislators, Lt. Governor Gavin Newsom and business association leaders who traveled to Austin, Texas on an economic development fact finding mission.

The mission was conceived by Assemblyman Dan Logue who arranged for ten legislators to spend two days in Austin talking to California companies who had recently moved or expanded operations in Texas.  The group also met with Governor Rick Perry, officials from his administration and members of the Texas Legislature.

 

The big take-away from the two days in Austin was the commitment Texas has to providing a positive business climate for its employers and to creating job opportunities for its workers.  That commitment appears to start with Governor Rick Perry, who prides himself in saying, “creating and growing employers is his number one job – with a healthy, growing economy other problems become less daunting.” 

There is no question that Governor Perry is the quarterback of Texas’ economic development team.  His enthusiasm and commitment permeates a state bureaucracy where government agencies are sensitive to employers who are willing to invest in Texas.  Governor Perry leads regular economic development missions to California, New York and other states and nations to recruit employers who bring jobs to his state.

The Texas economic development strategy was born out of the 2003 recession when state revenues dropped, creating a massive budget deficit.  To address the 2003 crisis, Perry made two decisive moves:  1. to aggressively promote Texas’ affordable business climate to grow revenues to the state through economic expansion; 2. move the state to a zero-base budget process to control the growth in government spending. 

His plan appears to be working.  While it’s difficult to understand all aspects of the Texas business climate in just a few days, the U.S. Bureau of Labor Statistics shows solid job growth in Texas over the past decade, while California’s job numbers are far below its 2001 levels.

 

This is not to say Texas has all the answers or that California doesn’t have its own set of attributes, but the fact is California’s business climate is very unpredictable and investors shy away from unpredictability. Texas places a high premium on a predictable business climate and investors seem to agree.

Over the past few months, I‘ve often greeted California legislators by saying, “Without having heard one of your campaign speeches or read a single piece of your campaign literature, I’m certain your number one campaign pledge was to create jobs.”  The response is always a big smile and an affirmation that my guess was correct.  My following  comment is, “Now that you’re here, you have no idea how you’re going to fulfill that promise.”  I typically get a very sober response, confirming that my second observation is also correct.

California hasn’t had an economic development strategy for more than a decade.  We’ve been resting on our laurels while other states and nations aggressively recruit our brightest and best entrepreneurs and innovators.  It doesn’t have to be this way.  California can become competitive for investors if we put our economic house and business climate in order.

For the past ten years, our Governors and Legislatures have focused on spending cuts and tax increases as the solution to our state’s economic woes.  There is a third leg to that stool, an aggressive plan for economic growth.  If job creation is truly our highest priority, then let’s create a plan to grow jobs.  Look to the future as Governor Perry did in 2003, set job creation goals for the next 15 years and develop a strategy to achieve those goals.  It’s simple, but it won’t be easy.





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