Despite Challenges California Businesses Growing Stronger

photo - despite challenges by San Jose LibraryCalifornia has been labeled a business unfriendly state. Other states have lower taxes, costs and regulations. Last year Chief Executive magazine named California as the worst state to do business in, according to the Los Angeles Daily News. But the state is a worldwide economic powerhouse. It overtook Brazil as the world’s seventh-largest economy. California is highly competitive and extremely attractive for many companies in part because of the quality of talent in the job market.

Employee skills, a vast amount of private equity, sunny weather and its connection to the economies of the Pacific Rim and Asia continue to keep California’s economy strong. Southern California’s large population is also bringing businesses to the area. Whether it’s in Los Angeles County, Orange County or the Inland Empire, the population of 18 million people is a huge market for companies selling to consumers or other businesses.

If you look at California as a whole, according to U.S. Census Bureau data,

  • The state’s population as of last years is estimated at 38,802,500 people.
  • The latest estimate (2007) of the number of businesses in the state is 3,425,510.
  • The state’s mean average income is $85,408, which is more than $12,000 above the national estimate.

Information from Walls & Associates’ National Establishment Time-Series Database shows the number of jobs leaving California is small compared with the number of jobs that remain and are created here every year. The data shows that in an average year 32,000 companies move annually (whether within California, out of the state, or into the state) and only 1,700 moved out of the state.

“I think there are dimensions one tends to focus on when California does more poorly than other states with taxes, etcetera, but that’s a misleading way to think about this,” Don Walls, president of Walls and Associates, is quoted as saying. “It’s the total environment that impacts business, and the questions then become: Is there evidence that California does not attract business? When businesses have a chance to leave, do they stay? The answer is more than 90 percent who moved because their current location was not optimal, chose to move within the state.”

Life could be easier for businesses in California, but businesses in all states make trade offs when deciding where to locate. One way to improve the results of your California business is to get a better idea as to how laws and regulations impact your operations. You may be able to lower your exposure in some areas and take advantage of other laws, depending on your circumstances. Learn more by contacting our office so we can talk about what you do and how it’s impacted by the law.