California’s business climate is a relentless sirocco scouring away any shred of profitability for its job-creators.
Like mastodons in tar, entrepreneurs are being inexorably sucked into a morass of regulations.
Companies are fleeing the Tarnished State at speeds outstripping panicked woodland critters desperately trying to stay ahead of a forest fire.
But a free market paradise beckons.
A place of mercantile manna and liability rectitude. A haven of hefty returns, affordable housing, swift permit approvals and eager, well-educated employees.
An economic Eden – a mere 1,600 miles away.
So Gov. Rick Perry and a number of California’s Republican lawmakers contend.
The unemployment rate in Texas is 1.2 percent below the national average and 3.6 percentage points beneath California’s 11.6 percent level. In part due to more lax zoning, the median home price in Texas is $125,000 versus a little under $348,000 in California.
Those are among the reasons the Lone Star state routinely appears in rankings as the nation’s best state in which to do business or at least one of the best.
Streams of press releases flow from the GOP governor’s office touting new expansions such as, most recently, Entertainment Arts, the California-headquartered video game maker, and eBay.
Perry’s website includes a section cataloguing the state’s successes called “Texas Brags,” which to a non-Texan seems akin to “Airplanes Fly.”
There’s also a link to “Texas Wide Open for Business,” a site cataloguing what Texas offers that other states don’t.
But Texas also leads the nation in dirtiest air, amount of toxic chemicals released into the water and hazardous waste generated, according to statistics from various sources compiled in Texas on the Brink, a publication of the Texas House of Representatives Legislative Study Group.
Texas also has the nation’s highest percentage of minimum wage jobs and the lowest percentage of residents with a high school diploma in the country. Of adult Texans, nearly 32 percent are college graduates – almost 38 percent of Californians are.
Almost 30 percent of Texans are uninsured – more than 6 million persons of whom 60 percent are Hispanic. Texas also has the highest percentage of uninsured children in the country.
In Texas, 17.2 percent of the population lives in poverty compared to 13.2 percent in California where the median income is $59,000 versus $48,000 in Texas.
“It’s a bit like Dukakis’ ‘Massachusetts Miracle,’ which turned out to be a partial truth,” California State Treasurer Bill Lockyer told Capitol Weekly. “There’s some Perry puffery going on right now.”
Nevertheless, after having nearly identical unemployment rates from 2000 to 2006, following the housing implosion California’s unemployment rate shot up well higher than that of the nation’s second most populous state.
In the recession’s wake, Texas is also posting faster job growth than California adding some 237,000 jobs since the official end of the recession in June 2009.
Perry wants to keep things that way. And doing so at California’s expense doesn’t bother him in the least.
“If you want to live in a state that has high taxes, high regulations – that is favorable to smoking marijuana and gay marriage – then move to California,” is one of his favorite tag lines.
“In Texas, we still believe in freedom. Freedom from over-taxation, over-regulation, over-litigation.”
Perry routinely sends letters to businesses in California and other states inviting them to consider their “future in America’s new land of opportunity.”
Texas, he says, has no income tax and a balanced two-year state budget.
“The governor’s four main principles for strengthening our economy are: Keeping taxes low, maintaining a predictable regulatory climate, having a fair legal system and making sure we have an educated workforce in place so when people come here to create jobs they’ll find capable people to hold those jobs,” said Lucy Nashed, a spokeswoman for Perry.
“When we met with him, the governor told us, ‘You can’t be for jobs and against business,” said Assemblyman Dan Logue, a Linda Republican who led a group of mostly GOP lawmakers to Texas this spring. “It’s not the recession that’s bankrupting the state of California, it’s our policies.”
But several California economists and political leaders say comparing the two state economies is more complicated than simply tallying employment and job creation statistics.
“Texas and California have different economic bases,” says Stephen Levy, director and senior economist of the Center for Continuing Study of the California Economy in Palo Alto.