RIDER NOTE: Below is the best recent commentary I've read on the deteriorating California business climate -- and why Texas is so much more attractive to businesses. Author Joseph Vranich heads Spectrum Location Solutions -- and is an expert in business relocation motivation and policies. He includes specific companies that have departed -- or not come to California.
In addition I've included a half dozen less known salient facts demonstrating that Texas is beating California as an attractive business state. Some, but not all, are from my "California vs. the Other States" fact sheet.
What particularly aggravates Vranich (and me) is all the Texas bashing by California's dominant political party and its liberal media propaganda machine (especially the LA TIMES). There's a complete failure to confront the economic realities that are driving California's businesses (and tax base) to other states (and NOT just to Texas) -- a realities that are impeding other businesses from moving TO California. The bigoted, stereotypical dismissal by smug CA liberals of Texas and its people -- a magnet state with a diverse population of over 26 million residents -- is disgusting.
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RIDER'S HALF DOZEN "TEXAS KICKS CALIFORNIA'S ASS" POINTS
1. To rent a 26-foot U-Haul truck one-way, here are the current prices being quoted by U-Haul for June 18: Torrance, CA to Plano, TX : $2,626
Plano, TX to Torrance, CA : $1,264
Los Angeles, CA to Dallas, TX: $2,558
Dallas TX to Los Angeles : $1,232
Bottom Line: The cost of a one-way U-Haul truck leaving California for Texas is more than twice the cost to rent that same truck going from Texas to California, suggesting that there are twice as many trucks and people leaving California for Texas than vice-versa. Based on the huge difference in demand for one-way truck rentals, there is a premium of more than 100% for Californians to rent trucks going to Texas, and large discounts for trucks going in the opposite direction to California. U-Haul's market-based pricing seems to confirm the California exodus to Texas of jobs, people and businesses like Toyota and Occidental.
http://www.aei-ideas.org/2014/05/the-california-exodus-to-texas-is-reflected-in-market-based-one-way-u-haul-truck-rental-prices/
2. The national "supplemental" (adjusted for cost of living -- the new BLS standard) 2010-2012 poverty rate is 16.0%. Texas is higher, at 16.8%.
But California's supplemental poverty rate is by far the worst in the nation at 23.8%. We are 48.8% higher than the average for the other 49 states. Indeed, the CA poverty rate is 20.2% higher than 2 nd place Nevada. We are 45.1% worse than Texas.
http://www.census.gov/prod/2013pubs/p60-247.pdf Table 4
3. According to recent U.S. census figures, the 2009 median household income in California is significantly higher than Texas.
CA -- $58,931
TX -- $48,259 -- 18.1% less than CA
But, ADJUSTED FOR THE COST OF LIVING, the Texas median household income is significantly higher than California.
TX -- $53,009
CA -- $44,456 -- 16.1% less than TXhttp://en.wikipedia.org/wiki/Household_income_in_the_United_States#Median_income
4. California's huge GDP (8th largest in the world -- down from 5th largest in 1999) is often touted as proof positive that we are more financially successful than other states. Of course, not mentioned is that CA is by far the most populous state. A better gauge is the per capita GDP:
California $46,029
Texas $46,498
More important, the Texas GDP is growing significantly faster than California's.
https://bber.unm.edu/econ/st-gdp5.htm
5. California residential electricity costs an average of 27.6% more per kWh than the national average. CA commercial rates are 44.4% higher. For industrial use, CA electricity is 74.4% higher than the national average (October, 2013). NOTE: SDG&E is even higher. California industrial rates are more than DOUBLE the Texas rate.
http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_06_a
6. 736 top U.S. CEO's surveyed rank California "the worst state in which to do business" for the 9 th straight year (May, 2013). Texas is again ranked the best state.
http://chiefexecutive.net/best-worst-states-for-business-2013
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http://spectrumlocationsolutions.me/2014/05/05/time-for-california-to-end-the-texas-bashing/
Time for California to End the Texas BashingPosted May 5, 2014 by bizlocate (a.k.a. Joseph Vranich)
As a corporate site selection consultant, my world is buzzing about the big Toyota headquarters move from Torrance, California to Plano, Texas. My peers and I know full well how company employees will have to seriously consider their stay-or-move options and how Torrance's treasury will be adversely affected.
But some of us are irritated with the nonsense coming from people who defend California's business environment at all costs. Causes for relocating the company's North American HQ and 3,000 high-paying jobs aren't quite what politicians or the Los Angeles Times want people to believe.
Toyota announced that a more "geographically central"location will "improve collaboration,""speed decision-making" and enhance "cost efficiencies." Actually, there is a boatload of truth to all that.
To be kind to Toyota, the company had to limit what it said because even after the move it will keep about 2,300 jobs in California. Also, right after the announcement, Toyota said it will help fund a California startup, FirstElement Fuel of Newport Beach, to speed up the opening of retail hydrogen-fuel stations.
So Toyota gains nothing by criticizing California's business climate in a way that would embarrass politicians. But Toyota doesn't need to say a single harsh word. The record is clear that California officials are more interested in keeping wasteful government programs going than in keeping traditional wealth-building corporations in the state.
The latest evidence: Sacramento is now discussing two more tax increases - extending the "temporary" Proposition 30 income-tax hike that took effect two years ago and establishing a new oil-extraction tax.
I'll say what Toyota didn't - any business leaving California can benefit from cost reductions between 20 and 35%, depending upon their destination, helped significantly by lower taxes and lower compliance costs as compared to California's jumble of mind-boggling regulations.
I've been to Sacramento and have encouraged policy changes to benefit commercial enterprises. For all the difference it's made, I may as well have spoken to a box full of doorknobs.
As for the Los Angeles Times, when a corporation announced it was leaving the L.A. area (I can't remember if it was the Northrop Grumman or the Hilton Hotels departure), a reporter called about the "business climate." His first question, asked in an accusatory tone, was, "Did you endorse Meg Whitman for governor?" (For the record, I don't endorse any candidates.) I gave him an encyclopedic amount of well-documented information, which failed to influence his story one iota.
When the Toyota news broke, Gov. Jerry Brown revealed his condescension towards businesses by saying, "We've got a few problems, we have lots of little burdens and regulations and taxes, but smart people figure out how to make it." The Wall Street Journal's comeback is priceless: "California's problem is that smart people have figured out they can make it better elsewhere."
The Los Angeles Times seems to have pulled out all the stops in trying to make Texas look bad.
Last week, David Horsey of the Times wrote: "In lots of places in California, it's tough to live on a middle-class family budget." True, but he then followed with a comment that is shocking, outrageous and inexcusable: "In lots of places in Texas, it's hard to live outside a church-going, football-loving, white, heterosexual lifestyle."
Really? Well, life is hard in Los Angeles, which has the highest poverty rate in the nation.
It's not hard to live in Plano, where voters last year electedHarold LaRosiliere as mayor. It was a great day there when LaRosiliere - a black man born in Haiti who grew up in Harlem - was supported by a white guy who happened to be the outgoing Republican mayor. And it was a fabulous time in Plano when, upon taking his oath of office, LaRosiliere received a standing ovation from a packed city council chamber.
It's not hard to live in Houston, either. In a Rice Universitystudy, the region came out on top as the most ethnically diverse large metropolitan area in the country. Houston has seen big population increases in Latinos and Asians, and segregation among African-Americans and Latinos has declined. Also, Houston Mayor Annise Parker recently married her long-time gay partner.
Too often the Times ignores the fourth estate's tradition of focusing on what is wrong with its home state and community. Until the newspaper shapes up, it's difficult to imagine government cleaning itself up.
At least a dozen companies are leaving Los Angeles County for out-of-state locations just since the start of this year - or decided not to come here.
Universa Investments will move from Santa Monica to Miami. Why? The company's founder, Mark Spitznagel, told the South Florida Business Journal: "Florida's business-friendly policies, which are so different from California's, offer the perfect environment for us as we expand."
Gary Lee, Chief Executive of Chinese technology firm Wirelessor, said to the Las Vegas Review-Journal: "I was considering opening my North American operation in Long Beach, but after comparing the region's political, tax, and economic climates, I decided that Las Vegas was the better option." He expects to build a manufacturing plant there within 24 months.
Some of the other Los Angeles County departures this year include:Industrial Brush Corp. - building a new plant in St. George, Utah to replace its Pomona facility. General Motors - moving electric-motor research jobs from Torrance to Pontiac, Mich. DHF Technical Products - heading out of Commerce for Rio Rancho, New Mexico. Sony Pictures Imageworks - shifting staff from Los Angeles to Vancouver, British Columbia.
Considering those events, will the Los Angeles Times direct its Texas-style vitriol to Nevada, Florida, Utah, Michigan, New Mexico and Canada?
And that Occidental Petroleum headquarters relocation to Houston is a huge loss. According to Bloomberg, "Occidental is still ranked as the third-most-valuable company in Southern California."
When it comes to population comparisons, people are moving to Texas cities in droves. The Dallas-Fort Worth-Arlington metro area had a 29.8% population growth in the 2000-2012 period. The Houston-Sugar Land-Baytown area saw a 31% gain. Austin and San Antonio, among others, also show substantial increases.
Meanwhile, in that period, the Los Angeles-Long Beach-Santa Ana region registered a gain of (get out your hankies) 5.6%.
Let's look at job growth.
The Bureau of Labor Statistics lists employment in the Dallas-Arlington-Fort Worth metropolitan area as increasing from 2.1 million jobs in 1990 to 3.2 million in 2013 - a 52.4% increase.
Last month's UCLA Anderson Forecast examined the Los Angeles economy. One stunning conclusion is that Los Angeles has ranked near the bottom of major U.S. metropolitan areas in job growth from 1990 to 2012. In looking at the 30 largest metro areas, only three had declines over the 23-year period. They are Cleveland (-2.6%), Detroit (-6%) and Los Angeles County (-7.1%). So sunny L.A. has had deeper employment losses than those two Rust Belt cities.
The "creative class" amongst L.A.'s defenders may find a way to spin that -7.1% into a positive.
Some Californians belittle Texas by claiming its employment growth is in low-paying jobs. In fact, Texas is an epicenter for new high-paying jobs.
According to Wendell Cox of Demographia, "The number of jobs in Texas has grown by a truly impressive 31.5% since 1995, compared with just 12% nationwide many of the new Texas jobs paid well." From 2002 through 2011, "for industries paying over 150% of the average American wage, Texas could claim 216,000 extra jobs; the rest of the country added 495,000. In other words, the Lone Star State, with 8% of the U.S. population, created nearly a third of the country's highest-paying positions."
The Los Angeles Times is likely to continue to smear Texas while making California look as look good as possible. That is a prelude, after all, to the paper's expected endorsement of Jerry Brown in the upcoming gubernatorial race.
Joseph Vranich of Spectrum Location Solutions, based in Irvine, California, helps companies find optimal locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of business owners relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.
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