Claim of California Jobs Moving Out of State Shown by Study to be a Myth

[courtesy of California Progress Report]

"Hostile Business Climate" and "Job Killer" Frames Don't Match Reality of Economic Data

By Frank D. Russo

The Public Policy Institute of California (PPIC) has released a blockbuster 165 page report that carefully goes through all the economic numbers and debunks the idea that businesses have been leaving the state because of a hostile business climate. This is an in depth report based on a comprehensive database of virtually every business that employed California workers at any point from 1992 to 2004.

After reading this report, and prior studies by the PPIC, Arnold Schwarzenegger should be embarrassed to have used one of the major frames he wielded in the 2003 recall election to win the Governorship and his friends at the California Chamber of Commerce should be embarrassed to trot out their "job killer" list of bills to improve the life of Californians with their wild and unsupported statements made for years. But they will not, and so this report is one that should be read carefully and remembered the next time "there they go again."

The study looks at the years of 1992 through 2004 and shows that California has not had a mass exodus of businesses. Most of the business relocations have occurred within California, usually to an adjacent county where land prices are cheaper. There is the usual ebb and flow of businesses in and out of California but are replaced by new businesses that move into California or start here.

In the words of the study: "[T]he small number of California jobs moving to other states due to business relocation is relatively inconsequential—about 11,000 jobs per year out of more than 18 million (.06 percent). Business births, deaths, contractions, and expansions have a much greater effect on employment."

The PPIC released a study in 2005 showing that businesses were not relocating due to a poor business climate. Just take a look at what the San Diego Union-Tribune had to say then in "Study: Not many jobs leaving state," and the response of the Governor's office in that article: