How can CA improve its business climate?

[powayseller]

jg mentioned that CA is not such a good state in which to do business. Why? What should and can Arnold change, to improve our business climate?

[Chrispy]

Arnold did make some changes to our work comp laws, which brought the cost of doing business in CA down slightly. An example is, chiropractic visits for work comp patients used to be unlimited. Now they are limited to 24 visits a year that the state will reimburse for.

My brother-in-law owns a furniture manufacturing company in LA with 70 employees and last year paid $210,000 for work comp insurance – that is minus any claims! That’s $3K per employee per year, added to the other burdens such as health and dental insurance!

It costs more to “do business” in CA because the cost of owning a business is so much higher, and that cost is passed onto the consumer. Not to mention, leasing, renting, or buying facilities or offices is substantially higher than in other states where land is (relatively) cheaper – ie, Phoenix or Oregon. Or Mexico. No wonder there are so many maquilladoras in Mex as opposed to Otay.

[no_such_reality]

My simple view …

Quit pandering to every special interest.

My bitter view…

1. Enforce the realization with the public worker unions that they are “Public Servants”. Their pay and benefits packages need to be brought in line with the public companies. This includes their expecting to actually get work done. This also includes the bleeping politicians.

2. Enforce our existing laws for taxes and employment. I’m tired of seeing everybody register their cars out of state or CEOs use WA or TX as their place of residence when they are in CA 90% of the time.

3. Send the illegal aliens home. The resulting drop in requirements on our schools (K-12) and health & human services (which account for over half of the budget) will allow us to reduce it finally.

4. Revoke the proposition process. The misinformation and blatant manipulation by special interests for personal gain is pathetic. With the lack of accomplishment from our legislature, the proposition process has simply become Mob rules.

[heavyd]

“Sending the illegals home” would result in massive wage inflation in agriculture, construction, and services.

Ever visited a farm in the Central Valley? Or walked around a construction site anywhere in CA? Or gone behind the scenes at a locall hotel or restaurant? All of these businesses employ immigrant labor, much of it illegal.

In a state where unemployment is already low at ~5%, where do you think we’d find people to fill the millions of jobs vacated by the illegal immigrants we send home?

Overnight you would see cash wages rise by 20-30% in order to entice legal workers into these low-end jobs. And these employers would also begin paying more in health insurance, etc.

And all of these costs would immediately be passed on to consumers.

Who wants to see inflation move from 2-3% pa to double digits?

The majority of consumers here in CA are net beneficiaries of the widespread employment of illegal aliens. Most debate centers around the significant costs involved in providing education, healthcare, etc to this very large component of the workforce, but few talk about the very positive effects this group has on prices.

[no_such_reality]

The benefits we receive are phyrrhic victory at best. Yes, I’ve seen the farms and the construction sites. I’ve also seen the nannys and residential gardeners.

The net result is they are actually taking more out through the use of our infrastructure than the benefit we receive.

As for unemployment, the numbers have been twisted in so many contortions for political purposes that they barely represent anything.

Now, if we truely can’t live without them, then we should make them citizens and move on. If not, then allowing their exploitation for the benefit of the few, the business owners.

[powayseller]

If the illegals were truly a drain, the borders would be enforced. Obviously, they are an economic benefit. If they were made legal, their wages would be legal too, subject to minimum wage and workers comp and unemployment insurance.

What keeps companies from coming to CA? It seems the companies headquartered here, are staying only because their CEO or owner doesn’t want to leave San Diego. How many companies ever move to CA? I hear of companies leaving or shutting down, not moving here. Why?

[no_such_reality]

Powayseller, has the Government addressed the social security issues? No. Saying they’d have done it if it needed doing is silly.

It’s a truely rare leader that does what needs doing instead of doing what will get them re-elected.

For farming, 75% of the food we eat is generated by less than 10% of the farms. These aren’t mom & pop operations. They are large corporate entities.

Now here’s some facts, farm labor, the hired labor of the type we can’t survive without only accounts for 10% of the farm costs. That’s at the farm level. It’s insane to that minute cost is going to explode into double digits boogeyman inflation at the retail level.

[Anonymous]

Artificially low rates caused by the employment of illegals, or by China buying up our debt to devalue their currency, is what got us into this mess. If the people and corporations running this country actually cared about what is right, they would let us take our medicine and get these problems fixed before we go any further down this dead end path.

All parties come to an end sometime. The only question is how bad the hangover will be?

[sdrealtor]

Big companies rarely if ever move here. It has always been that way even when housing was relatively cheap. What is unique about SD is that it is a HUGE draw to intellectual, creative thinkers with an entrepreneurial spirit. SD has always been a business incubator where many great young companies start. Once they reach a critical mass, they ultimately get sold to a corporate giant. The jobs leave, the money stays and the founders start another company. The cycle continues. Too many of you out there seem to be brilliant but lack the entrepreneurial spirit that makes SD great. This is a great place to start a company with tons of bright, young potential employees willing to take a risk on your start-up ideas. I could go on and on with stories, including the company I started in the late 90’s and ultimately sold off. Here’s one:

Ever heard of Nixon Watches? Probably not! It is a company that basically started in an Encinitas garge by two bright ambitious surfer dudes. Company struggled for several years, eventually gained traction and sold out to Billabong for close to $80M.

[Bugs]

I don’t think it matters how many people we legally allow to immigrate here or how we allocate our quotas. We could allow 11 million unskilled workers in to work here and there would still be another 11 million who would come in illegally. We’d still have our own “La Raza” types marching in parades waving the Mexican flag (try demonstrating like that in Mexico). Those guys would still
argue that this is their land in the first place, that we have no sovereign right to close our borders, and it’s a human rights violation to make it difficult for Mexicans to gain entry here upon demand.

Meanwhile, the Mexican government shoots people coming across their southern border.

[heavyd]

Sure, labor (illegal and otherwise) is “only” 10% of the farms’ operating costs. But at the packers it’s higher…and the majority of short-haul trucking in and out of the Valley is done by immigrants these days. That’s just CA’s agriculture industry…think about the entire hotel and F&B industry in CA — labor is a much higher % of their costs, direct or otherwise. Likewise construction. There is no doubt there would be significant upward pressure on wages in the near-term if illegal aliens are prosecuted and / or repatriated.

[no_such_reality]

That’s just CA’s agriculture industry…think about the entire hotel and F&B industry in CA — labor is a much higher % of their costs, direct or otherwise

Basically you’re argument is that you want illegal immigration so your dinner for two at the California Pizza Kitchen will only be $60 instead of $65. Meanwhile one illegal child is costing us $10,000/yr to put in school.

But wait, I thought the argument about F&B was they’re paid minimum wage or less so they had to get tips…

You only have fake fear as a point and no data.

[Anonymous]

Upward pressure on wages is what we need to give low and middle income people a fighting chance. The rich love this economy because illegals keep their cost down, but don’t compete against them. That’s why the gulf between rich and poor is growing and the middle class is dying.

If we had some wage inflation, then the Fed would have to raise rates and the liquidity glut that is causing all of these bubbles would go away.

True there would be a lot of pain, but I think it would bring people back down to Earth and make us stronger.

[heavyd]

Actually, No Such Reality, my statements are based entirely on facts. For example…

Labor is equal to about 30% of revenues at a typical family restaurant. I am drawing this data from the latest 10-Q from Ruby Tuesday. I don’t have the data for California Pizza Kitchen (their pizza blows, by the way), but I’m willing to bet it’s similar. If these guys make a 15% OP margin, then labor is actually closer to 40% of costs, on average. To me, that’s material.

And the latest data I have, from the 2003-4 school year, show that median spending per pupil is about $6,800 per year in CA. In districts that serve a relatively high proportion of migrant labor (legal and illegal alike), the median is closer to $4,000 per student. I am pulling this data from some RAND Corp reports that are available via subscription.

Me? I couldn’t care less whether my occasional night out costs $60 or $65. The point I am trying to make is that draining the workforce of an enormous pool of cheap labor will inevitably lead to significant wage inflation. That’s fine with me.

But my own experience has been that the very people who whine about rising costs are the same ones who whine about the presence of illegal labor in this state. They are ultimately related and it’s tough to have one without the other.

[no_such_reality]

The $6800 amount is basically the amount that makes it to the classroom and does not include capital buildout, administrations etc. link

I’ll gladly agree, the typical people complaining about illegal immigration are also the first ones pulling up to the home depot day laborers when they need physical work done.

Overall, I recognize we’ll have wage and price inflation. However, I suspect once we have all of our necessary workers above the board, we’ll better be able to maintain our quality of life in a sustainable manner.

Essentially, we are merely repeating the middle ages. Instead of innovating like we did in the renaissance, we continue to exploit cheap plentiful labor has the Europe did before the black plague occured eliminating plentiful labor. The result, was innovation and the shift from the manually intensive processes.

I’m not a great fan of living wages, but I’m even less of a fan of artificially low wages for physically demanding or unpleasant work because the owners are exploiting non-Americans in our own country,

[Author]

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