For San Diego's North County Times
My grandparents left Krasna, Bessarabia, Russia a hundred years ago, joining a flood of German immigrants to North Dakota. My parents headed west from there, making Washington State their new home. My career led me from Washington to Indiana, then back west again to California.
I thought of my Midwestern roots and our several job-related family relocations when I learned of the South Dakota governor's recent attempts to entice local businesses to move to his state. On a morning TV news quiz, I learned blizzards in the Midwest can carry wind-chill temperatures of minus-60 degrees. When asked about the weather, the governor replied, "There is no bad weather in South Dakota, only inappropriate clothing."
Conventional wisdom has it that businesses are driven out of California because of high taxes and burdensome regulations, ruining the state's economy by causing a massive loss of jobs. The media capitalize on this politically popular credo with stories designed to support the theory.
But the only independent, objective and nonpartisan report I found on the issue reveals a far different picture. Businesses are, indeed, moving to other states, but not nearly in the numbers implied by those with political axes to grind. The Public Policy Institute of California's 2010 report, "Business Location Decisions and Employment Dynamics in California," cited a 15-year study indicating that relocation causes a smaller share of jobs gained and lost in California than in most other states.
From 1992 through 2006, the thousands of jobs moving into and out of California resulted in an annual net loss of only 0.05 percent of the state's 18 million jobs. California, in fact, ranks below the national average in job losses due to business relocations. South Dakota, on the other hand, ranks fifth highest in jobs lost through relocations, at 3.6 percent of their workforce annually over the same period.
Maybe that explains the governor's North County visit.
Ignoring the facts, politicians blame California's low ranking in business friendliness for our slumping economy, pointing to reports like this year's CNBC's, "America's Top States for Business," which ranks California 47th in the cost of doing business.
So why aren't more Golden State companies fleeing to fly-over country? Maybe because California ranks first in the nation in access to capital and technology/innovation, while South Dakota ranks 35th and 49th respectively. Maybe companies like San Diego's little 1989 startup now known as Qualcomm are willing to accept higher costs of doing business in exchange for larger profits and greater potential for growth.
And don't forget the governor's observation about the need to invest in fashionable South Dakota wind-chill attire.