The American Interest
Analysis by Walter Russell Mead & Staff
Neighboring States Poach California Jobs

There’s nothing new about governors competing to bring jobs to their state, but rarely has it been this brazen. The Wall Street Journal reports that neighboring states, as well as some states as far flung as Georgia and Tennessee, are stationing official “business recruiters” in California to convince businesses to move their operations out of state.

It’s no accident that California is the main target. The Golden State has the nation’s largest economy, but it is also one of the least business-friendly: A recent CNBC study reported that California has the third-highest cost of doing business in America due to its high taxes and endless bureaucratic red tape. Combine this with a dysfunctional state government, and it’s not hard to see why some companies might want out. And with the voters electing a new Democratic supermajority that many expect will increase the burden on state businesses, the job sharks think they have an attractive pitch:

Last year, Californians voted to raise taxes on the state’s wealthiest residents. They also voted to close a tax loophole that had allowed multistate corporations to avoid paying tax based on their California sales. Meanwhile, auctions got under way in November for California’s cap-and-trade program for emissions, forcing businesses to start paying for the rights to release more than a certain amount of greenhouse gases. This year, California companies will be held responsible if the warehouses they contract with underpay employees.

It’s still too early to know whether the sales pitch is working, but the mere fact that other states are investing so much in luring businesses away suggests that some are detecting a distinct hint of blood in the water. They may be proven wrong, but California will have to play good defense to keep businesses from packing their bags and heading out.

 

Published on January 3, 2013 12:26 pm