California is the Worst State for Business, Seriously!

I wish the title were an exaggeration, but sadly, it is not. On May 3rd, CEO Magazine came out with its annual survey of 550 business leaders asking about the best and worst states for doing business. The survey looked at a wide range of issues that included taxation, regulation, workforce quality and living environment. California came in dead last. The bottom five also included Michigan, New Jersey, Illinois and New York. What is interesting is that these are powerhouse states, with large populations and large employment bases. With all due respect, we are not talking about West Virginia or New Mexico (though they did not rank that high, either).

I spoke to the writer for the survey, J.P. Conlon, and asked whether they focused on litigation climate as one of the issues. He told me they did not, but that you could interpret areas like regulation and workforce quality and living environment as areas affected by litigation.

This study came on the heels of Andrew Puzder, CEO of CKE Restaurants, which owns Carl’s Jr., announcing that he has no plans to expand in California and is even considering re-locating the headquarters of CKE from California to Texas. I blogged about him on May 3rd. His story is the prototype for why this state is ranked dead last.

Two questions come to mind: Why is nothing being done, in the midst of a recession, to make our state less hostile to business, and why is the legislature continuing down the same course of voting for policies that allow abuse of the legal system at the expense of business and job growth? No legal reform. Nada. Absolutely nothing.

So far this year the Assembly Judiciary Committee has voted down class action reform, punitive damage reform and even construction defect litigation reform.

Why will the legislature not deal with this issue? I think part of it is due to the fact that most of them have not worked in the private sector or if they did it was just for a brief period. I think the second factor is special interests. Certain members of this legislature are beholden to the trial lawyers. $33.5 million over a decade in campaign contributions is hard to ignore. So what you end up with is a lot of people claiming they support business, but when you look at their voting records there is nothing there. Sort of like a meringue pie – heavy on fluff and not a lot of substance.

So yet another year goes by and this state remains dead in the water. People need to get involved and take control. If you are not happy with the course we are on, please do something and engage. Stop the madness and start holding elected officials accountable.

 

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