By BRIAN McGOWAN
There has been yet another upsurge of states and cities around the country targeting California businesses for relocation. Recently, several articles have highlighted that California companies continue to receive attention from other states that are trying to lure them out of California.
All of this attention comes as no surprise and could even be considered flattering. But the fact is, stealing a company or two is not going to replicate what is in the DNA of Californians,innovation and a spirit of entrepreneurship.
Contrary to myth, California remains a powerful magnet for businesses. In fact, debates about California’s business climate frequently understate the state’s strengths. To be useful in business location decisions, a
discussion of “business climate” should focus not only on tax and regulatory costs but also on workforce skill, availability of capital, support for new business and overall quality of life.
Focusing only on the cost side of the equation is not only short sighted but fails to explain why California’s growth tends to keep up with,or surpass,that of the nation.
California is one of the largest and most diverse economies in the world. Gov. Schwar-zenegger often refers to California as a nation state. California’s strength lies in the size, di-versity and adaptability of its economy as well as in the talent and range of its population.
Quality of Life
The state’s quality of life is unmatched and it boasts many unique assets that inspire innovation and creativity and foster entrepreneurialism. In other words, what really makes California great is that the best and the brightest from all backgrounds and nations come here to realize the American dream.
California supports creativity with a superior university system and excellent job training programs that produce an unrivaled, highly skilled labor force. There are more than 2.3 million students enrolled in 213 colleges and universities and more than 266,000 college graduates every year. California has the nation’s highest concentration of engineers, scientists, mathematicians and skilled technicians.
While it may be true that California is a high-cost state for business, you get what you pay for.
For instance, while California workers earn, on average, 12% more than the average U.S. worker,even when adjusting for differences in workers’ education, occupation, industry and other personal char-acteristics,California’s workers have a higher productivity rate. Output per worker is 13% higher than the national average, more than offsetting the higher wages.
In addition, California invests heavily in maintaining a world class global infrastructure for the movement of goods and people, for talent development and to preserve our environment.
California also is home to the high-tech industries of Silicon Valley, the biotech industries of San Diego and the Bay Area, the agricultural industry of the Central Valley and the entertainment industry of Los Angeles, making it the 8th largest economy in the world.
To be successful over the long haul, a state needs capable entrepreneurs and the risk capital to support the conversion of research into commercially viable technology products and services. California is second to none when it comes to research and development and venture capital investment. Not only is California an attractive market for poachers, it is an attractive market for business and remains the No. 1 state for attracting foreign direct investment.
The state also leads the way in several business rankings. Most recently, 51 California companies were ranked among Fortune’s 500 list of America’s largest corporations. Four California companies were among the top 10 best companies to work for in the United States, according to Fortune’s 100 Best Companies to Work For listing, including Sunnyvale-based NetApp Inc., which happens to be No. 1 on the 2009 list.
Innovation seems to be around every corner in the Golden State. California has a burgeoning civilian space industry in the Mojave Desert and is home to the first civilian designed and built space craft.
California also has inspired companies such as Google Inc., Hewlett-Packard Co., Netflix Inc., Amazon.com Inc., Walt Disney Co. and Yahoo Inc.
One example of the growth potential for business in California is eBay Inc., which, in 1998, had 30 employees and about $4 million in sales. Today, it supports the livelihoods of 1.3 million people.
How many other game-changing companies are incubating right now in a garage or laboratory somewhere in California?
Stimulus Package
Californians also understand that inaction does not keep you on the aforementioned lists and that there is always room for improvement. For this reason, Governor Schwarzenegger negotiated an economic stimulus package in this year’s budget to enhance California’s business environment while helping businesses weather this difficult economy.
The budget includes provisions such as the elective single sales factor, which can help level the tax playing field for California businesses; the “new hire” tax credit, which rewards California businesses that are hiring when we need it most; and the streamlining of the California Environmental Quality Act’s permitting standards, which can expedite projects and generate jobs.
California has and will continue to inspire a global innovation network that increasingly transforms the way we all live, work and play. Its powerful global connections place it at the crossroads of goods and services, talent, capital and, most important, ideas,the ultimate drivers of economic growth.
Ideas require an environment that encourages creative expression, establishes open-knowledge platforms and provides access to information.
These also happen to be the three ingredients that created California’s culture of innovation and entrepreneurship.
As other states spend millions on poaching campaigns and cannibalizing the American economy, the California will continue investing in infrastructure, encouraging innovation and promoting national economic growth.
McGowan serves as deputy secretary for Economic Development and Commerce at the state’s Business, Transportation and Housing Agency.
