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The really irksome thing for conservatives is that they've spent the last few years here predicting imminent doom for California because of its liberal practices ....... and yet here we are getting better again.
What is not getting better, are middle class well paying blue collar jobs. Manufacturing plant after manufacturing plant pulling out. Everything from autos, to steel mills, etc., as mentioned above. New jobs are estimated to be 70% low wage jobs. The rest are upper middle class jobs. But what about the jobs for the middle class blue collar worker. They are what are not being produced. And most college graduates cannot find a job in their field.
This thread asked a simple question. Imagine I have an established large corporation in California, and I want to put in a new operation manufacturing plant and should I put it in LA (the states biggest city with more people that several states) or some other state?
Not one person has shown it should be put in LA.. Some of the posts say:
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Anyone arguing FOR putting a new business in CA clearly has no business sense. CA was just voted 47th out of the 50 states for business. You'd have to be crazy to open something here, especially a small business.
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I would put a new business in California if that is where my customers were, otherwise I would put it elsewhere for cost savings.
Your customers are local people, and when you put your business where the customers are, you are a small local business. Not a 1,500 employer as in the original question. As the poster says, he/she would put it somewhere else.
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Due to AB32 plus myriad other "social" costs, I will not locate the plant in CA. I will only locate HQ, marketing and maybe engineering in CA. I will locate manufacturing in someplace like TX, OR, SC ... or, CHINA!
Again, this poster just wants high end jobs in California when most of the people are not qualified for high end jobs. Kind of saying, starve out the middle class and poor, so people like me can have California to ourselves. Not going to happen, so his taxes will go up to support the people he/she does not want working in California.
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In my view the United States, or at least much of it, is now to advanced for low level manufacturing work. It's not that we can't do this work, but why should we?
I don't want a warehouse job when I can be a technologist or scientist or....financial trader.
For CA, old Jerry Brown wants the creative class to revive his economy. He wants you to take your wrench and cranes and florklifts elsewhere. So does DC, and so do I.
In other words, these posters and the State Governor want to do away with everything but the high paid STEM jobs. None of them care, about middle income families who want to work. They are being very selfish, and want to only have prosperity for themselves. To heck with everyone else.
Over the 2001 through the 2011 period (the figures for 2012 are supposed to be released next month) California lost STEM jobs. While places like Texas gained a lot. Between California loss, and Texas gain, there is over 100,000 jobs different. As every STEM job creates 5 non stem jobs, it shows why California still has high unemployment. On the other hand, Texas has recovered from the recession a couple of years ago.
This poster really takes the cake. He/She again wants to run those that do not have a real high paid highly educated job out of the state. Wants to make it a state of only the elite.
In fact he claims that the Governor Of California wants to drive the blue collar workers out of California and only wants the elite to stay. That is exactly what he is doing. Problem, it is the middle class families that are pulling up stakes and leaving. Leaving the elite he wants, and there is a fast growing poor population taking their place. California already has more than every fifth person living below the poverty line, using half of federal welfare funds. Just thing at the present trend as more middle income families leave the state and replace them with poor, how high the poverty rate will become. Just think those that want it this way, will have to have their taxes raised to support these new poor people.
Not one of the California boosters, have been able to show a good reason to put a new facility in California. I was sure some of them would have a solution to California's problem. But alas no. They cannot accept the fact that there is a problem.
You can't discuss urbanity without the biggest impact on why people leave a high cost area- children. I can tell most of the posters here don't have kids. But if and when you have them, even if you can easily afford an expensive place you simply many not want your kids to grow up there
I don't have any reason to believe that the reason why people leave high cost areas is children instead of simply getting priced out of the area. But the point I was making is entirely independent of whether one has children or not, the point is that different people value different things and you can control the "cost of living" by making sacrifices. All the "cost of living" calculators are useless because individual preference is the most critical issue.
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Originally Posted by expatCA
That is true, but locating near a hub, rather than in Montana, etc, such as Dallas, Atlanta, St Louis, Kansas City and many more gets you the same level of service you get in CA and at a lower cost. Are there reasons to locate in CA, yes, are there reasons to not locate there, yes. CA is not the be all and end all for businesses.
You are speaking as if all cities have the same infrastructure, but they don't. For example, you're not going to get the "same level of service" if you're involved in the apparel industry in Dallas as you would in Los Angeles. In terms of costs, you seem to be ignoring the very issue I brought up, costs involve a lot more than rent. But ignoring that, the costs aren't necessarily cheaper in other states....it depends.
Anyhow, you guys don't get to get your cake and eat it too. If businesses are leaving California, that means the costs to do business in California are declining. Why? Because as businesses leave commercial rents will decline, labor will become cheaper, etc. On the other hand, if the costs to do business in California are high that means there is plenty of depend to locate businesses in California....
If you look at most of the cases of large businesses building facilities in Texas, Georgia, etc....you'll find that they are being given large tax breaks and this strategy can backfire. Businesses put a lot of stress on infrastructure and the tax breaks can make it different to pay for it.
I don't have any reason to believe that the reason why people leave high cost areas is children instead of simply getting priced out of the area. But the point I was making is entirely independent of whether one has children or not, the point is that different people value different things and you can control the "cost of living" by making sacrifices. All the "cost of living" calculators are useless because individual preference is the most critical issue.
You are ignoring the fact, that people that have insufficient income to even make sacrifices is what causes the high poverty rate in California. Families are leaving, because of the low quality of life that even a middle income will give them in California cities. They are leaving and going to where they will be able to move out of apartment living, and buy a home for their family. There are only some sacrifices they can make, when the money is not enough to supply the basic housing, food, medical, school supplies and other family expenses.
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You are speaking as if all cities have the same infrastructure, but they don't. For example, you're not going to get the "same level of service" if you're involved in the apparel industry in Dallas as you would in Los Angeles. In terms of costs, you seem to be ignoring the very issue I brought up, costs involve a lot more than rent. But ignoring that, the costs aren't necessarily cheaper in other states....it depends.
Check and you will find there are a lot of apparel manufacturing companies in Texas particularly Dallas. The cost of doing business is overall reported to be 40% less in Dallas than Los Angeles to do business. The ability to get service in Dallas for the apparel business is solvable, when you have that much more money to work with. Modern transportation and communications, has solved a lot of problems a long time ago. In fact, it is cheaper to ship from Dallas to where the largest percentage of population live, than it is from California.
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If you look at most of the cases of large businesses building facilities in Texas, Georgia, etc....you'll find that they are being given large tax breaks and this strategy can backfire. Businesses put a lot of stress on infrastructure and the tax breaks can make it different to pay for it.
However, a large number of people being employed, bring in a lot of taxes from other sources. Overall the people get jobs, and state/local government come out ahead. Every job in a manufacturing plant, generates 5 jobs for others. All of those jobs, bring in tax money to the governments involved. If you have been involved in putting in a new facility such as a plant, you will realize that the local government forces the business to put in a lot of the extra infrastructure to handle the new business at the businesses expense. The tax breaks, are to help the company recover the costs they have taken on to handle infrastructure etc. They put it in, then recover over a few years due to tax breaks. The other taxes generated help the city/county/state.
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Anyhow, you guys don't get to get your cake and eat it too. If businesses are leaving California, that means the costs to do business in California are declining. Why? Because as businesses leave commercial rents will decline, labor will become cheaper, etc. On the other hand, if the costs to do business in California are high that means there is plenty of depend to locate businesses in California....
There are a lot more to costs than empty commercial space. Labor costs for existing business will not go down, due to the cost of living in the area. At this time, there is already a lot of vacant industrial space in California and the cost to do business in the state is not going down as you say it will.
My brother is career Commercial Real Estate... never brokered a home in 25 years.
They are still building and find the market tight in their areas of the Bay Area.
For a few years... they stopped building on spec... most all was build to suit.
Company never laid off anyone and continues to expand.
Some areas just remained popular and the down turn was only a blip on the radar. Other areas were very hard hit... like my city where every block had at least a bank owned property.
California is a huge State and hard to define... it still is the place to make it for many.
I have observed that some high earners "Need" every dollar they earn and then some...
I've found Bay Area living quite doable being frugal... many wants are not needs.
Location: where you sip the tea of the breasts of the spinsters of Utica
8,297 posts, read 14,163,488 times
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Oldtrader, everything you say flies in the face of what's actually happening. For every business that leaves California, two more are started. The unemployment problem is mostly about seasonal agricultural work in the enormous farming sector.
See what I'm saying? You're asking WHY so many new businesses should choose California to start up in. But we can't know that unless we examine specific cases ...... suffice it to say that many of them ARE choosing California, whether or not you can figger it out. Sure some choose to start up in Texas, Lord bless their hearts, but plenty are making the decision to come here based on their personal needs and the profit motive.
You are speaking as if all cities have the same infrastructure, but they don't. For example, you're not going to get the "same level of service" if you're involved in the apparel industry in Dallas as you would in Los Angeles. In terms of costs, you seem to be ignoring the very issue I brought up, costs involve a lot more than rent. But ignoring that, the costs aren't necessarily cheaper in other states....it depends.
What apparel industry? It is all made in Bangladesh, Vietnam, etc :Look at the tags.
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Anyhow, you guys don't get to get your cake and eat it too. If businesses are leaving California, that means the costs to do business in California are declining. Why? Because as businesses leave commercial rents will decline, labor will become cheaper, etc. On the other hand, if the costs to do business in California are high that means there is plenty of depend to locate businesses in California....
Sorry costs and taxes are going up and the regulations are getting insane. Nothing declines in CA except the standard of living. I know, born and raised in CA and operate a business here.
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If you look at most of the cases of large businesses building facilities in Texas, Georgia, etc....you'll find that they are being given large tax breaks and this strategy can backfire. Businesses put a lot of stress on infrastructure and the tax breaks can make it different to pay for it.
Yep and CA doesn't soooo, business move. The point is not the specific reasons or reasons, just that they move and CA looses jobs and the ex employees can't find a replacement job. The State looses. Just think, one company with 500 jobs moves and 30 employing 2 people open. Yep looks like CA is booming, but a net lose of 440 jobs and the buying power that brought. It is actually worse as my company is finding out.
You are ignoring the fact, that people that have insufficient income to even make sacrifices is what causes the high poverty rate in California. Families are leaving, because of the low quality of life that even a middle income will give them in California cities. They are leaving and going to where they will be able to move out of apartment living, and buy a home for their family.
I'm not ignoring anything, instead I'm pointing out that one can control a lot of the "costs of living". In particular, just because a 3,000 sf home in Los Angeles costs more, on average, than one in Dallas doesn't mean the "cost of living" for individuals is more in Los Angeles. People can offset the higher costs by getting a smaller place and maintain a similar "cost of living".
Whether or not the costs are worth in it in California is an individual matter.
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Originally Posted by oldtrader
Check and you will find there are a lot of apparel manufacturing companies in Texas particularly Dallas. The cost of doing business is overall reported to be 40% less in Dallas than Los Angeles to do business. The ability to get service in Dallas for the apparel business is solvable, when you have that much more money to work with.
There are not "a lot" of manufacturing companies in Texas and there is no location in Texas that provides the sort of apparel nexus that Los Angeles does....not even close.
Your figure is made up, there is no general way to determine whether the "cost of business" is 40% less in one area than another. The best you can do is compare commercial rents, utility costs, etc....but that just part of the picture. The biggest costs for manufacturers, rent, labor and equipment, are similar in Dallas and Los Angeles while Dallas is likely to be cheaper on some minor costs.
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Originally Posted by oldtrader
However, a large number of people being employed, bring in a lot of taxes from other sources. Overall the people get jobs, and state/local government come out ahead.
Yes, obviously a new business will generate tax revenue....the question is whether the subsidies given to the business will exceed the tax revenue generated by the business.
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Originally Posted by oldtrader
At this time, there is already a lot of vacant industrial space in California and the cost to do business in the state is not going down as you say it will.
Of course it has, and if you had your boots on the ground you'd realize the reality.
What apparel industry? It is all made in Bangladesh, Vietnam, etc :Look at the tags.
If you actually "looked at tags", you'd find that apparel is made throughout the world....including the US. There are numerous apparel manufacturers in Los Angeles, the biggest of which is American Apparel (6,000 factory workers), and a lot of supporting businesses (fabric suppliers, equipment, ink suppliers, etc).
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Originally Posted by expatCA
Sorry costs and taxes are going up and the regulations are getting insane. Nothing declines in CA except the standard of living. I know, born and raised in CA and operate a business here.
Right, so you guys think that somehow California violates basic economics. Somehow, in California there is low demand for business formulation...yet magically the cost of doing business in California remains high.
The regulation in California haven't changed much in decades.
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Originally Posted by expatCA
Yep and CA doesn't soooo, business move. The point is not the specific reasons or reasons, just that they move and CA looses jobs and the ex employees can't find a replacement job.
Yes, California usually doesn't.....why? Because it doesn't have to....California has such a positive environment for businesses that it doesn't have to pay them large sums to locate here. Having to offer businesses large sums to location in your state is just another way of saying your state isn't particularly good for business.
Though, I do think California should have fought to keep more of its manufacturing base but local/state officials seem to be making more efforts now.
Oldtrader, everything you say flies in the face of what's actually happening. For every business that leaves California, two more are started. The unemployment problem is mostly about seasonal agricultural work in the enormous farming sector.
The real unemployment rate in California is hovering at 18%. This is the BLS U6 rate. This includes all those that are getting jobs in California for part time jobs while looking for full time jobs they cannot find. It includes Software Engineers working at McDonald's flipping handburgers, etc. It is the true unemployment rate, and why it is known as the real unemployment rate. The vast majority of new jobs in California, are lower paid, part time, or temporary jobs.
Again proof of the problem is the core better paid jobs known as STEM jobs have declined in California while rapidly increasing over the past 10 years.
California has a 23% poverty rate, another indication of the lack of sufficient well d paying jobs. Far above the other states. Poverty Rate among poor families in California has increased so it is far higher than in other states.
If you think that the ag industry is responsible for the high unemployment in California think again.
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