It’s not much of a stretch to say local companies’ complaints about the business climate in San Diego and California in general can sound downright apocalyptic. See: this, this and this.

So when we were able to zero in on four issues that frustrate a broad spectrum of businesses, we decided to dub them The Four Horsemen.

We’ll roll out stories about each of them this week, but here’s a preview. Be sure to return to this post throughout the week for links to each of the stories as they appear.

Workers’ Comp: California companies pay much higher workers’ compensation premiums than their counterparts in other states. Those bills can force CEOs’ hands when it comes to hiring decisions or deciding on when to give raises.


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Cost of Living: Thanks to San Diego’s steep housing and living costs, businesses must pay their workers more and spend more on commercial property.

Manufacturing Taxes: San Diego’s set on adding more manufacturing jobs but that’s complicated by the state’s relatively high tax rate for those companies.

Energy Costs: San Diego’s energy rates outpace those in almost every other major metro area.

These posts are the climax of my quest to find out whether companies are actually leaving in droves (they’re not) and to shed light on local dynamics that make doing business here challenging.

You can catch up on the rest of my coverage here.

    This article relates to: Business, Cost of Living, Economy, News, Quest, Quest: Business Climate, Share

    Written by Lisa Halverstadt

    Lisa Halverstadt is a reporter at Voice of San Diego. Know of something she should check out? You can contact her directly at lisa@vosd.org or 619.325.0528.

    24 comments
    CaptD
    CaptD subscriber

    I suggest that if Attorney General Kamala Harris really wants to be seen as a credible candidate for CA Senator Boxer's seat then <b>she better stop avoiding the multi-billion dollar San Onofre debacle which now includes the one-sided Pro-Utility settlement by the CPUC and immediately pursue the investigation of Peevey's conduct and, if laws have been violated, to prosecute all those involved</b>. Otherwise she will be seen as just another Politician that is far more interested in her relationship with BIG Utilities than she is with California's voting ratepayers.


    With so many billions of dollars at stake, it is just a matter of time before the law firm Aguirre & Severson attracts enough public attention to insure that their appeal of the CPUC's unfair settlement gift to SCE and SDG&E gets its day in Federal Court. There the rule of law not the biased rules of the CPUC, will allow for *legal discovery* into what really went on during the replacement steam generator project. These documents will then spotlight SCE as being totally responsible for the engineering debacle at San Onofre, which will result in the ratepayers not having to pay many billions of dollars as proposed by the CPUC's unfair settlement gift to SCE and SDG&E.


    This case will also implicate not only Governor Brown who has turned a blind eye to the cozy relationship between the CPUC and the Big Utilities they regulate but also all of the CA's elected officials who have not demanded that ratepayers be treated fairly because they seek to continue retain their own cozy relationship with the Big Utilities. How many know, for example that Governor Brown's sister is on the board of Sempra which might very well explain why Gov. Brown has to date shown no interest in reforming the CPUC.


    Much more here:


    http://www.sandiegoreader.com/news/2015/jan/12/ticker-new-cpuc-presidents-erased-emails/ 


    Posted:  http://www.mercurynews.com/News/ci_27328573/Mercury-News-editorial:-Its-a-new-day-at-the-PUC?source=infinite

    CaptD
    CaptD subscriber

    As I have said many time before, SCE's in-house replacement steam generator project that has so far resulted in a 3+ Billion Dollar ratepayer funded debacle will now also identify the CPUC as a major contributing party, as the law firm Aguirre & Severson continue to press for justice in Federal Court, since the CPUC's attempt at justice resulted in nothing more than a unfair one-sided settlement for the owner/operators of San Onofre that caused the entire debacle in the first place.

    While the rest of southern California's media remains mum on this topic, I salute the San Diego Reader* for their ongoing coverage of the most important issue facing utility ratepayers, since the cost of Energy both now and in the future affects us all!

    http://www.sandiegoreader.com/news/2015/jan/12/ticker-new-cpuc-presidents-erased-emails/?c=181269


    NOTE: California already has some of the highest priced energy in the USA, despite having some of, if not the best weather in the USA, and the reason for that is that the CPUC has enabled the BIG Utilities to funnel ever more ratepayer money into their shareholders pockets, thanks to ever more rate increases being approved by the CPUC.


    CaptD
    CaptD subscriber

    As I have said many time before, SCE's in-house replacement steam generator project that has so far resulted in a 3+ Billion Dollar ratepayer funded debacle will now also identify the CPUC as a major contributing party, as the law firm Aguirre & Severson continue to press for justice in Federal Court, since the CPUC's attempt at justice resulted in nothing more than a unfair one-sided settlement for the owner/operators of San Onofre that caused the entire debacle in the first place.

    While the rest of southern California's media remains mum on this topic, I salute the San Diego Reader for their ongoing coverage of the most important issue facing utility ratepayers, since the cost of Energy both now and in the future affects us all!

    NOTE: California already has some of the highest priced energy in the USA, despite having some of, if not the best weather in the USA, and the reason for that is that the CPUC has enabled the BIG Utilities to funnel ever more ratepayer money into their shareholders pockets, thanks to ever more rate increases being approved by the CPUC.


    John H Borja
    John H Borja subscriber

    Cost of living: not controllable.  People want to live here. When more people want to live here and can afford, housing will be more expensive. Everything else, food, etc. is relative.

    Energy costs: we now have cleaner air and better environmental controls. because California has pushed hard to get everyone to "pitch in" and means an added cost for everyone living in California.  Do you want to have a really nice house next to a factory? That's Houston,Texas....yuck.

    Workman's Compensation costs: If an employer can get away with paying less, they'll use any excuse to pay less.

    Manufacturing taxes: taxes help everyone. There are plenty of programs to promote business in California. If these guys want to believe the hype, let 'em. 

    Did any of these businesses want to move to Barstow, I here housing and employments cost are way less than S.F., L.A., or S.D.

    TJ Apple
    TJ Apple subscribermember

    Good choices, I look forward to the articles.

    stclairp
    stclairp subscriber

    Business has consistently identified these issues as problems.  Under the Reagan Administration, after tax and regulatory reform, business still identified these as problems.  


    I think its far more important to ask business to identify specific local (City and County), state and federal rules and regulations that inhibit growth and hiring.  


    Let's have something meaty from them, and not just general complaints.  


    Taxes and many regulations are not going to go away.  Nor do the most broad-sweeping of them seem to have a very significant impact on growth.   Growth is about the same no matter what the current tax rate or regulatory climate may be.  Growth is far more sensitive to birth rates,  interest rates, government spending at all levels, capital investment and  personal savings.  


    I've asked the San Diego Chamber of Commerce for the list of the "top ten" regulations that inhibit growth and hiring.  I've never received a specific reply.  Complaining about taxes and law is older than Shakespeare.  Let's get specific.  


    Peter St.Clair 

    Richard Rider
    Richard Rider subscribermember

    VERY GOOD choices!  California's sky-high workers' comp costs fly below the radar for most folks.  And most Californians don't realize how high our electricity costs are vs. the rest of the nation.  Or that SDG&E is even higher -- arguably the highest major utility in the continental U.S.

    I might suggest three more horsemen (shouldn't that be "horse persons"?) to add to the job killing posse:

    1. Litigation climate.
    2. Regulatory costs and delays.
    3. Cost and uncertainty regarding our water supply.

    To whet your readers' interest (from my "CA vs. the Other States" fact sheet:
    www.TinyURL.com/CA-vs-other-states

    CA has the highest/worst state workers’ compensation rates in 2013, up from 3rd in 2012. CA rates 21.3% higher than 2nd highest state, 88% higher than median state. Yet we pay low benefits -- much goes to lawyers.

    http://riderrants.blogspot.com/2014/10/california-has-worst-workers.html

    California residential electricity costs an average of 35.4% more per kWh than the national average. CA commercial rates are 60.3% higher.For industrial use, CA electricity is 85.4% higher than the national average (July, 2014). NOTE: SDG&E is considerably higher.

    http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_06_a


    The American Tort Reform Foundation ranks CA the “2nd worst judicial hellhole” in U.S. – most anti-business – which is “better” than the last 2 years’ #1 ranking.  The U.S. Chamber of Commerce ranks CA higher – “only” the 4th worst state (unfortunately, sliding from 7th worst in 2008).

    http://www.judicialhellholes.org/wp-content/uploads/2014/12/JudicialHellholes-2014.pdf

    and    

    http://www.instituteforlegalreform.com/states/california


    From 2007 through 2010, 10,763 manufacturing facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation's population, CA got 1.6% of the built or expanded manufacturing facilities. Stated differently, adjusted for population, the other 49 states averaged 8.4 times more manufacturing growth than did California.

    http://www.cmta.net/20110303mfgFacilities07to10.pdf   -- prepared byCalifornia Manufacturers and Technology Association

    Mark Giffin
    Mark Giffin subscribermember

    @Richard Rider 

    Unfortunately Californias Workmans comp gets "gamed". The 2012 reforms were supposed to curb the abuses but just like previous reforms have not done so. 

    DavidM
    DavidM subscriber

    @Richard Rider Anyone who believes San Diego's litigation environment is hostile to business needs to review the local judges who actually hear civil cases. 

    Richard Rider
    Richard Rider subscribermember

    @DavidM @Richard Rider And anyone who thinks that the CA courts (and laws) are too business-friendly is likely a litigation attorney.

    SDGIS
    SDGIS subscribermember

    Did you read the article? Companies are not leaving on droves. This is because California is a great place to live and innovate. Everyday companies choose to move to, or stay in, California. All the sky is falling talk just isn't happening.

    Richard Rider
    Richard Rider subscribermember

    @SDGIS Yes, most companies stay -- especially if they are retail or service companies with clients in the state.  It's a HUGE disruption to pick up and leave a state.  But too often California companies choose to EXPAND in other states.  Especially if they actually MAKE anything.

    Your claim that businesses are flocking to California is beyond ludicrous.  

    ADDITIONAL FACTS (As opposed to your unsourced generalizations): 

    California’s 2015 “business tax climate” ranks 3rd worst in the nation – behind New York and anchor-clanker New Jersey. In addition, CA has a lock on the worst rank in the Small Business Tax Index – a whopping 8.3% worse than 2nd worst state.

    http://taxfoundation.org/article/2015-state-business-tax-climate-index   
    and   
    http://www.sbecouncil.org/wp-content/uploads/2014/04/BTI2014Final.pdf

    The top U.S. CEO’s surveyed rank California “the worst state in which to do business” for the 10th straight year (May, 2014).
    http://chiefexecutive.net/best-worst-states-for-business-2014#ranking

    In 2012, our supply of California businesses shrunk 5.2%. In ONE year. NOTE: That's a NET figure – 5.2% fewer businesses in CA in 2012 than were here in 2011.  Indeed, in 2012, CA lost businesses at a 67.7% higher rate than the 2nd worst state!

    http://riderrants.blogspot.com/2013/07/in-2012-ca-lost-businesses-at-677.html


    Of 100 U.S. real estate markets, CA contains by far the least affordable middle class housing market (San Francisco). PLUS the 2nd, 3rd, 5th, 6th and 7th. San Diego is #5 (w/“middle class” homes avg. 1,056 sq. ft.) 
    http://riderrants.blogspot.com/2013/10/the-us-least-affordable-housing-market

    CA is tied for the 2nd worst state unemployment rate (November, 2014) – 7.2%.  National unemployment rate 5.8%.  National unemployment rate not including CA is 5.6%, making the CA unemployment rate 28.4% higher than the average of the other 49 states.

    http://www.bls.gov/web/laus/laumstrk.htmWe were at 4.8% in Nov, 2006 – vs. national 4.6%.
    Using the 3rd quarter 2014 U-6 measure of unemployment (includes involuntary part-time workers), CA is just behind Nevada at 15.8% vs. national 12.5%.  National U-6 not including CA is 12.1%, making CA’s U-6 31.1% higher than the average of the other 49 states.http://www.bls.gov/lau/stalt.htm

    California small businesses failed in 2011 at a rate 69% higher than the national average -- the worst state in the nation.

    http://money.cnn.com/2011/05/19/smallbusiness/small_business_state_failure_rates/index.htm   (based on Dunn & Bradstreet study)

    AND I REPEAT:  
    From 2007 through 2010, 10,763 manufacturing facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation's population, CA got 1.6% of the built or expanded manufacturing facilities. Stated differently, adjusted for population, the other 49 states averaged 8.4 times more manufacturing growth than did California.

    http://www.cmta.net/20110303mfgFacilities07to10.pdf   -- prepared by California Manufacturers and Technology Association

    SDGIS
    SDGIS subscribermember

    @Richard Rider @SDGIS Apple, Twitter, Facebook and Qualcomm choose to come and stay here every day. They could go anywhere, but they choose California because they know that taxes and other incentives/disincentives won't make or break their business. Smart employees and company culture are way more important to their success. California fosters innovation in a way that few places in the world do/can. As goes California, so goes the world.


    Yes, opening and running a McDonalds is a larger obstacle in California than in Deleware/South Dakota/Texas. I have absolutely no problem with this.

    paul jamason
    paul jamason subscribermember

    @Richard Rider @SDGIS Funny, in all of Richard's links I didn't find this recent Bloomberg article summarizing how strong California's economy is: http://www.businessweek.com/news/2015-01-16/brown-s-california-overtakes-brazil-with-companies-leading-world


    Or this one, showing how oil-dependent red states are seeing their fortunes shrink, as California's diverse economy thrives:


    http://www.newyorker.com/business/currency/california-bested-texas


    And it's odd how all the predictions of wealthy Californians leaving the state after their income tax increase (which helped balance the budget) were absolutely wrong.

    Richard Rider
    Richard Rider subscribermember

    @SDGIS The companies you cite were founded here and/or moved here many years ago.  All started in CA when taxes were lower and the business climate was less hostile.  

    And yet you claim more such companies are moving there every day.  Are you daft, man?

    Is it hard to type holding cheerleader pom-poms?  Again you deliver generalizations -- devoid of content.

    To your credit, at least you are honest.  It's good that you so frankly demonstrate the elitist view common to liberals -- expressing delight that McDonald's and other retail businesses find CA particularly hostile to commerce. You don't care about our high unemployment -- after all, YOU'VE got a job, so little else matters.  And if Californians can't get a job with some trendy Internet-oriented company, well -- too bad for them.

    You seem particularly happy that ill-educated minorities (thank you, California public school system) are the ones most impacted by such policies.  Few liberals would be so frank.

    THANK YOU for such honesty.

    msginsd
    msginsd subscriber

    @paul jamason @Richard Rider @SDGIS I'll go you one step farther.  In all of his, and the rest of the libertarians', bombastic blathering, there's never any kind of realistic solutions.  Just a bunch of hand-picked and twisted statistics to say the sky is falling.  They like to portray themselves as intellectuals, but there's a reason why they've never succeeded in establishing credibility with the populace.  They're shunned from all sides, and rightly so.


    I've met SDGIS, although I won't say where.  He is indeed a thoughtful, considered, successful business owner.  He is anything but "daft".   And Rider's personal attacks are ill-advised.

    Richard Rider
    Richard Rider subscribermember

    @msginsd @paul jamason @Richard Rider @SDGIS What facts did I twist?  Was I being unfair -- using actual data and giving sources? I didn't know that using hard facts would classify me as an "intellectual."  Guess that's a bad thing in your world, right?

    I never said the sky is falling -- we are in a stately decline.  Nor did I say the rich are leaving in droves.  They still hope Prop 30 is a temporary tax.  We'll see how they react when it becomes apparent that it's going to be a permanent tax.  

    Youse guys keep posting straw men arguments that you dutifully knock down, but NONE of you have refuted a single point that I've made, though I do appreciate paul jamison at least using sources. Biased sources, but sources.

    Gotta move on, as no one is still reading this thread.  But it's been fun.

    Jerry Ollinger
    Jerry Ollinger subscribermember

    @Richard Rider @SDGIS Companies expand outside of California because they want to have access not only to California talent but to talent also outside of California. 


    Richard Rider
    Richard Rider subscribermember

    @Jerry Ollinger @Richard Rider @SDGIS Yeah, right.  Our high cost of living, our high taxes on businesses and individuals, our high utility costs, our runaway litigation costs, our oppressive regulation costs -- none of that is considered important by greedy business people.  

    They just "want to have access to outside talent." SURRREEEEEEEE.

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