Logistics

California’s costly tax and regulatory policies have driven scores of businesses to leave the state, reduce their operations or curtail plans to locate here, according to a report from Spectrum Location Solutions. (Photo by John Valenzuela/The Sun)

By Kevin Smith, San Gabriel Valley Tribune
Posted: 08/09/16 – 1:54 PM PDT |

California’s costly tax and regulatory policies prompted more than 10,000 businesses to leave the state, reduce their operations or curtail plans to locate here between 2008 and 2015, according to a report from Spectrum Location Solutions.

The Irvine-based company conducts site-selection studies and other assessments to help businesses relocate to optimum states and locales for their operations. Some of their clients include corporations that have relocated out of California, like Honda.

The report, “California Business Departures: An Eight-Year Review 2008-2015,” reveals that at least 1,687 California disinvestment events occurred during that period, a count that reflects only those that became public knowledge.

And for every disinvestment that became known — either through media reports, company announcements or company reports to the U.S. Department of Labor, the Securities and Exchange Commission or the California Employment Development Department — another five occurred, the report said.

In preparing the Spectrum report, site selection consultants and economic development personnel from across the U.S. were asked this question:

For every company that leaves an area — any area, not just California – how many others make such a move without any media coverage or without having to file a report with the state or federal government?

Responses ranged from five to seven, with a few indicating that as many as 10 additional businesses made disinvestment moves for every one that was known. Spectrum ultimately relied on the most conservative estimate of five. With that multiplier in mind, the total number of businesses disinvestment actions in the Golden State exceeded 10,000.

A variety of factors would appear to support the multiplier theory. Smaller companies often avoid issuing statements about such moves to avoid publicity. And companies that expand outside of California to serve new territories — actions that might appear unrelated to California’s difficult business climate — often are not listed.

Another factor is the California Worker Adjustment and Retraining Notification Act. That requires companies to file a furlough notice with the state Employment Development Department giving a 60-day notice if it employs 75 employees or more and lays off 50 or more during any 30-day period. But a review of the notices indicates the absence of companies with 74 employees and lower that are known through other sources to have closed completely or in part and left the state, the report said.

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