California Governor Jerry Brown has been lauded by the left as one of the most successful and influential leaders in the country. Supported by a Democratic supermajority in both houses of the California Legislature, the governor can basically do as he pleases, but he can’t seem to bring back the jobs that he’s chased away.
Four years ago, Brown launched “California Competes,” his program to boost California jobs by awarding tax credits to job-creating businesses. Today, two-thirds of those credits have been left unclaimed.
To make matters worse, no one can vouch for the jobs that the program has produced because, conveniently enough, the state offices responsible for awarding and tracking the credits aren’t keeping count.
Brown’s administration is crossing its fingers that businesses are simply waiting until the last minute to claim their credit, but that’s probably wishful thinking. The nonpartisan Legislative Analyst’s Office even said it “anticipated somewhat larger amounts” of claimed credits, which is not a good sign.
The private sector isn’t too hopeful either.
Micah Weinberg, president of the Bay Area Council Economic Institute, believes the claim rate won’t improve anytime soon, and small businesses are arguing the credits are not worth the cost.
Matt Pentecost, owner of Sac Surface Pro in Sacramento, says his $6,000 a year approved credit isn’t enough of an incentive to pay for the salary, workers’ compensation, and employment taxes of more workers. Businesses are also struggling to find employees with the skill set they need, regardless of the tax credit — a key gap that academia doesn’t have much interest in filling.
California’s hostile business environment has caused a mass exodus of companies from the state, and small businesses are the most likely to leave. Smaller businesses are disproportionately affected by California’s taxes and regulations, and yet they employ around 50 percent of the state’s private workforce.
As jobs leave the state, so do its workers.
Although average annual domestic migration losses decreased from 160,000 to 50,000 between 2010 and 2015, the number reached 110,000 in 2016. Interestingly enough, the largest demographic of California “refugees” is middle-aged workers who earn $100,000 to $200,000, leaving a significant dent in the state’s tax revenue.
While its heart may have been in the right place, the “California Competes” program fails to make the state more business-friendly. With its high taxes and insane regulations, California will continue to lose jobs and workers despite the creativity of its politicians.
Brendan Pringle (@BrendanPringle) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a freelance journalist in California.
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