The state of California is already in a recession. The bleak financial state makes sense: California remains one of the worst states in the country for business. Corporate and personal income taxes are absurdly high. Housing costs are through the roof. And the state is home to more bureaucratic regulations than any other place aside from New York.
Now, these harmful policies are coming home to roost.
When it comes to the health of his state’s economy, California Governor Jerry Brown has been walking on eggshells this year.
The following chart shows the trailing twelve month averages of California’s civilian labor force and number of employed is one that we’ve adapted from a different project to show that data in the context of the state’s higher-than-federal minimum wage increases and periods of negative GDP growth for the national economy. It shows that in 2017, the size of the state’s labor force has peaked and begun to decline in 2017, while the number of employed shows very slow to stagnant growth during the year.
Meanwhile, the state’s population continues to drop and companies are fleeing the state in search of lower corporate taxes in places like Texas and Oklahoma.
Earlier this year, Investor’s Business Daily reported that Nestle USA left Glendale, California and moved all those good paying jobs to Virginia. The $26-billion dollar per year food company has had enough of California’s high taxes and burdensome regulations.
Economist William W. Roberts said that California’s costly taxes, mandates and other requirements have made California a horrible place to do business, and that’s not likely to change anytime soon.
But the liberal local politicians are calling Nestle’s departure an “opportunity” to fill all the empty office space with new jobs and new companies.
Right. Good luck with that.
Over the past 10 years, approximately 5 million people have moved away from California, and the mass exodus appears to be happening at an increasingly fast rate. Texas has been the top destination for individuals leaving California since 2007. Texas is home to low taxes, and as such, is a job-creating machine.
Things are about to get much worse for California. Donald Trump and his Attorney General Jeff Sessions are threatening to take federal funds from the Golden State if they designate themselves as a “sanctuary state”.
What are your thoughts on the financial mess of California? Let us know in the comments section.