Creating jobs in California

Recent data show the state isn’t the job-killing machine some politicians say it is

Remember when local Assemblyman Dan Logue was telling anyone who would listen that California was going in the tank economically, losing jobs and businesses to other states, especially Texas? Well, guess what. Data released last week show that California isn’t the job-killing machine Logue said it was.

In May, according to the latest employment report, California added 45,900 jobs, and then in June it added another 38,300 jobs. In those two months, California was responsible for half the job growth in the entire country. And most of those jobs were in the information and professional, scientific and technical-services sectors, which tend to pay well.

The state’s unemployment rate, at 10.7 percent, is still the third-highest in the nation, the result of the collapse of the housing market and the resulting crash of related sectors, especially construction. But California is definitely coming back. It continues to attract more venture capital than any other state—more, in fact, than all the other states combined. Here, too, the money tends to go to economic sectors that produce high-wage jobs.

Critics like to point to the low rating California’s business climate gets. However, as Peter Schrag, the dean of California pundits, recently pointed out, there’s little to link employment rates and business climate. Nevada, for example, was ranked third in the nation by the Tax Foundation for its business-friendly tax structure, but it has the highest unemployment rate in the country. Vermont, rated 47th in terms of tax friendliness, has an unemployment rate of only 4.7 percent.

And Texas? In her recent book, As Goes Texas, New York Times columnist Gail Collins argues that the state’s business friendliness is based in large part on a regressive tax structure that forces the poor to pay more of their income than the rich—and under which they get some of the worst services in the world.

California has problems, but we don’t need to emulate Texas to solve them.