Another Big Company Leaves California. What Will It Take for State Officials to Change Course?

Another Big Company Leaves California. What Will It Take for State Officials to Change Course?

Forgive us if we sound like a broken record, but the exodus of California businesses out of the state to more affordable and competitive economic climates grew worse last week.

The Los Angeles Times reports that the latest corporate headquarters to announce their departure is AECOM, the global engineering and construction firm.

According to the times, “a company spokesperson said AECOM is moving because ‘Dallas has emerged as a U.S. hub for corporate headquarters and a compelling corporate talent magnet, particularly among our peers and public companies in the engineering and consulting sectors.’”

Though 2,500 employees will remain at AECOM’s California locations across the state, the CEO and C-Suite will relocate to Texas on October 1.  The company has 47,000 employees worldwide.

Just last week, Kerry Jackson wrote on Right by the Bay that, “excessive taxation, smothering regulations, a legal system overly accommodative to plaintiffs’ lawyers who eye businesses as treasure chests to plunder, and a briar patch of bureaucracy don’t exactly feed the fires of innovation and dynamism.”

So, what are state officials doing to try and keep companies like AECOM headquartered in California?  If you listen to Gov. Newsom’s recent comments, it’s to deny the reality of what’s happening.

In a question-and-answer session with editorial board members from the McClatchy newspapers chain, Newsom called California “the tentpole of the American economy” and noted the state had created 559,000 jobs in recent months.

“Eat your heart out, Texas and Florida,” he said.

But as Chapman University fellow in urban studies Joel Kotkin writes in PRI’s new Saving California book, “most of the new jobs pay poorly.”

“A remarkable 86 percent of all new jobs paid below the median income while almost half paid under $40,000,” he writes.  “Even Silicon Valley has created fewer high-paying positions than the national average, and far fewer than prime competitors in places such as Salt Lake City, Seattle or Austin.”

What can be done to turn things around and make California a more attractive place to retain jobs – let alone create new ones?

Among his suggested reforms, Kotkin says that state lawmakers should use some of the current record $75.7 billion budget surplus to make investments in “downtrodden areas” of the state.  He notes that states like Ohio and South Carolina “have lured private investments by providing not just reduced taxes and infrastructure, but state-supported skills training.”  Prioritizing job training for blue-collar skills is one of the prime reasons companies locate there, he notes.

If local and state leaders are interested in learning what they can do to stem the tide and keep these companies in California – and the good-paying jobs and tax revenue that come with them – they would be wise to read Saving California and pay attention to Kotkin’s chapter.

P.S. PRI’s Kerry Jackson and Wayne Winegarden have a new study coming out soon exploring the reasons why California continues to lose jobs and opportunity to states like Texas and Tennessee.  Stay tuned.

Tim Anaya is the Pacific Research Institute’s senior director of communications and the Sacramento office.

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