Assessing the State of the Golden State

The Pacific Research Institute (PRI), a free-market think tank based in California, found that California’s labor performance over the last five years is among the worst performing in the nation, ranking 48th and besting only Michigan and Mississippi. The ranking was published in the new study “Assessing the State of the Golden State” by Jason Clemens, PRI director of research, and Robert P. Murphy, Ph.D., senior policy fellow.

“California’s current economic woes are often blamed on the national recession,” said Mr. Clemens. “But the state’s suffering precedes the current cyclical downturn. California’s mired economic structure has been hampering growth for years.”

Using data over the last five-year period, the Pacific Research Institute, as part of its research for the California Prosperity Project, found that the state ranked:

  1. a mediocre 24th among all states in its ability to expand the economy and incomes;
  2. in the bottom 20 for private-sector employment growth;
  3. in the bottom 20 for the length of unemployment;
  4. in the bottom 20 for the average unemployment rate.

“Moreover, California’s reputation for being home to the most innovative entrepreneurs in the world is fast becoming a myth,” Mr. Clemens said. According to PRI’s research, California has experienced an average net increase of small and medium-sized businesses of just 1.2 percent, putting California 16th among the states—not even in the top 30 percent.

Do you know the way out of San Jose?

Perhaps the best measure of a state’s economic health is its migration rate, whereby residents indicate with their feet where they think prospects are brightest. Over the last five years, California has had the seventh-worst migration rate. The state population has dropped by one million – or about 550 people have left the state each day. Flight is an especially enticing option since California’s neighboring states offer healthier economic prospects. Arizona and Utah ranked 3rd and 4th in overall economic performance and Oregon, Washington and Colorado ranked in the top 20. “This makes California an unappetizing outlier within the southwest and coastal states.” Mr. Clemens said.

“Unfortunately, many Californians don’t understand that the policy under-girding the state’s failing economy still presides. We believe that the current crisis is a direct result of a tax-and-spend, regulatory economy that punishes taxpayers. Changes must be made to our keystone economic policies in order to bring about recovery and prosperity.”

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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