Most of the California business community is at the mercy of California’s progressive state legislature. It is easy to forget, especially with Silicon Valley pumping out inflated IPOs, that small businesses are the backbone of the economy. The U.S. Small Business Administration counts four million small business that call California home, employing over seven million employees, almost half the state’s total workforce, based on the latest numbers.
Despite the Legislature’s increasingly leftward shift, the California Chamber of Commerce has proven surprisingly effective in this hostile political environment in defeating bills on their annual “Job Killers” list The Job Killer list includes the key bills that are a threat to economic development and job creation and retention.
According to veteran state capitol reporter Dan Walters, the Job Killer list has an incredible success rate, “Between 1997, when the program began, and 2019, the “job killer” label was applied to 761 bills and just 62 had become law, a 92% kill ratio.”
Given the impacts of COVID-19 and the coronavirus shutdowns that decimated California’s state budget and local economies, one would think anti-business bills would be at the bottom of the legislature’s priority list.
Unfortunately, California legislators often pursue public policy devoid of the economic reality. During one of the worst economic crisis in modern history, the 2020 Job Killer list was packed with 19 bills. Fortunately, CalChamber lived up to their reputation, with only two of the 19 bills making it to Governor Gavin Newsom’s desk, or a 90 percent success rate. In 2019, only one of the 31 Job Killer bills made it through.
Two bills, out of the 19 listed this session, are still enough to trouble California small businesses.
I asked Jennifer Barrera, executive vice president at CalChamber, how the impact of COVID-19 and a shortened legislative session impacted the Job Killer list, “This year’s Job Killer list was one of our most important to date. The impact of COVID-19 on small business and the economy has been devastating. Every year, we make it our mission to educate lawmakers on the negative impact that job killing legislation will have on the future of our state and on employers’ ability to invest in the California economy,” said Barrera.
“It was surprising that this year — in the midst of a pandemic that caused businesses to shut down — lawmakers still wanted to pass new laws that would cost California jobs. The good news is CalChamber managed to stop all but two job killer bills. Unfortunately, one job killer was just signed into law and we are urging all small businesses to learn more about the leave program mandated by SB 1383.”
Senate Bill 1383 expands paid family leave requirements on small businesses with as few as five employees, with CalChamber arguing that small businesses are disproportionately impacted and potentially exposed to costly litigation. According to CalChamber and the Employment Development Department, that could impact 1.6 million employers.
Other Job Killer bills that were stopped include a $275 “headcount tax” on all employees, an estimated $6.8 billion tax increase, an expansion of CEQA provisions, and mandated scheduling for grocery and hospitality industries.
And let’s not forget that we are still dealing with the lingering impacts of Assembly Bill 5, which has decimated the ability of Californians to work as independent contractors at a time when many could have benefitted from freelance work and work at home during COVID-19 shutdowns.
The state legislature passed a litany of bills that expanded exemptions for musicians, eliminated restrictions to freelance journalists and photographers, and eve travel agents. PRI has written extensively about the incredible damage AB5 has caused to Californians.
We may not yet know the full impact that the COVID-19 and coronavirus shutdowns has had on the small business community. What we do know is that California is in no shape to take care of the millions applying for unemployment benefits each day. A new report says the state’s employment backlog is climbing by 10,000 claims a day. That is an internal report that estimates the backlog should be cleared by January 2021. In government time, much like dog years, it will probably much longer than that.
The best thing we can do to brighten California’s economic outlook is to stop pushing policies that could drive many small businesses to close down for good. Pursuing policies that will encourage economic growth and job creation should be at the top of the agenda in Sacramento, especially as we seek to pull the state out of the depths of a $54 billion budget deficit.
Will California’s current state leadership realize this and embrace the small business community? Probably not. At least groups like CalChamber are here to limit the damage.
Evan Harris is the media relations and outreach manager for PRI.