This article was published by The McAlvany Intelligence Advisor on Thursday, October 8, 2015:
A year ago, when the Cato Institute published its Fiscal Policy Report Card on America’s Governors, the best governor, Pat McCrory of North Carolina, scored 78, giving him an “A” rating by Cato. The country’s worst governor, Jerry Brown of California, scored 19, earning him an “F.” His rating was seven full points behind Colorado’s Governor John Hickenlooper, who scored a 26. At the time, Cato said this about Governor Brown:
Governor Brown scores as the worst governor in America on this year’s report card. He has pushed for numerous large tax increases. In 2012 he championed a plan to increase annual tax revenues by $6 billion a year. That increase, which passed on a November 2012 ballot, included a hike in the top individual income tax rate to 13.3 percent. He also supported a $1 per pack increase in cigarette taxes, which failed on a June 2012 ballot.
To his credit, he did approve a 2013 law that reduced sales taxes on the purchase of manufacturing equipment.
Brown scores poorly on spending. He has proposed spending increases averaging 6.8 percent annually over the last three years, which is more than twice the national average of 3.1 percent over that period.
California’s general fund spending has grown from $86 billion in 2012 to Brown’s proposed spending for 2015 of $107 billion. He has supported numerous dubious spending projects, including a boondoggle high-speed rail system.
Chief Executive magazine runs a slightly different study, from the point of view of CEOs actually having to do business in each state. For the past 11 years, California has ranked at the very bottom of its list. Because of high taxes and an anti-business mentality California has failed to replace workers leaving for more favorable climes. Said one CEO:
California is the highest-taxed state in the nation [with the] highest gas tax – 60-plus cents per gallon, which, combined with CARB [California Air Resources Board] regulations – make delivery within the state extremely costly.
Added to this is the disdain for any and all manufacturing … [as well as the state’s huge] pension debt….
Said another:
California is a deeply troubled state with a problematic infrastructure and social issues. Businesses in the state are so highly regulated that most cannot afford to do business, and elected officials do not have any business experience [or] understanding.
Said still another:
Google server farms tend to be built in lower-tax states like Nevada, Arizona and Iowa. Were it not for its climate and excellent university system, it is a wonder that more California companies don’t leave.
On Tuesday the country’s worst governor, head of the worst state in the union in which to do business, signed into law its “equal pay” mandate which will no doubt permanently cement into place both his, and his state’s, position at the bottom of both listings.
The law changes the definition of “equal” to “almost equal” or “similarly equal.” Under current law (the new law becomes effective January 1, 2016), courts have interpreted “equal” to mean that male and female workers must hold the same jobs in order to be paid the same. But under the new law, “equal” now includes “substantially similar work,” even if their titles are different or they work at different locations.
For example, a female housekeeper who cleans hotel rooms may, under the new law, challenge her employer if she learns than a male janitor working in the same hotel cleaning the lobby and banquet halls is being paid more than she is.
And her employer, under the new law, must “prove a negative” – namely, that the reason(s) she is being paid less is seniority or merit, that the reasons are job-related and reasonable, and that it is not due to sex discrimination.
Naturally this is going to be an additional boon to litigation lawyers and moving companies that relocate businesses and their employees to other states. Al Latham, himself a labor lawyer and an occasional guest lecturer at USC, noted that, “It is going to lead to lots more litigation, which further weakens the business climate in California.”
Another labor lawyer, Geoff DeBoskey, agreed on both counts: more work for lawyers and more business for U-Haul as companies exit the state’s increasingly anti-business climate. He said that employers will “move operations and grow elsewhere. If an employer is going to build a new call center [for example], they are just not going to build that in California.”
But it’s all good, said the governor after signing into law the new mandate:
The inequities that have plagued our state and have burdened women forever are slowly being resolved with this kind of bill … [it’s] a very important milestone.
The U-Haul Index, which has consistently tracked California’s exodus, has expanded greatly over the past couple of years. If a family were to rent a 20-foot U-Haul trailer to move from San Francisco to Houston this weekend, it would cost $2,416. But the cost in the other direction, from Houston to SF, would be only $1,080, reflecting the intersection of supply and demand.
None of this seems to matter, however, to Governor Moonbeam and his “rainbows, butterflies and unicorns” coalition in the state legislature, nearly all of whom voted for this obnoxious and other-worldly bill.
The question remains: does California have a death wish, or is the lack of understanding of basic economics among California’s legislators so vast that reality is only located on some distant yet-to-be-discovered planet in the universe?
Sources:
LATimes: With new equal-pay act, will Jennifer Lawrence get paid like Bradley Cooper?
Washington Times: Tough new equal pay law threatens to accelerate California’s business exodus
LATimes: California now has one of the toughest equal pay laws in the country
ChiefExecutive.net: 2015 BEST AND WORST STATE RANKINGS
ChiefExecutive.net: 2015 #50 | California
Cato: Fiscal Policy Report Card on America’s Governors 2014
Cato: The full report on America’s Governors 2014
The New American: Latest U-Haul Index Shows Californians Leaving for Texas
Calculate the U-Haul Index here
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