Southern California Record

Wednesday, September 18, 2019

California Business and Industrial Alliance founder points to over-regulation, lawsuits as factors in state's poor ranking in business poll

Reform

By Rich Peters | Aug 16, 2019


SACRAMENTO – It’s becoming more challenging to conduct business in the state of California, according to CNBC’s annual state-to-state business poll. The poll ranks each state in a number of major categories, including workforce, economy and structure, and the Golden State did not fare well.

Overall, California currently ranks 32nd in the nation, down from 25th a year ago, and 50th for its business friendliness. Cost of doing business, cost of living and business friendliness all received an F grade.

“Companies come here to get in on the gold rush of venture capital, but high costs and regulation can stifle the dream,” summarizes the poll. 

These numbers come as little surprise to many experts around the state.

“Workers' compensation -- if you look at California -- normally they’re the highest in the nation…higher than anywhere else in the United States," Tom Manzo, founder and president of the California Business and Industrial Alliance, said. "(In) Southern California, compared to Northern California, workers' compensation rates are even higher, and the biggest reason that the workers' comp rates are so high are due to all the litigation and all the lawsuits.”

Manzo also touched on the rocky litigation climate that is currently challenging businesses across the state.

“The over-regulation has led to excessive litigation,” he said. “If you have an 1,100 page rule book, most people aren’t going to be able to follow it -- they’re not going to understand it. The only ones that are really going to understand it are the attorneys. So what ends up happening is the attorneys are taking advantage of all these different rules and regulations where if things were a little more simplified you wouldn't have as much litigation as you have in the state of California.”

The poll was conducted by CNBC through the economic profile sources of: U.S. Census Bureau, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Federation of Tax Administrators, American Petroleum Institute (excluding 18.40 cent/gallon federal tax), Moody's Investor Service and S&P Global Market Intelligence.

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California Business and Industrial Alliance

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