Newspaper article The Christian Science Monitor

California's Fight to Stop Corporate Flight ; State Has Made Strides in Easing Rules on Business, but Housing and Other Costs Still Bring Moving Vans

Newspaper article The Christian Science Monitor

California's Fight to Stop Corporate Flight ; State Has Made Strides in Easing Rules on Business, but Housing and Other Costs Still Bring Moving Vans

Article excerpt

Lee Mason has seen the latest statistics telling her California is creeping slowly but surely out of recession. She's read the recent headlines about Gov. Arnold Schwarzenegger signing a budget with no new taxes and overhauling the state's costly workers' compensation system.

And she knows he has launched a national billboard drive to drum up business for the state from neighboring Nevada to Georgia, Illinois, and Texas. But none of that is helping right now for Ms. Mason, the vice president of Clarke Gear Co. - a 50-year old Los Angeles firm which makes gears for planes and rockets.

She says there are still so many other concerns (utility price hikes, soaring healthcare premiums, restrictive overtime policies, a new family-leave policy, and sky-high housing costs) that she is having to scramble to keep the company viable and competitive. Of late, that means shifting company quarters, after 50 years at the same location in North Hollywood, to cheaper facilities about 25 miles north. Cheaper for California that is. Her workers, she hopes, might find homes for under $400,000.

"We are starting to see the end of recession but are not yet seeing the big changes promised by [Governor] Schwarzenegger," says Mason. "It doesn't take a rocket scientist to figure out that if things don't get easier, more and more businesses will say enough is enough and move out of state altogether."

That kind of anxiety is being reported by scores of California firms, economists say. And how local businesses respond could shape population and economic patterns across the West for years to come. For now, the delay in California's economic reform is keeping the state's financial recovery behind that of its neighbors - Utah, Nevada, Arizona - and even helping to fuel their prosperity, as some Californians flee rising costs.

Still-booming Nevada is No. 1 in the United States in business growth, with 4.6 percent job growth over the past year; Arizona is at No. 4 with 2.5 percent growth; Utah is up 1.4 percent. California is up much less, at 0.6 percent, according to the Blue Chip Economic Forecast published by Arizona State University (ASU).

"California's business reforms are going far slower than people hoped in the first, great burst of optimism when Schwarzenegger took office," says Jack Kyser, president of the Los Angeles Economic Development Council.

A workers' compensation reform package passed several months ago only cut expensive premiums by half of what businesses had hoped for. Unemployment insurance premiums remain high. The country's first, family-leave program - allowing workers to take up to six weeks paid leave to care for newborns or ill relatives - is forcing employers to work around new patterns of employee absence.

"Legislators don't seem to get it that businesses have far more options now. …

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