California’s Job Growth Stagnates as Businesses Flee
A property for sale in California. Photo: X/ @sfchronicle
August 10, 2024 Hour: 8:33 am
Companies such as Tesla, Oracle, Hewlett Packard Enterprises, and Chevron have relocated their headquarters out of the state.
On Wednesday, the Hoover Institution releases a report showing that California’s private sector job growth reached a virtual standstill, with only 5,400 jobs added in the state’s businesses between January 2022 and June 2024.
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According to the report authored by Lee Ohanian, a professor of economics at the University of California, Los Angeles (UCLA), these jobs represented a mere 0.07 percent of the 7.32 million jobs created in U.S. private businesses during the same period.
The report revealed a striking contrast between California’s job market and the rest of the United States. If California had matched the national growth rate, it would have added over 970,000 jobs, nearly 180 times more than the actual increase.
The situation has escalated in recent months, with California’s private sector employment plummeting by over 46,000 workers since January 2023. This unprecedented collapse was significantly affecting the national economy, given that California represented nearly 12 percent of the country’s population.
This decline is attributed to a mass exodus of businesses and residents from the state, a trend that is significantly impacting the state’s economy. Between 2022 and 2023, California’s population decreased by approximately 75,000. High-profile companies such as Tesla, Oracle, Hewlett Packard Enterprises, and, most recently, Chevron have relocated their headquarters out of the state.
Economic factors are driving this exodus. California’s median single-family home price exceeds US$900,000, while the state ranks fifth highest in electricity prices and second highest in gasoline prices nationally, according to the report, which said that public schools are also underperforming, with only 25 percent to 30 percent of students proficient on core subjects.
Furthermore, the business climate, such as tax policies and regulatory burdens, in California is equally challenging. The Tax Foundation ranked California as having the fifth worst tax climate in the nation, while the Chief Executive magazine rated the Golden State as the least business-friendly state in the country. As to the regulatory burdens, California was ranked second worst among all states.
Despite these concerning trends, California Governor Gavin Newsom recently claimed that “California continues to lead the nation’s economy and create good jobs throughout the state.” However, Ohanian noted that this growth is primarily driven by government hiring, which accounted for 96.5 percent of the state’s total job growth between January 2022 and June 2024.
teleSUR/ JF Source: Xinhua
