It’s curious that anyone concerned about the state’s economy would look for answers in Nevada – a state that has been hit even harder by the recession than California. But on Friday, a group of the state’s legislators did just that; they convened a forum in Reno to learn from former California business owners why they relocated out of state. But businesses hopping across state lines are not the source of California’s job market troubles. In fact, the most recent employment data show that our neighboring states have fared worse during the downturn than we have. The total number of nonfarm jobs dropped by 7.0 percent in Arizona and by 5.4 percent in both Nevada and Oregon between March 2008 and March 2009, compared to a 4.2 percent drop in California.
The premise of Friday’s forum – to uncover why businesses “flee” California – calls to mind one of the CBP’s favorite aphorisms: The plural of anecdote is not data. Sure, some business owners have moved across state lines; but that doesn’t mean that businesses are leaving California in droves, as often is claimed. In fact, when researchers at the Public Policy Institute of California examined a database of essentially all business establishments that employed California workers, they found that business relocation out of California accounted for a negligible share of the state’s job loss between 1992 and 2004. Based on this finding, PPIC researchers concluded that “it is important to be wary of anecdotal evidence of businesses fleeing the state to support arguments that California has an economic climate hostile to business.”
— Alissa Anderson