When it comes to being one of the Top States for Business, there are those who talk about their potential and those who exercise it. For the Golden State, the past year has been all about the latter. Driven by smart, pragmatic leadership from Governor Brown, continued strength in our key economic sectors and recently approved statewide development tools, California has had a year of remarkable economic recovery. And in an accelerating economy, with new opportunities to drive growth, we’re poised to build on that recovery and increase opportunities even further.
So last week, when CNBC released their poll of the Top States to do Business, I was looking forward to seeing some of our success reflected in our results. Sadly, it wasn’t there. As California continues to come back strong from the deepest recession in modern memory, the story’s editors seemed unaware of the incredible economic activity that’s made it possible. From the jobs created to the industries innovated to the business revenue generated – somehow they missed all the real economic activity that recently raised California to the 8th largest economy in the world. It seemed to me to be a tremendous oversight on their part.
So if they’ve forgotten to tell you about California, I will.
In a landmark for the state, California ended 10 years of budget deficits as Governor Brown not only signed his third consecutive balanced budget but one that included a billion dollar surplus. In April Governor Brown led a trade mission to China where he announced over $1.8 billion dollars in deals and opened a California foreign trade office in Shanghai – the first in over a decade. It was the latest in a series of significant initiatives from Governor Brown including worker’s compensation reform, pension reform and regulatory modernization.
The moves – fiscally and strategically – are ones that have been recognized at the highest levels. In March, the ratings service Fitch changed the state’s outlook from “stable” to “positive.” In June, Moody’s upgraded their ratings for California’s Economic Recovery Bonds. And the ratings service Standard & Poor’s raised California’s credit rating in January for the first time since 2006. But it’s more than just Wall Street. On Numbers, a blog from parent company American City Business Journals, recognized Governor Brown as a Top 10 “Job Creating Governor” while Area Development Magazine lauded California with their Silver Shovel Award. They not only praised California for “remarkable success in growing high-wage jobs in recent years” but recognized Samsung Semiconductors’ $300 million dollar San Jose expansion as one of the nation’s Best Economic Development Projects of 2012.
But it’s more than awards – it’s numbers. In terms of GDP, California’s growth rate was 3.5% in 2012. That ties us for fifth best in the nation. But let’s talk about how that translates in jobs. Thursday’s job numbers showed California creating over 30 thousand jobs in June, more than any other state. That’s not an outlier. The number of employed Californians grew by 3.3% in the last 12 months – the largest year over year employment gain since 1990. When it comes to reducing unemployment, the numbers are even more telling. According to the Labor Department, not only is California home to all 10 of the 10 metropolitan areas with the fastest-improving unemployment rates but the number of unemployed Californians fell by 19% over the last 12 months. That 19% represents our largest year over year civilian unemployment decrease since 1984. You can see it in California’s unemployment rate. That rate has fallen 2.1 percentage points in the last 12 months – most in the U.S. – while the US unemployment rate dropped just 0.6 percentage points over the same time. That means our unemployment rate isn’t just falling faster than every other state, it’s doing it at more than three times the national rate.
In terms of recognizing business climates where companies are succeeding, California continues to shine. California leads the nation with 54 companies on the Fortune 500 list and 24 of Fortune’s 100 Fastest Growing companies – both more than any other state. We don’t just have the leading companies today, but we have a climate that continues to grow the companies of tomorrow. It’s all part of California’s proven entrepreneurial culture – a culture that continues to receive close to half of all venture capital financing in the U.S and remains the No. 1 state for attracting foreign direct investment.
Finally, in terms of sectors, where other states have one or two main economic areas, California has several – all of which lead the nation. California is first in high tech, biotech, agriculture, entertainment, and manufacturing. In trade, California merchandise exports grew to $161.7 billion last year – a record export high for the state. And while other Governors have talked big on their visits to California, what they’ve really done is add to our #1 tourism sector – one that boasts over 200 million visitors in 2012 with direct travel spending of more than $106.4 billion.
Just last week the Governor signed AB 93 and SB 90 – also known as GEDI – the Governor’s Economic Development Initiative. It was an effort that brought together business leaders, labor interests and legislators from both sides of the aisle. That collaboration has created a more flexible, more competitive set of economic development tools for California.
All this is not to say that we don’t have significant business issues to fix – as do other states. But we also have an administration committed to addressing them and, in the Governor’s Office of Business and Economic Development (GO-Biz), an office actively engaging with the business community to address concerns, create solutions and help grow jobs across California.
In the end, there should be no real dispute. With tremendous moves to support businesses and results that back it up, California’s IS clearly a top state for doing business. Other states are free to tout their rankings for possible business tomorrow. We’ll be happy to talk about our actual business today. More than ever, California is where the next world-changing company is created. Where new industries and sectors are invented. California remains a place where the next big idea isn’t just being dreamed.
California is where it’s being done.