The most enthusiastic applause for political speakers who addressed Monday’s California’s Small Business Day celebration came when Assembly minority leader Connie Conway expressed her vision of dealing with California’s budget. She said both sides of the aisle would like to see revenue grow to meet budgetary needs, only her political opponents want to raise taxes to meet the goal while she wants to see an invigorated economy and unburdened businesses creating jobs that bring more money into the treasury.
The difficulties for small business owners caused by the state’s regulation and tax laws that brought about that response of small business owners at the conference are reflected in a new survey on small business friendliness.
California did poorly.
The small business owners attending the conference were headed back to a number of cities that were ranked near the bottom of American cities in their friendliness toward small business. The third annual Small Business Friendliness Survey conducted by Thumbtack.com and the Ewing Marion Kauffman Foundation ranked San Jose 68 in business friendliness, Santa Rosa 70, Riverside 71, Los Angeles 74, Oxnard 76, San Diego 78, and Sacramento 82. Unfortunately, for Sacramento, only 82 cities were listed in the survey. It finished dead last. Oakland was the highest ranked California city at 42.
Some other key findings for California include:
- California received a grade of F for its friendliness towards small business, one of the worst grades in the country.
- California received low marks for its regulations, earning a grade of F for its labor, health and safety, and environmental regulations, and a D for its tax code, licensing, and zoning laws.
- The state’s best grade was a B- for the ease of hiring new workers.
- 52 percent of California’s small businesses said they paid the right share of taxes, in line with the national average.
- The top rated states overall were Utah, Idaho, Texas, Virginia and Louisiana. The lowest rated were Rhode Island, Illinois, California, Connecticut and New Jersey.
The survey reviewed data from over 12,000 business owners. Thumbtack chief economist Jon Lieber said, “Creating a business climate that is welcoming to small, dynamic businesses is more important than ever, and California continues to receive low marks from its small businesses for creating this kind of environment.”
The importance of encouraging small business can be seen in another post on this page today. Written by economist Stephen Moore, he looks at the Small Business Friendliness Survey and compares the growth rates of the states ranked highest against those ranked lower in good small business environment. Small business friendly states do better in creating jobs and increasing the state’s GDP.
However, the survey does not reflect that small businesses are actually opening in California in respectable numbers. As Bloomberg Businessweek reported, “The Thumbtack/Kauffman survey seems intended more as a way for cities and states to evaluate their policies than as road map for potential entrepreneurs.”
Hopefully, California elected officials will evaluate policies and create more opportunity for growth by encouraging small business.