The logo of Google, one of California’s corporate crown jewels, is seen outside Google Bay View facilities during the Made by Google event in Mountain View, California, Aug. 13, 2024.
But in recent years, especially since the pandemic, the luster of an idea-based economy, which designs things but doesn’t always make them, has dulled. Americans have learned that global supply chains can break down and that it’s risky to rely on a geopolitical rival like China to make America’s goods.
Still, global trade remains a big part of the California economy, from inbound containers of Asian-made goods to outbound exports like tree nuts and fruits from the state’s nation-leading farm sector.
“As long as we can continue to hold a place in the global knowledge economy, we will continue to be a very high value added and therefore rich state, with a lot of poor people … driving around because we have extreme income inequality,” says Martin Kenney, an economics professor at the University of California, Davis and co-director of the UC Berkeley Roundtable on the International Economy.
Employees inspect almonds in the processing facility at Stewart & Jasper Orchards in Newman, California, July 20, 2021. California is the world’s largest producer of almonds.
For richer, for poorer
That inequality is inescapable. Nearly a third of Californians are poor – living in or near poverty. That’s a 2.4% uptick from two years earlier. And California has more homeless residents than any other state, up about 20% in five years.
The meaning of “well paid” is different here, as the cost of housing outpaces wages. California homes hit a median sales price of $900,000 this summer – a first – and more than twice the national median. Other things such as groceries and utilities cost more here, too.
Still, the California dream persists, bringing dynamism to the state’s economy.
Small businesses – those with fewer than 500 employees – employ nearly half the state’s workers. Between 2021 and 2022, some 130,000 new small businesses formed in California, but more than two-thirds as many closed in that same year.
Every small business is an opportunity, says Loren Kaye, president of the California Foundation for Commerce and Education.
“Every one of those that close or move could wind up being the next Tesla, or name your success story, not happening in California. That’s a big risk,” he says. “You just don’t want to have systemic disincentives to form small businesses that do provide those employment opportunities.”
Among those disincentives are aggressive environmental regulations. California’s landmark environmental law is a 44-year-old novel-length list of codes and procedures aimed at minimizing the environmental impact of any development. The state has lofty environmental mandates: an 85% cut in 1990-level emissions by the year 2045, and all electricity from carbon-free sources by then, for example.
Chevron’s exit “didn’t happen in a vacuum” says Mr. Christensen. “It happened because Gavin Newsom’s Legislature made it inhospitable to do business in California, and even the biggest, oldest, and most wealthy business in California decided that they wanted nothing to do with this.”
Chevron has long been vocal about the difficulty of doing business in California, where thousands of employees will remain even when the corporate leaders move. But some of the decline in its own business prospects here reflects the transition toward a cleaner economy where other employers can prosper in the future.
“California isn’t for everybody, but it’s certainly for a lot of different businesses and industries,” says Mr. Kaye. “You pay a price for being here, but you also get something for it.”
Staff writer Laurent Belsie contributed to this report.
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Publish date : 2024-08-29 09:00:00
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