California loses another business, but at least we have a higher minimum wage

November 20, 2015
"But at least we won the election! Obama!!"

“But at least we raised the wage!”

It’s now widely regarded as legend and fable, but there once was a time when California created an almost unending wealth of jobs, leading to a good life and prosperity for her people.

Nowadays the progressives who run our state, enabled by their sheep-like voters who dominate the coast and the major urban areas, are doing all they can to run businesses (and jobs and prosperity) out of California, and California into the ground.

Just ask the owner of Woof & Poof:

One of the few things actually made in Chico may, sadly, no longer be made in Chico. Woof & Poof C.E.O. and owner Roger Hart said today, the company is having to cease production. Hart made the statement today at the annual warehouse sale.

Every year on the first Saturday of November a sale is held at the warehouse on Orange Street. Woof & Poof products include everything from stuffed collector dolls, blankets and door hangers to musical Santas for the holidays.

The unique, quality products are sold to more than 600 stores in the United States and Nordstrom’s. Woof & Poof has been in Chico for 40 years, but that’s about to end. Hart says a raise in minimum wage and workers compensation are just a couple of issues that have made it difficult to keep the business financially afloat here. Hart said, “The high cost of doing business in California coupled with ridiculous regulatory environment makes it virtually impossible to do business.” He says he has seen an 11% hike in payroll.

Time for another lesson in economics, kiddies:

Labor is a cost, because the business owner has to provide wages and, often, benefits that cost him more money. When a government mandate increases that cost, the business owner has three choices: pass the cost along to the customer, who may decide it’s too much and stop shopping there; cut employee hours and stop hiring to save on labor costs, thus costing potential jobs and putting a burden on workers still employed; and, finally, just decide it’s not worth it anymore and close up shop. In the low-margin bookseller business, Borderlands’ owner chose the last course as the only one viable.

Borderlands was a bookstore that closed in San Francisco after the owner could no longer afford the minimum wage. That was the owner’s choice, and now Roger Hart has decided to join him. I’ve no doubt there have been others, nor that there will be many more like him who choose the same.

Chico, for those who don’t know it, is a small city in the north part of the state, an area that, like the interior east and south, has been treated as an exploitable colony by our coastal progressive elites and the pols the force on us. The damage their policies of “economic, social, and environmental justice” have laid waste to farmland and small towns and cities up and down the state, far from the trendy restaurants of San Francisco or Hollywood, where I bet none of the 30 workers losing their jobs at Woof & Poof could afford to eat.

No wonder there are secession movements.

via @hipEchik on Facebook

PS: One of the burdensome regulations that caused Mr. Hart to throw up his hands? A state font mandate. You read that right. Because he had used the wrong size of font on pillow tags, an inspector threatened to seize his entire inventory. Instead, he had to spend a lot of money to make corrections.

I’m surprised he wasn’t required to cut down a tree with a herring, too.

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Fleeing California: Toyota takes its business (and its jobs) to Texas

April 28, 2014

Moving

Oh, man, this is just a gut punch to the Southern California economy:

Toyota Motor Corp. plans to move large numbers of jobs from its sales and marketing headquarters in Torrance to suburban Dallas, according to a person familiar with the automaker’s plans.

The move, creating a new North American headquarters, would put management of Toyota’s U.S. business close to where it builds most cars for this market.

North American Chief Executive Jim Lentz is expected to brief employees Monday, said the person, who was not authorized to speak publicly. Toyota declined to detail its plans. About 5,300 people work at Toyota’s Torrance complex. It is unclear how many workers will be asked to move to Texas. The move is expected to take several years.

I don’t know how many will move to Texas, but I bet several thousand won’t. And that doesn’t even address the ripple effects in the region’s economy, all sorts of support businesses that would lose the revenue spent by those employees — restaurants, dry cleaners, janitorial companies, you name it. Those people won’t be heading for Texas; they’ll be stuck here. And it’s going to hurt.

Toyota originally came to LA in the late 1950s, and staying here made sense for them for a long time, in spite of increasingly burdensome taxes and regulations. After all, most of their cars entered the US through the huge Port Of Los Angeles, so it made sense to have the North American HQ nearby.

But, with the passage of time, Toyota, like so many foreign car manufacturers, built more and more of their cars here in the US, mostly choosing to construct their facilities in business-friendly Southern states… such as Texas. The last auto manufacturing plant in California, coincidentally Toyota’s, closed in 2010. Eventually, economic logic (1) lead the company to decide that the cost of living and business in California wasn’t worth staying in California, not when their manufacturing operations had all shifted to Texas and nearby states.

As Dale Buss writes at Forbes. After talking about the structural shift in Toyota’s business, he looks at the once-Golden State:

Besides, California’s business climate is becoming an even bigger downer. California has become infamous with business executives and owners there not only for high tax rates and complex taxing schemes but also for overzealous regulations and regulators that have managed to stifle the entrepreneurial energy of thousands of companies.

Even Hollywood movie studios have been souring about producing flicks in California, increasingly reckoning that the sweet tax breaks and assistance packages now offered by so many other states offset the legacy advantages and ideal production climate in California.

About the only vast remaining pocket of dynamism in the California economy is Silicon Valley, where the mastery of the global digital economy by companies ranging from Google to Hewlett-Packard has become so complete that they have been able to succeed despite the home-state business landscape.

In the annual Chief Executive magazine “Best States / Worst States” ranking that surveys CEOs for their opinions, Texas has been holding on to the No. 1 spot for a while; California seems permanently relegated to No. 50.

As Automotive News put it, “Despite the deep, creative talent pool in greater Los Angeles, doing business in California has become more expensive for companies and their workers.” Bestplaces.net said that the cost of living for employees is 39 percent higher in Torrance than in Plano, and housing costs are 63 percent lower in Plano.

Thus, over the last 10 years, the Lone Star State has stolen so many jobs from the paragon of the Pacific Coast that Toyota’s reported move should come as no big surprise.

No, it’s no surprise, but it is maddening because it is a largely self-inflicted wound. Business flight has been going on for a few years, now, and, no, “Green jobs” just aren’t going to fill the gap. Heck, a businessman even set up a consulting firm to help companies “abandon ship.”

Losing Toyota should be a loud, blaring alarm for Governor Brown and the progressive oligarchs who dominate our legislature, for it’s their policies, piling on regulations and taxes year after year, decade after decade, that have made it nearly impossible to build a business here. (Just read this “Dear California” letter from a small businesswoman who’d had enough.) And for those companies that had been successful, the incentive to move finally grows too great to resist. But they won’t learn, not until it gets much worse. Like all good oligarchs, they’re isolated in their ivory tower of safe seats and unaccountability (2).

Keep watch at the I-10 crossing into Arizona: pretty soon, a lot of those taillights you see  heading East are going to be on the back of Toyotas.

And they ain’t coming back.

Footnote:
(1) Something progressives should acquaint themselves with, sometime.
(2) And, before anyone else can say it, yes, that’s our fault as voters.

(Crossposted at Sister Toldjah)


Mexico: their pain is our gain?

August 13, 2011

Well, it apparently is at least in Deep South Texas in the Rio Grande Valley, whereto many Mexican businesses are relocating to escape the violence just south of the border:

“If you think about South Texas, we’re like a big thumb sticking into Mexico. We have access to the port, through rail; it’s an ideal place to be,” says state Rep. Aaron Pena.

Our thumb has a giant shield.

“It’s about security, and it’s about proximity to markets,” says Pena.

Pena says he has seen a change in the Rio Grande Valley. Manufacturing workers don’t want to go south of the Rio Grande.

“What’s great here is that we provide the security of our state, our military, our institutions. They’re all here. It makes it a better place,” says Pena.

“It is disturbing to go through this on a daily basis; it’s almost like working for a funeral home,” says Miguel, who worked at a maquiladora.

The cost of business is more than what is in the bottom line. Cartels cut off supply routes and hijack drivers. Companies have to pay different organizations to move their goods. It’s no longer worth the risk.

“They think that maybe the things will get better over in Mexico, but in the meantime, they’re put their roots here,” says state Rep. Veronica Gonzales.

Even the lower cost of labor in Mexico is less and less able to make up for the lack of security. And while it’s to the benefit of McAllen and other parts, it also points to a spiraling problem in Mexico: as the jobs leave, those left without work will either have to go to other parts of the country to find a job, come north (probably illegally), or make what money they can in their own region, perhaps by working for the cartels.

I honestly don’t think this is to the long-term benefit of the American side of the Valley, either. If you think of the border region as a neighborhood with the actual boundary being the street running down the middle, then “broken windows” on one side are eventually going to degrade the other. And we’re already seeing plenty of incidents of cartel crime and violence on “our side of the street.”

The failure of the Mexican state to provide security along their northern border leaves the gunmen as the only real winners.

(Crossposted at Sister Toldjah)


California Screamin’: cartoon version

April 22, 2011

California’s history and California’s present:

via Ed Driscoll, who provides some depressing context for the future.