CalBizBlog

UNEMPLOYMENT: IT'S WORSE THAN WE THOUGHT

Tim Johnson — Fri, 12 Mar 2010 04:41:00 GMT

Validating Statistical Analysis

Apparently, the unemployment picture in California is worse than officials
had identified. According to a new report on statewide employment trends,
employers across the state shed 871,000 jobs in 2009. Far more than original
estimates based upon the monthly surveys, but not necessarily based upon the
U-6 unemployment numbers that can be found at the Bureau of Labor Statistics
and those shared to our readers at the California Business Minute.

But it apparently comes as somewhat of a surprise to the people involved. An article
in the Contra Costa Times, California Job Losses Grow by George Avalos, March
1st, it quoted an economist with the state who was caught off guard by the revision.
"The economy was a lot worse than everybody thought," said Howard Roth, chief
economist with the state's Department of Finance. "The job market is weaker than
we figured." How can this be? EDD reported as recently as Jan. 22 that California
employers cut 579,000 jobs from payrolls in 2009. However, the revision illustrates
292,000 more lost jobs.

Again, quoted from the article, "If it comes to that number, it would be one
of the biggest revisions ever," said Paul Wessen, an economist with the state
EDD. "I can't remember a revision this big since the early 1990s, when we lost
a lot of aerospace jobs."

So why are the job losses so much worse than first thought? EDD's monthly
estimates depend in part on a survey of a limited number of employers. A more
extensive review is showing other outcomes.

Again quotes from the Contra Costa article: "Businesses went away and no longer
existed that we originally thought were there," said Dennis Meyers, an economist
with the state finance department.

"When you have a recession this severe, you can have a variation like this,"
added Wessen, the EDD economist. "The monthly payroll survey predicts the
direction the economy is heading. But it often doesn't get the magnitude of
the change."

While the response by those involved in the revise shed new light on the recession,
it also shows the need to get the statisticians out of the Capitol periodically to go out
and look around to validate their analysis Meanwhile, our tax dollars are paying for
this type of analysis statistically speaking.

NOTE: Are you unemployed? Let's us hear from you and your opinion, specifically if
your unemployment checks have been delayed, or if you have been denied unemployment
or have had to challenge the findings of EDD staff to get unemployment.

TJohnson@CaliforniaBusinessMinute.com

What Are CalBizBlogger's Reading?

Tim Johnson — Fri, 05 Mar 2010 06:29:00 GMT

For the months of February and March, it appears the major articles that our readers
are viewing are as follows:

Driving Silicon Valley
Saving Toyota's NUMMI or is it time to Move On?
Harsh Realities: The Issues Facing California and its Economic Recovery (The Series)
Congress Created Dust Bowl
Legalizing and Taxing Marijuana in California
Big Surf's Up: California's Surfing Industry

DRIVING SILICON VALLEY: Stuck in Neutral or in Need of an Overhaul?

Tim Johnson — Thu, 04 Mar 2010 21:03:00 GMT

What does the Silicon Valley and NASCAR have in common? Upon reading a press release
announcing a recent study on the issues confronting the Silicon Valley economy, it sounds as
though they have been heavily influenced by the racing series.

According to the press release on the recent study; ‘2010 Index of Silicon Valley’ released in
February by the Joint Venture: Silicon Valley Network and Silicon Valley Community Foundation,
it reads and sounds more like Darrell Waltrip from FOX Sports doing color commentary on the
weekly race broadcast than describing the economy of the Silicon Valley.

"Silicon Valley's innovation engine has driven the region's prosperity
for 60 years, but at the moment we're stalled," Joint Venture chief
executive Russell Hancock said in a statement. "What's hard to say is
whether we're stuck in neutral, which has happened before, or whether
it's time now for a complete overhaul," Hancock said.

Light heartedly, the stakeholders statements appear to be more akin to a NASCAR Crew Chief
describing the details associated with preparation for a race than an economy. But maybe the
comments are appropriate in explaining the requirements of supporting a high performing
economy like the Silicon Valley.

The stakeholders in their press release illustrate that the economic downturn has caused jobs,
patents and venture capital investment to decline in 2009. The report claims that the global
economic crisis has taken a heavy toll on the Silicon Valley and its future as the US center of
innovation is apparently at risk.

Additional quotes from the leadership of the stakeholder organizations illustrate further impacts.
For example, “With the loss of 90,000 jobs between the second quarters of 2008 and 2009, the
cutting-edge innovators of Silicon Valley apparently could not insulate itself from the larger
economic downturn," said Russell Hancock, Joint Venture president and CEO, and Silicon Valley
Community Foundation CEO Emmett Carson, in a joint statement. And apparently through the
findings of this report the stakeholders feel the Silicon Valley has new challenges. Again, in their
press release they state, "There are clear warning signs suggesting the Silicon Valley has entered
a new phase of uncertainty, and that our competitive standing is at risk."

Their concerns stem from the impact of the recession coupled with a new era of uncertainty in
attracting top talent, funding innovation and preserving a decent quality of life.


                                           Darrell Waltrip of Fox Sports

According to the report, the Silicon Valley is no longer able to attract the foreign talent which
has been its ‘lifeblood.’ The report indicates that "Inflows from China and India continue to
rise, as does investment and collaboration between the Valley and those two nations, but
China and India are both experiencing rapid economic growth." "As they do, opportunities
in those countries will slow the flow of talent here." So as the global partnerships increase,
the Silicon Valley grows ever more dependent on foreign talent creating problems. And in
concert with this, the terrorist attacks of 9/11 coupled with the rise of other global high tech
regions, have both made the Silicon Valley less accessible and less attractive.

In addition, the report identified that "The level of investment continues to decline, and venture
capitalists generally have not realized significant returns for the past decade." "Silicon Valley's
economic and innovation engine has cooled off," the report identified, citing a one-percent
decline in 2009 in the number of patents from the region and all-time high office vacancy rates.
Additionally, the report said Silicon Valley is not attracting significant federal funding for research
and was being ‘slammed’ by the California state budget crisis and ‘political dysfunction.’ "Our
vulnerabilities don't mean Silicon Valley's best days are behind it, but they do suggest we're a
region at risk,” according to the report.

In response to the press statements and the findings from the report, it appears that
enhancements, improvements, refinements are always needed. The stakeholders of the
Silicon Valley have tried to be good stewards working diligently to make the Silicon
Valley a high performing economic region, the model, if not the brand synonymous with
high tech in the world. Thus, the statements convey a tough time in the pits for the
Silicon Valley.

However, the Silicon Valley has been the recipient of recent positive news. For example,
the recent comments from the co-CEO of Motorola, Sanjay Jha who stated to the Wall
Street Journal in an article that the talent Motorola needs is in Silicon Valley and
upon its future break-up, it needs to go to that talent base. That comment should be
proof enough of what outsiders still think of the Silicon Valley. In fact, this comment
unto itself should have jump started the Valley’s engine, hence diminishing any previous
thoughts to the contrary.

In addition to this comment, there has been the recent announcement of the Invest in
America Alliance initiative. This private sector initiative has been created to support
investment in U.S.-based growth-oriented industries and to significantly increase job
opportunities for this year’s college graduates. The initiative serves as the private
sector's complement to existing state and federal job creation programs through long-
term investment in industries and talent poised to produce the next breakthroughs in
technology innovation. The two-pronged effort includes a commitment from Intel Capital
and 24 leading venture capital firms many based in the Silicon Valley that will invest
$3.5 billion in U.S.-based technology companies over the next 2 years, and no doubt,
many in the Silicon Valley might benefit. These investments will target key innovation
and growth segments such as clean technology, information technology and biotechnology
(new pistons for the Silicon Valley’s motor). Additionally, the Invest in America
Alliance also includes commitments from 17 technology firms and other corporate
leaders (again many from the Silicon Valley) to increase their hiring of college
graduates, some by as much as two times, to create the products and provide the
services of tomorrow.

And recently there was a meeting amongst the mayors of the seven largest cities in
the state hosted by San Jose Mayor Chuck Reed in the Silicon Valley to meet and
discuss with tech companies the issues of importance in growing the high tech sector
in the state and to identify opportunities and directions by teaming with local
political leaders to help in the effort.

There are two sides to every story, but the recent actions coincidental or not sure seem to
be timely to the findings of the report, specifically in keeping the pole position in the context
of the global race for the ‘center’ of high tech.

And while positive press goes a long way to convey a message, the statements from
the stakeholders are reminiscent of the script from the comedy movie about a goofy
stock car racer Ricky Bobby played by comedian Will Farrell and his side kick academy
award winner (Oscar for ‘Best Supporting Actor”), John C. Riley in the film ‘Talladega
Nights.

The stakeholders appear to be acting like the film characters, specifically Ricky Bobby,
whose judgment has been affected by being too close to the exhaust pipe. And for the
stakeholders possibly and unfortunately to close to the subject matter. However, both
are endearing to their audiences for their attempts of achieving success and wanting
to be winners. Certainly, the stakeholders’ statements on the report bring forth valid
concerns, but they illustrate a glass half full scenario by failing to mention all the great
work in building such a dynamic center- the Silicon Valley, that the statements just don’t
seem warranted for the leader, granted a battered around the fenders leader, but very
much a track tested leader of the high tech sector of our nation and the world.

But from a NASCAR aficionado’s perspective, the solution seems clear. Upon a first
glance, it does not appear that the Silicon Valley is stuck in neutral. But it does
appear that there is something wrong with the engine. And upon further review, there
is no reason to perform an expensive and time consuming overhaul. Based upon the
stakeholders statements of the need to attract top talent, acquire funding for innovation
and preserve a decent quality of life, it appears that Silicon Valley’s engine is impacted
by a restrictor plate on its engine’s carburetor (a constrained business environment).
To solve this problem, develop a plan and solve for each. Go back to the fundamentals,
hire and elect a crew chief and a pit crew, (team members), that are experienced and
successful, e.g., from the public sector (mayors, city council members coupled with city
managers and key department directors), utilize the institutes of higher education and
seek the experience and wisdom of private sector leaders to help put the Silicon Valley
back on to the track and into the lead. But in either case, get over it and get on with it,
because when the yellow flag of this economy gives way to a green one and the Silicon
Valley is not prepared, it will be left in the dust. And as the film character Ricky Bobby
would say, “If you ain’t first, you’re in last.” And maybe moving forward, that should be the
slogan for the Silicon Valley.

From Your #1 Fan
Tim Johnson
tjohnson@californiabusinessminute.com

AGAIN: Nevada Recruiting Businesses From California

Tim Johnson — Thu, 04 Mar 2010 20:46:00 GMT

AGAIN: NEVADA RECRUITING BUSINESSES FROM CALIFORNIA
But Beware of Economic Developers Bearing Information

According to an article in the February 8th 2010 edition of the Northern Nevada
Business Weekly, Nevada state officials now have the information to back up
their claims that the Silver State provides a better home for California executives
and their businesses. Apparently, Nevada is now armed and coming to the Golden
State with the facts.

As the story goes, The Nevada Commission on Economic Development commissioned
Whittaker Associates Inc., a Michigan economic research firm, to detail the
differences between California and Nevada.

The study validates from an outside observer a pitch that has been made by industrial
recruiters from Nevada, said Mike Skaggs, executive director of the Commission on
Economic Development in the article. The Commission will be using the research as
part of an e-mail campaign targeting high-growth California companies that are looking
to expand, said Skaggs. It will be used, too, as economic development officials work
the trade show circuit to pitch potential employers on the benefits of Nevada locations.

The study found Nevada is a leader in supporting new businesses, with a business tax
climate that ranks fourth among the 50 states. Nevada also ranks third in terms of
its favorable corporate tax structure. California ranks 48th and 34th, respectively,
in these same categories according to the Small Business & Entrepreneurship Council’s
annual report that ranks states for entrepreneurship.

However, upon a closer look, not all of their data is correct. California does not
have the highest top personal income tax rate in the nation. That honor goes to
Hawaii and Oregon.

And the Silver State isn’t in any better fiscal situation than California. In fact,
according to the state Assembly Speaker Barbara Buckley, things are so bad in Nevada
that apparently the state could lay off every worker paid for from its General Fund
and it would still be $300 million in the red.

Lastly, Nevada won’t tell you that they have been rated has one of the least ‘Happiest
States’ in the nation in two recent rankings including Warwick University and a Gallup
Poll, ranked 39th and 46th respectively.

It appears the Silver State is in hopes of striking it rich, looking for a mother lode,
a get rich quick effort at the expense of the Golden State, rather than growing and
building a sustainable and diverse economy themselves. And if you are a Nevada official
recruiting businesses away from California, and you get offered chocolates by California
executives during your visitations, thank the economic developers from Colorado’s and
their Valentine recruitment mission.

By the way, who has higher unemployment rates? Oh that's right, Michigan and Nevada.

tjohnson@californiabusinessminute.com

CALIFORNIA AND AMERICA'S CUP

Tim Johnson — Wed, 24 Feb 2010 18:39:00 GMT

The America’s Cup is coming back to the United States courtesy of Californian Larry Ellison
and Team BMWOracle in what can be best be described as the stealthiest victory of a
coveted and prized trophy in boat racing in the world and it was won by a Californian -based
team. Unfortunately it has recieved little if any fanfare given that it has lost to competing coverage
of the Super Bowl, Daytona 500 and the Olympics.

Ellison, most notable for his position as CEO of Redwood City –based Oracle has lead the
management of the BMW/Oracle sponsored boat from the Golden Gate Yacht Club, achieved
success with its cutting edge trimaran boat winning back the prized America’s Cup beating the
two-time defending champion, Alinghi of Switzerland with a two-race sweep of a best of three
competition off the shores of Spain in the 33rd America’s Cup.

BMW Oracle is the first American team to win the trophy since America3 in 1992. Ellison's victory
over rival Ernesto Bertarelli will see the trophy heading over the Atlantic specifically back to San
Francisco's Golden Gate Yacht Club.

The Cup is the oldest active trophy in international sport, predating the modern Olympics by 45 years.
Originally named the Royal Yacht Squadron Cup, it became known as the "America's Cup" after the
first yacht to win the trophy, the schooner America.

The rules regarding the America’s Cup are overwhelming and a moving target as the winner has leverage
in formulating them. However the courts are involved in the settlement of such actions as was the situation
surrounding this challenge to the America’s Cup. Based upon the success of BMW/Oracle, they now get to
determine the next venue for the challenge to Cup. The forefront runners are of course San Francisco, San
Diego and Newport Rhode Island, the long time home of the America’s Cup until the loss to the Australians
in 1983. The decision to host a Cup could mean a significant economic impact to the host community.
Go California!

Meanwhile, Ellison said following BMW Oracle's victory that the yacht class for the America's Cup would be
determined by a consensus among the America's Cup community. Expectations are that a design rule for
mono-hulls that represents an evolution from today's America's Cup Class yachts, faster boats with more
high-tech features, is the most likely direction. Whether there will be the excitement of scaling up the yachts
to the proportions of the fabled J-Class, and what sort of technology will be involved, are questions that will
be explored in the decision-making process for the new class. If you have not seen the pictures of this giant
multi-hull trimaran that was built in the state of Washington, see below. Estimates of potential speed by
experts place the possibility of 45 knots.

The victory is sweet as the America Cup returns to the US specifically to California even though the effort has
yet received the fanfare it deserves.

Pictures below, BMWOracle in San Diego Bay and sailiing off San Diego coast, and during America's Cup race

SAVING TOYOTA'S NUMMI OR IS IT TIME TO MOVE ON?

Tim Johnson — Wed, 24 Feb 2010 18:16:00 GMT

State Treasurer Bill Lockyer has appointed a 10 member group that will look into the options
for keeping Toyota’s New United Motor Manufacturing plant, the only automotive manufacturing
plant facility in the state open in Fremont past its planned March 31st closure date.

Toyota which manufactures its Corolla cars and Tacoma pickup trucks at the plant, announced
in August it would close the 5 million square-foot plant. Two months earlier, its NUMMI partner
for the previous 25 years, General Motors Co., pulled out of the arrangement, citing economic
concerns. General Motors produced the Pontiac Vibe at the location.

NUMMI employs 4,700 workers, and is the only unionized workforce at a Toyota manufacturing
plant in the United States. If the plant closes, these jobs and an estimated 20,000 to 50,000
workers at other companies that supply the plant could be impacted.

State officials have already tried to persuade Toyota to keep NUMMI open by offering tax breaks
and vehicle purchase preferences, among other business incentives. Last year, three bills
introduced in the state legislature would have created a special auto manufacturing retention
zone around the NUMMI plant, providing Toyota a sales tax exemption in buying new equipment
for the plant, and requiring state agencies to give preference to purchasing vehicles
manufactured in California. NUMMI is the only automotive manufacturing plant in the state.

The Commission held its first meeting this week at the California Public Utilities Commission office
in San Francisco, during which commission members took public testimony about the plant shutdown.
Additionally, the Commission members are scheduled to visit the company headquarters in Japan.

The commission will be chaired by University of California at Berkeley labor economist professor,
Harley Shaiken. Other commission members include Fremont mayor, Bob Wasserman; actor
Danny Glover; the Rev. Bruce Reyes-Chow of the Presbyterian Church USA; Victor Uno, chairman
of the Port of Oakland's board of commissioners; Nina Moore, legislative director of the Fremont
Chamber of Commerce; Richard Holober, executive director of the Consumer Federation of
California; Bruce Kern, executive director of the East Bay Economic Development Alliance; Carl Pope,
president of the Sierra Club; and Art Pulaski, chief officer of the California Federation of Labor.

Meanwhile, a Toyota official said before a congressional hearing it would not reverse plans to end
production in California despite a suggestion from Californian congressman Jerry McNerny that
doing so might give the embattled carmaker a lift in a big market.

"It's not financially viable to do," Jim Lentz, Toyota's U.S. sales chief, told a congressional hearing on
Toyota recalls and other safety questions that have jolted the automaker's reputation for quality and
hurt sales. "It was General Motors abandoning NUMMI that set this in play," Lentz said, adding that the
facility as a stand-alone is a long way from Toyota's supplier network.

Production is shifting to Texas, Canada and Japan. Lentz said Toyota does not take the closure lightly
and would help affected workers through the transition. Toyota employs 30,000 at 10 plants in the U.S.

But the effort is also being advanced on yet another front. According to the San Francisco Chronicle,
Alameda County Supervisor Keith Carson met last week with an Asian auto official - company and
country unnamed, except it's not China. Carson said he plans to meet with the company's top
management in the next month.

Andrew Ross of the San Francisco Chronicle stated in his article from February 23rd that given
Supervisor Carson's silence to release any information that maybe it's Hyundai Motor Co., and/or its
affiliate KIA Motor Corp. whose products have been making impressive inroads in the United States,
as the mushrooming number of their dealers in the Bay Area attests? Ross claims the South Korean
companies' market share is still comparatively small (7.5 percent in the United States), but it was the
third fastest growing auto company last year in terms of units manufactured, behind Volkswagen and
Ford, and were two of the only three brands, along with Subaru, to see an increase in U.S. sales.

tjohnson@californiabusinessminute.com

Colorado Loves California, Again

Tim Johnson — Fri, 19 Feb 2010 06:53:00 GMT

Colorado’s at it again. Economic developers from across the state are on their second
annual Valentine’s love fest with California, well as it pertains to the businesses across
the Golden State.

Again, a specific group of California businesses, apparently 500 executives as identified
by Colorado officials will receive Valentine Day cards and chocolates specifically in Los
Angeles and the San Francisco Bay area in the effort to sweet talk them to move their
operations to Colorado.

In a quote to the San Francisco chronicle, Erin Bodine, Executive Director of the Metro
Denver Economic Development Corporation they have had some success with generating
inquiries through last year's campaign. She identified Bay area companies setting up
shop in Denver and surrounding environs, although she could not validate their efforts
were the reason behind the site selection decisions. They include Novato's SPG Solar,
which is opening an office in Denver later this year, and Foster City's Solar City, which set
up an operations facility in the region last year.

In the meantime, San Francisco-based Charles Schwab & Co. is locating 500 high-tech
jobs to Denver, along with Mountain View's Intuit Inc. which opened a call center in Englewood,
Colo., in August, prompted in part by the area's "deep talent pool" and its more attractive
operating costs compared to Silicon Valley, an Intuit spokesman said at the time. And
formerly from El Segundo, DaVita Inc., a kidney dialysis company moved its corporate
headquarters last year to a suburb of Denver, prompted by its "lower costs and desirability
as a place to live," the company's CEO told the Denver Post.

"We want California to recover, and quickly. But ... the Golden State has a state constitution that
is even goofier than ours. Its legislature has an even bigger Gordian Knot tied around its hands
than ours. Both states need to unravel those 'governance knots' if we can ever hope to be a nimble
and innovative player in the global marketplace."

A blog post from Metro Denver EDC's Tom Clark

Maybe Colorado would have greater success if they just showed up with money.

MAVERICK'S BIG WAVE COMPETITION 2010 - RESULTS

Tim Johnson — Sun, 14 Feb 2010 01:57:00 GMT

The surfer's tamed the waves, the spectators were wiped out, and so ends the
Maverick's 'Big Wave' competition for 2010.

South African, Chris Bertish won this year's competition taking home a paltry $50,000
for surfing the four story waves. But it was the spectators that unfortunately suffered
from this year's big wave competition as one rogue wave hit the break water and tore
through the hordes of spectators, judges table, vendors and the public address system.
Below are two links to unedited video of the incident.

http://www.youtube.com/watch?v=jV7KhSdUQPU

http://www.youtube.com/watch?v=0urujXs0YkU

Also, want to know what it looks like to be in the throes of a 4 story wave, below find a
link to a video that was edited on this year's event illustrating size, scale and scope of
the competition.

http://www.youtube.com/watch?v=OhKxM1yng_Y

And finally, congrats to Chris Bertish and to all who participated and get well to all those
injured spectators. Watching at AT&T Park in San Francisco sounds better and better
all the time.

Chris Bertish, winner 2010 Maverick's

The Greening of California via Oregon, New York and Florida

Tim Johnson — Fri, 15 Jan 2010 18:47:00 GMT

The headlines read, ‘Largest Wind Farm in the US will be built in Oregon’ but
behind the headlines it is all because of the requirement that all public utilities
including those in California need to source 25 percent of their energy from
renewable sources.

The proposed project, Shepard’s Flat is located in north-central Oregon in Marrow
and Gilliam counties located near the Columbia River. The wind farm will cover 30
square miles and will provide 845 megawatts of power enough power to support
235,000 homes. The wind farm will cost $2 billion to build. It will employ over 400
during construction phase and then employ 35 during operation.

Again, as identified in the news articles, while in Oregon, the Shepherds Flat Wind
Farm will supply energy to California's Southern California Edison utility, and like all
utilities in the nation, it must secure 25% of its power from renewable sources by 2025.

The Shepherds Flat Wind Farm is being built by New York-based Caithness Energy.
Construction will begin next year. GE was selected and will be supplying 338 wind
turbines at a cost of $1.4 billion at its Florida manufacturing facility and will also
provide 10 years of operational and maintenance services to the project.

While this maybe a very exciting project, this energy will have to travel nearly 1,000
miles to get to its customers. And given the previous experience with electrical
transmission deregulation in California, it was determined that there is not enough
space to transmit electricity across the grid specifically those long distances given
capacity. While California is working to site new transmission lines, the decision on
the location(s) still remains unresolved.

But even if there were the transmission lines, will this energy ever reach California or
is it simply an effort to fulfill the requirements?

It appears it is the the requirements. And unfortunately, while many of us read the main
stream news media articles, it makes us believe that this energy will be coming to us in
California. But apparently, and unfortunately that is not the case. Certainly it is a good idea
to utilize renewable energy, especially as indicated by the American Wind Energy Association
specifically that the industry can supply in the near future enough energy for nearly 7 million
homes. But not every project as identified in recent headlines is green for California.

In the meantime, it appears that the only people that will directly benefit from the Shepard
Flat project are Oregonians, New Yorkers and Floridians.

Tim Johnson
tjohnson@CaliforniaBusinessMinute.com

The Decline: The Geography of a Recession

Tim Johnson — Thu, 03 Dec 2009 06:57:00 GMT

For all in business, community and economic development along with workforce
training and redevelopment a great Web 2.0 piece enitled - The Decline: The
Geography of a Recession has been configured and published by journalist and
writer Latoya Egwuekwe. See the link below. It is a tremendous undertaking and
well worth the view.

http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

California Christmas 2009

Tim Johnson — Thu, 03 Dec 2009 06:45:00 GMT

CALIFORNIA CHRISTMAS 2009

Yeah, we are in the midst of the Great Recession, but it is important to remember
the holidays. So as a part of our annual commitment to Californians, here is this
year's list of just some of the great holiday events across the Golden State.

ENJOY!

Light Shows Extraordinaire

Holiday of Lights: The Del Mar Fairgrounds in San Diego are transformed into
the largest animated, drive-through light show on the West Coast. More than
400 twinkling displays are organized into themes, including Candy Cane Lane,
Toyland and Elves at Play. New for 2009, viewers can opt for a hayride to
travel the 1.5-mile route. Details: Nov. 25-Jan. 3, www.sdfair.com/holidayoflights,
858-755-1161. $14/car up to five people, $19 for six or more.

DWP Holiday Light Festival: The 14th annual Los Angeles Department of Water and
Power light show extravaganza illuminates a one-mile segment of Crystal Springs
Drive. One 200-foot-wide exhibit commemorates the department's century of service
to Los Angeles. The light show goes "green" Dec. 4-17 with vehicle-free, pedestrian
-only access. Details: Dec. 4-30, www.dwplightfestival.com, 213-367-1255. Free.

Christmas Tree Lane: The beauty of Oxnard's historic home district comes to life
with houses outlined in twinkling, colored lights and grounds covered in large,
creative displays. Cars coast slowly and pedestrians amble past red lights in the
shape of draped wreaths and white life-size reindeer. Details: Dec. 13-26,
www.visitoxnard.com, 800-269-6273. Free.

Fresno’s 87th annual Christmas Tree Lane. A two mile lone stretch of Van Ness
Blvd. is lit up. See http://www.oldfig.org/about/christmastreelane.html for more
information.

America’s Largest Living Christmas Tree: See the tree in Ferndale

Parades

14th Annual Lighted Tractor Parade in Calistoga: Experience the ultimate small-town
holiday cheer when decorated vintage and modern tractors, antique trucks, human-
powered vehicles and construction equipment roll down Main Street in Calistoga.
Downtown merchants along the parade route will host open houses offering hot cider
and cookies. Details: Dec. 5, www.calistogachamber.com/chamberevents, 707-942-6333.
Free.

45th Annual Woodland Holiday Parade: One of Northern California's largest holiday
parades, more than 175 entries march, perform and entertain in "Making Spirits Bright"
on Main Street in Woodland. Following bands, dance and majorette groups, equestrians,
local floats and more is Santa Claus in an antique fire engine. Details: Dec. 12,
www.woodlandchamber.org, 530-662-7327. Free.

Holiday Bowl, San Diego:
The Holiday Bowl Parade will take place on Dec. 30th along the San Diego waterfront.
See the largest big balloon parade on the west coast. See www.HolidayBowl.com for
details

Waterside for the Holidays

Capitola's Surfin' Santa on Capitola Beach: Santa and his reindeer trade their
sleigh for surfboards. Once on the beach, Santa pulls out the ubiquitous beach
chair to visit with children and families, dispensing candy canes and holiday
wishes. Details: Nov. 28, www.santacruz.org, 831-475-6522. Free.

38th Annual Parade of Lights: "Christmas at the Zoo" is the theme for San Diego's
boat parade along the downtown waterfront. More than 100 vessels put on their best
holiday attire to wow crowds from Shelter Island to the Ferry Landing Marketplace.
A fireworks extravaganza kicks off the event. Details: Dec. 13, 20,
www.sdparadeoflights.org, 619-224-2240. Free.

101st Newport Beach Christmas Boat Parade: Newport Beach Harbor will blaze with
lights to the theme of "The Joys of Christmas Toys." Some decorated yachts, boats,
kayaks and canoes will sport animated Christmas scenes accompanied by costumed
carolers and music. Along the harbor's 14 miles, they will pass the Ring of Lights,
beautifully decorated homes and businesses that serve as a backdrop. Details:
Dec. 16-20, www.christmasboatparade.com, 949-729-4400. Free.

Holiday Music & Performing Arts

Home for the Holidays: Sacramento Choral Society and Orchestra: December 12.
Concerts at 2pm and 8 pm. Mondavi Center on the campus of UC Davis. Tickets $30
and $40 Information: (916) 536-9065

Celebrations and Fairs

Yule Fest Celebration: The Danish-style village of Solvang dresses up with lights
and seasonal adornments in November and December for its annual Winterfest
Celebration. More than 150 boutiques and specialty shops host open houses. Street
musicians and singers give voice to this year's theme of the "Village of Music,"
and Solvang Park's Gazebo echoes with Christmas carolers. Mark your calendars for
the tree-lighting ceremony and arrival of St. Nick on Dec. 4, the Julefest Parade
on Dec. 5, the Nativity Pageant on Dec. 12 and the Winter Solstice Party on
Dec. 18. Details: Nov. 20-Jan. 8, www.solvangusa.com, 800-468-6765. Free.

Gingerbread Village at the Manchester Grand Hyatt, San Diego: Vote for your
favorite gingerbread house in the hotel's Grand Lobby. Each house is created
by local students working with Hyatt chefs. Included is a 6-foot-tall replica
of the Hyatt Hotel. Supporting this year's theme of "Kids Giving to Kids,"
visitors are asked to bring an unwrapped gift for Toys for Tots. Details:
Nov. 30-Dec. 27, www.manchestergrand.hyatt.com, 619-232-1234. Free.

Gold Country Christmas Fun: The 35th Annual Sonora Christmas Craft and Music
Festival brings together more than 200 craft artists, performers (including
the Christmas Jug Band, Grinn & Barrett and Sourdough Slim), costumed elves,
carolers, an igloo-ensconced Santa Claus and more. Details: Nov. 27-29,
www.fireonthemountain.com/craft.html, 209-533-3473. $7 general, $5 seniors,
free ages 12 and younger.

Columbia State Historic Park: Lamplight Tours is an evening walking play, where
groups are guided by lamplight from scene to scene by costumed docents. Miner's
Christmas recreates life in the 1850s with costumed docents telling Christmas
stories, chestnuts roasting over open fires and candy canes being made. Details:
Lamplight Tours -- Dec. 4-5, www.columbiagazette.com/lamplight.html, 209-533-4117.
$15-$20. Miner's Christmas -- Dec. 12,-13, 19-20, www.columbiagazette.com/miners.html,
209-588-9128. Free.

Deck the Halls

Old-Fashioned Christmas at Rancho Guajome Adobe: Step back to the days of a 1800s
Spanish-American holiday at Vista's Rancho Guajome Adobe. Stroll through 28 rooms,
where pine cones, pepper tree branches, dried fruits and flowers are transformed
into wreaths, garlands and centerpieces. Try your hand at candle dipping and making
cornhusk dolls and caramel-candy apples. Enjoy performances by skilled equestrians,
the ballet folklorico dance troupe and more. Details: Nov. 25-26,
www.historyandculture.com/guajome, 760-724-4082. Free.

Christmas at the Inns, Pacific Beach: Relish the splendor of the Victorian era in
Pacific Grove, as nine bed-and-breakfast inns and former grand mansions, as well
as the Phoebe Hearst Social Hall at Asilomar Conference Center, shine with festive
decorations. The tour includes light refreshments and entertainment. Details:
Dec. 1-2, www.pacificgrove.com, 831-373-3304. $20 for both days.

Candle Light Tours- Mendocino: The bed and breakfast inns all along the rugged
coast of Mendocino County in Northern California are celebrating the 21st
anniversary of their candlelight tours for the holidays. Between December 9-11
(Wednesday through Friday), there are special activities and refreshments for
visitors. This year, proceeds will benefit programs for Mendocino Coast youth
through Big Brothers/Big Sisters of Mendocino County and MUSE (the Mendocino
Unified School Enrichment) fund. For more information, call 707-964-1228

Holiday Feasting

Vintners' Holidays and the Bracebridge Dinner: The magnificence of Yosemite
National Park in winter sets the scene for two holiday food and wine pageants
hosted by the Ahwahnee Hotel. Vintners' Holidays lets participants personally
interact with vintners, attend wine seminars and taste the latest wines. At a
gala five-course dinner, they will dine with wine makers, owners and growers.
Details: Nov. 29-Dec. 3. $199 for dinner-only tickets. For the four-hour pageant
of food, song and mirth that is the Bracebridge Dinner, Ahwahnee is transformed
into the Great Hall of a 17th century English manor. More than 100 players work
the room with carols, Renaissance rituals and entertainment while guests enjoy
a seven-course banquet. Details: Select dates from Dec. 13 to 25. From $963 for
lodging and dinner for two. www.YosemitePark.com/events, 801-559-4884.

The Twelve Days of Christmas: Twelve is the magic number in the Napa Valley.
For 12 nights in December, Meadowood in St. Helena teams 12 top chefs with 12
of Napa Valley's preeminent vintners to create holiday feasts. Proceeds benefit
Share Our Strength, a national child hunger prevention organization. Details:
Dec. 4-19, www.meadowood.com, 707-968-3153. From $950 per couple for one-night's
lodging and dinner for two.

Healdsburg Wine Country Christmas: Stretch a holiday dining experience to four
courses at four restaurants over a three-hour period in Healdsburg's Strolling
Dine Around. Eighteen eateries near historic Healdsburg Plaza offer guests their
choice of appetizer, first course, main course and dessert in an elegant
progressive dinner. Details: Dec. 9-10, 16-17, www.healdsburg.com, 707-479-7488,
$85 per person.

Dickens Dinner: Madrona Manor in Healdsburg is sumptuously decked out in holiday
finery, with staff in 19th-century period dress, for the Dickens Dinners. Enjoy
an elegant, candlelit three-course menu of traditional fare, while the Twelfth
Night carolers sing through the dining rooms. Details: Dec. 11-24,
www.madronamanor.com, 707-433-4231, $85-$1,155 per person.

For the Youngsters

Disneyland: The Magic Kingdom adds festive glitter with special attractions that
include a 60-foot-tall Christmas tree featuring 62,000 LED lights and ornaments;
Sleeping Beauty's Winter Castle sporting 50,000 lights; and Main Street rocking
with the Christmas Fantasy Parade, Believe in Holiday Magic Fireworks Spectacular
and nightly snowfall. It's a Small World hums for the holiday season and the
Haunted Mansion takes on Tim Burton's "The Nightmare before Christmas." Details:
Nov. 10-Jan. 3, www.disneyland.com, 714-781-4565. $72 general and $62 ages 3-9
for one-day, one-park ticket.

Six Flags Discovery Kingdom: Vallejo's amusement park creates themed wonderlands
such as Candy Cane Lane, Reindeer Village and Prancer's Play Area with life-size
toys and lots of entertainment. Highlights include an 80-foot white fir tree,
nightly holiday parade and Blitzen's Wonderland Mountain, doubled in size from
last year, where children can play in snow. Details: Weekends Nov. 27-Dec. 13,
daily Dec. 19-Jan. 3, www.sixflags.com, 707-643-6722. $29.99 online ticket
special for all ages.

Legoland Holiday Block Party: The entire theme park morphs into Holly Jolly
Holidays with a 30-foot decorated tree and a 7-foot Santa and reindeer, all
made of Legos and festive entertainment, carolers, elves, strolling musicians
and nightly fireworks. Kids can search for miniature Santas and reindeers
throughout Miniland USA and watch "Let It Snow" with dancing and songs.
Details: Dec. 19-31, www.legoland.com, 760-918-5346. $65 general, $55 ages 3-12
and 60 and older.

More Holiday Cheer

Finally as a side note, if this is not enough, go to the following for even
more information on Christmas activities across the state -
http://www.beachcalifornia.com/california/california-christmas-trees.html

Retail in California: Holiday Sales

Tim Johnson — Sat, 21 Nov 2009 05:45:00 GMT

After one of the most difficult years on record for retailers and consumers, Southern
Californians are more optimistic as the holiday shopping season kicks off, according
to Deloitte's 24th Annual Holiday Survey of retail spending and trends.

Fears about the recession are slowly subsiding, with more than half of Southern
Californians surveyed (52 percent) saying they expect the economy to improve in
2010, compared with 29 percent responding favorably last year. Moderate optimism
is starting to show in shopping plans as 47 percent of consumers in Southern
California expect to spend more or the same on the holidays, an improvement from
last year's 41 percent response.

However, Southern Californians remain concerned about their financial stability.
Deloitte found that 24 percent of respondents in Southern California feel that their
jobs are not secure -- a jump from 19 percent who felt this way last year and higher
than the national average of 18 percent. Almost half -- 49 percent -- of Southern
Californians surveyed feel their household's current financial situation is worse
than it was at this time last year versus a national average of 44 percent.

Despite expectations for economic improvement in 2010, consumers continue to
reduce their spending on gifts. The average number of gifts Southern Californians
plan to purchase declined to 15.1 from 22.9 last year and 22.8 in 2007. The amount
those surveyed consumers plan to spend on gifts is down as well, to $391 compared
with $469 in 2008, and $515 in 2007. "Southern Californians have been hit hard by the
economic downturn and are still struggling," said Jackie Fernandez, partner, Deloitte &
Touche LLP and Deloitte's Retail Sector leader in the Pacific Southwest. "With a state
unemployment level above 12 percent and a depressed real estate market, local
consumers are taking a very conservative approach to their holiday spending."

Consumers in Southern California, however, do appear willing to increase their spending
on two non-gift categories that traditionally account for a smaller portion of the holiday
budget: entertaining at home and non-gift clothing. Local respondents expect to increase
their home entertaining budget by 55 percent to $259 from $167 in 2008. They plan to
spend $170 on non-gift clothing -- an increase of 53 percent from $111 they expected to
spend on this category in 2008.

In total, consumers' anticipated holiday spend in Southern California is expected to
reach $1,092, a 6 percent decline from last year. "Consumers in Southern California are
reprioritizing how they spend their dollars and getting back to basics," said Fernandez.
"Although it will be a lean spending year, we expect shoppers to dedicate more dollars
this season to replenishing essential items and making the time spent with family and
riends more enjoyable."Among Southern Californians planning to spend less, the number
of respondents attributing at least part of it to job loss and pay reduction rose sharply,
doubling to 41 percent this year.

Discount Stores Still Top Destination; Gift Cards Remain Top Gift
Discount stores continue to hold the top spot as a shopping destination with nearly six out of
10 Southern Californians (57 percent) saying they expect to shop at discount/value department
stores. Online shopping remains strong this year at 38 percent. Some of the more popular
shopping destinations among Southern Californians also include toy stores and warehouse
membership clubs. Traditional department stores continue their downward trend as a shopping
destination, falling to 25 percent, and a sharp drop from last year's 33 percent. Despite the shift
in preferred shopping destinations, 48 percent of Southern California shoppers are remaining
loyal to the stores they like, although they are making fewer trips or buying less at these retail outlets.

Gift cards hold their first-place position for the sixth year in a row, with 62 percent of consumers
in Southern California planning to buy them as presents. The number of gift cards they plan to
purchase has declined to 4.9 from 5.7 last year, and the amount Southern California consumers
expect to spend per card fell to $25.90 from $27.54 last year. In addition, toys, dolls and games
(excluding computer and video games) show strong potential to rebound in popularity this
season. Almost four out of 10 consumers in Southern California (37 percent) plan to purchase
these items, up from 29 percent in 2008.

The Deal-Seeking Consumer May Turn Up Empty Handed
Consumers are expecting a repeat of last holiday season's deep discounts, and
more are planning to shop early. For example, 54 percent of Southern Californians
planning to purchase apparel and 41 percent of those buying toys expect a discount
of 50 percent off or more. In a sizeable jump from last year, 39 percent plan to
do most of their holiday shopping during the first two weeks of December, up from
20 percent in 2008.

"Retailers have been making significant adjustments to inventory since the 2008
holiday season, so consumers expecting rock-bottom, 'overstock' prices may come
up empty-handed," said Brent Schoenbaum, a partner in Deloitte's Retail practice.
"Consumers in Southern California have been observing this trend and likely know
that the products they want will move quickly and may not be replaced. Retailers
who are already promoting sales and this year's 'must-have' gifts stand to reap
the benefits from these early-bird shoppers."

About the Survey
The survey was commissioned by Deloitte and conducted online by an independent
research company between September 24 and October 2, 2009. The survey polled a
sample of 10,878 consumers nationwide, with a Southern California sample size
of 229, and has a margin of error for the entire sample of plus or minus one
percentage point.

For the purposes of this survey, the term "Southern California" encompasses
Los Angeles County, Orange County, Riverside County, San Bernardino County,
San Diego County and Ventura County.

For more information about Deloitte's Annual Holiday Survey, including interesting
statistics, historical data and useful links, please visit
www.deloitte.com/us/2009HolidaySurvey.

About Deloitte
As used in this document, "Deloitte" means Deloitte LLP, Deloitte & Touche LLP and
Deloitte Services LP, which are subsidiaries of Deloitte LLP. Please see
www.deloitte.com/us/about for a detailed description of the legal structure of
Deloitte LLP and its subsidiaries.

RETAIL IN CALIFORNIA

Tim Johnson — Fri, 20 Nov 2009 00:23:00 GMT

Black Friday and Cyber Monday are names Madison Avenue has given to the
Friday and Monday after Thanksgiving for days associated with shopping
specifically for the holidays.

Throughout the months of November and December, the retail sector will be
showcased at www.CaliforniaBusinessMinute.com . What do Black Friday and
Cyber Monday mean to California's economy and is the California consumer
still shell shocked by the recession or are they planning to loosen the up their
pocketbooks this holdiay season?

Read Minutes, articles and inteviews for information on California's retail sector.

OUTSOURCED: California's Happy Cows

Tim Johnson — Fri, 20 Nov 2009 00:07:00 GMT

In the effort to try to promote the business environment and economic climate
of this state, as the self –proclaimed Chief Evangelist Officer of California, I do
my best. But some days, I feel it just isn’t worth getting out of bed to do it.
One would think that during a period of recession, specifically when Californians
are complaining about how bad the economy is, (12 percent unemployment
statewide, along with being over regulated and taxed) that they would be working
together with something like a ‘Buy California First Program.’   Apparently and
unfortunately that is not the case. Two recent public relations fiascoes illustrate
a lack of unity and ‘one for all, all for one’ attitude.

First, in what can be described as ‘udderly’ foolish, the California Milk Advisory
Board and their happy cow commercials are going to be filmed in New Zealand.
The lovable cows with the mantra, ‘Great cheese come from happy cows and
happy cows come from California’, have become the stars of TV commercials
and publicity products, but they may not be lovable for long given the Board’s
current direction Apparently, the Board has been impacted by the recession and
identified that they too have to be cost conscious and look where to save money,
thus New Zealand provides a lower cost of doing business. So the Board plans to
film some of the ‘Happy Cow’ commercials down under.



I say, why stop there? Let’s start buying our cheese, milk and other dairy products
elsewhere, because the industry has been bemoaning the fact that the state is too
expensive to do business, so let’s just outsource the industry, just keep the California
brand, and put it on cheese and dairy products from Wisconsin. By the time the
catatonic California consumer wakes up to the fact that the product is label only and
that they have been hoodwinked by marketers and producers, it will be too late to retain
the industry. Do you suppose New Zealand has happy kiwis?

Second, the California Travel and Tourism Commission apparently has outsourced
its tourism call center to a firm in Kansas City, Missouri. The bureaucratic rhetoric
provided to Kevin Riggs of Sacramento television station KCRA who interviewed a
Commission representative was that it was all a part of the bidding process. States
don’t need to recruit our businesses we seemingly provide it to them and it appears
we would be more valuable as Californians in Missouri. Maybe Missouri ought to be
known as the Golden State.

Tim Johnson
tjohnson@CaliforniaBusinessMinute.com

HEALTH CARE IN CALIFORNIA

Tim Johnson — Fri, 30 Oct 2009 06:31:00 GMT

Healthcare is one of the largest employment sectors of the the state's economy
and one of the fastest growing as well. Throughout the month of October 2009,
the California Business Minute will be showcasing the sector in articles and
Minutes.

Of significant interest with all of the discussion on healthcare, and healthcare reform
little information is available on what the key direct and indirect multiplier impacts are from
healthcare on the state's economy. Research has found information from the American
Hospital Association on the impacts from hospitals statewide and from allied healthcare
employment in southern California, but little is available statewide from the sector.

However, the California Business Minute has been able to cull together information that
identifies basic impacts from the sector to illustrate its enormous impact. View these and
other articles this month at the Home Page of www.CaliforniaBusinessMinute.com.

HARSH REALITIES: The Issues Facing California and its Economic Recovery

Tim Johnson — Fri, 16 Oct 2009 08:06:00 GMT

Is Prosperity Possible for California?

It seemingly would be an easy task to paint a bleak picture about California's
economy, specifically given its current dismal condition. The title of this series,
Harsh Realities: The Issues Facing California and Its Economy, makes it appear
that the premise of this series is to paint such a picture. It certainly could be justified,
but that's not the intent. California has had its share of economic challenges.
California's economic woes have long been documented, exacerbated by high taxes
and an over regulated business environment, but its economy has always bounced
back. And although it has suffered from drought and natural disasters, e.g., fires
and earthquakes it always bounced back. But California is now confronted by a host of
new and additional impacts created by the 'Great Recession'. The housing bubble and the
subsequent mortgage meltdown that lead to the collapse of the financial sector have help
bring the state's economy to its knees with double-digit unemployment, the highest
unemployment in nearly 50 years (third or fourth highest in the nation) along with low
consumer confidence and spending, lack of available credit, significant residential
foreclosure (nearly 10 percent of the state's 13 million housing units) along with the need
to address an enormous state budget deficit that also impacts local governments all of
which has created distrust in its state legislature if not all of its state political leadership
as identified by a recent survey from the Field Poll.

But as the old adage goes, timing is everything and as it pertains to this series, it took time
to review these documents as it did for this recession to occur and as it will for it to recover.
It took most of the summer to read these massive reports from the Pacific Research Institute,
Milken Institute and the Public Policy Institute of California. Personnel from the California
Business Minute hunkered down to read these reports (so much for enjoyable summer reading).
It would, soon become a pain staking effort to read and write reviews on each, synthesizing them
into manageable pieces for the busy members of our community, a community comprised of
professionals from business, community and economic development, workforce training and
redevelopment that have little time to allocate to read such documents even in a booming
economy, let alone during a recession.

However, the timing on these reviews were perfect in context to the chronology of the recession
and its impact on the state. First, the series coincided with the state’s 2009-10 FY budget fiasco,
making for interesting reviews regarding comparisons and differences in public policy to the findings
of the reports. But it was also at a time when some at the Federal Reserve, including its Chairman
Ben E. Bernanke and other leading economists suggested that the recession had ended. While
that finding hasn’t yet been made official, it provided some hope and reference to the state’s economy
that the worst is over for the Golden State and some sense of economic normalcy is around the
corner and the critical headlines and media comments being made about the state were and are
simply exaggerated.

Additionally, the series coincided with the publication of three major magazine articles from The
Economist, Time and The New Republic, each presenting a perspective on California’s economy,
adding to the discussion of this series.

Upon their completion, the individual reviews were posted at the California Business Minute’s
blog, the CalBizBlog. But, due to the length of time necessary to complete these, it affected
the posting of other works for which we apologize. However, on the flip side, an unintended
consequence occurred. Internet search engines which ‘crawled’ the site during the summer
subsequently ranked the series high in their search engines, so the length between reviews
aided in the advertisement of the series and increased readership. Apparently, the loss of
content in lieu of presenting this material was a wash.

So now, this is where you, as a reader, expect that this series presented by seasoned
professionals from community and economic development will provide great wisdom and
insight to presenting solution(s) as if finding the Holy Grail for California, providing a
panacea to reversing California’s economic troubles. Unfortunately, the Socratic like writings
provided at the blog on business and economics coupled with its drill sergeant like directions
(recommendations) have been sidetracked. Unfortunately, after all of the pain staking effort,
it was uncovered that none of these reports or articles provide a road map for significant solutions,
let alone a Holy Grail. But they do provide insight and perspective, which is valuable such as
dispelling many issues and illustrating important data that is useful to our readers, thus it is this
information we intend to convey.

CONCLUSION

The three key reports, Pacific Research Institute's report, Assessing the State of the
Golden State, the Milken Institute's report, Manufacturing 2.0, A More Prosperous California
and The Public Policy Institute Of California's report, New Patterns of Immigrant Settlement
in California provide insight to the major issues facing California. Collectively, these reports
present what can be characterized as some of the 'best academic and applied research' on
the issues facing California in recent memory. And coincidently, all were published and released
within a short period of one another in the midst of a recession, thus providing an unequaled
opportunity to see three different perspectives from three different respected organization on how
to address the needs of California, specifically in the midst of a recession.

For example, the Pacific Research Institute’s report, Assessing the State of the Golden State,
is an excellent piece on understanding the issues. While it provides a provides a broad brush
of the issues facing the state, it should be used an introduction to the challenges of California
in the 21st Century. However, they purposely provide little if any recommendations, because this
piece lays the ground work for their future work on individual issues illustrated in the report and
their analysis and subsequent recommendations. It is an excellent piece on understanding the
issues.

The Milken Institute’s report, Manufacturing 2.0, A More Prosperous California, examines the
issues impacting manufacturing in the state. This is a follow on study from their previous work
for and sponsored by the California Manufacturers and Technology Association. Unfortunately,
it really doesn’t provide any eye-opening insight or any significant recommendations to the needs
of the sector. Manufacturing has been declining not just in California but across the nation, so
their criticisms leveled on the state are hard to swallow. And little if any eye-popping opportunities
were presented on what to do to reverse this trend, let alone any recommendations related to
enhancing the business environment for the new technologies growing in the state and their
corresponding manufacturing growth. For example, little if any insight was provided on green and
clean technologies, e.g., building of solar panels and electric car manufacturing, let alone any
discussion on the changes created by autonomous technology (robotics) e.g., unmanned aircraft,
ground and sea vehicles that are being produced in the state. The absence of this speaks volumes
about the need to address these issues because of the capacity for economic change due to the
incomparable resources of the world class scientific facilities in the state and the intellectual capital
of California’s population.

Nonetheless, the report provides valuable spreadsheets that compare California to its competitor
states. It is these spreadsheets that illustrate the state's current strengths and weaknesses that
should be used by those in economic development. The report is posted at the California
Manufacturers and Technology Association website - www.cmta.org

The report, New Patterns of Immigrant Settlement in California by The Public Policy Institute of
California provides a valuable understanding to the changes in immigration patterns. The report
contradicts public opinion, and validates that the state is no longer the top choice for immigrants.
While the state still has the most immigrants of any state in the nation, the percentages of immigrants
have changed and are lower than many of the Golden State’s neighbors. In fact the state is not even
in the top 5 states for immigration and hasn’t been for the last decade. It is an excellent study but
very academic in its presentation and unfortunately, probably a tough read for most, specifically for
those whose lives revolve around a Twitter account.

However, the value of this report is in its Technical Addendum. The charts illustrate the changes of
immigrant settlement far better than the narrative. It is strongly recommended to read the Executive
Summary and Technical Addendum to appreciate the value of this report. The report is posted at
www.PPIC.org. (Go to the subject topic of immigration at the website).

As stated earlier, timing is everything and three articles from The Economist, Time and The New Republic
magazines also provide further analysis on California during our review.

For example, The Economist magazine in its July 11, 2009 edition portrayed California’s 'dreaming’
days as over compared to the future of Texas in the article- America’s Future, California v Texas.
As California’s self proclaimed Chief Evangelist Officers, we take task with their comments on the
Golden State, but their argument does hold water, because if California does not work diligently to
turn around its economy, Texas may very well lead this nation towards the 22nd Century.

Time magazine’s cover story - Why California is Still America’s Future, October 22, 2009 is a balanced
and fair article on the economic issues facing the state. Journalist, Michael Grunwald covers the
salient issues of the state from a 65,000 foot level, but returns to validate that nowhere else on the
planet except for California can you still find the large sums of capital for innovation, intellectual
capital of California’s population, an unequaled entrepreneurial environment, and a state that is
accepting of business failure as a badge of honor. Coupled with great weather and geographic beauty,
California has and will continue to act as magnet to bring the world’s best together. The article leaves
the reader with the thought that if world changing actions can’t be done here, then maybe they can’t
be done anywhere…the dream lives on!

The New Republic’s October 26, 2009, article- End State, is California Finished? by John Judis
is a reflection of a former state resident drawn to the state (seduced) for the same reason(s)
others came. But the article diminishes the state for all of the issues illustrated above.
Unfortunately his article comes late to the marketplace and is not very enlightening. However,
in fairness to Judis, he does illustrate that many of the extreme headlines aimed at the state
are meant only to sell media products and the rhetoric spoken by media talking heads is unfair.
But he appears to be a two-faced journalist, because even with all of his denigration, he refuses
to bet against the state and its ability to recover and return to its prominence in the national and
world economies. Apparently he is not a gambling man. But his disdain is humorous because he
leaves the door open that maybe, just possibly, the luster and shine will return to the Golden State.

After reading all of these documents, it is impractical to think that everyone gets California. And
rightly so, because the dynamics that this state and what it faces are staggering. Just one issue,
such as the distribution of water would overwhelm most of our nation’s governors and state
legislatures in finding a solution let alone by researchers at a ‘think tank’ or journalists and their
editors. Thus the number and magnitude of the issues that California confronts are many and are
the basis for its problems. But that should not be an excuse for a poor performing economy. State
government leadership needs to take a more business like approach, formulate a methodology, a
checklist and corresponding marching orders to address these issues in an orderly but expedited
fashion, because the longer they wait to address these issues, the more difficult they become to
solve. But it is doubtful that they will be addressed anytime soon and in this recommended manner.
Because the state is also confronted by several external political actions, such as potential voter
initiatives making the state legislature part-time and dividing the state in two coupled with the potential
if not high probability of a constitutional convention. These actions seemingly are a reaction to the
lack of state leadership and will help to derail a focused recovery effort. While many criticize the
governor for his lack of hands on leadership, he has helped place California again in a positive international
light through his stardom. He has also put the state on the international stage illustrating its position
s a global innovator.

Keeping with this positive direction, many have forgotten or don't know that Californians invested in
California. During the recent economic boom of the Golden State, 1999-2006, California voters
supported multiple ballot initiatives for infrastructure projects, e.g. water and flood control, housing,
community development, schools and transportation projects to the tune of $48 billion. Preliminary
results illustrate that over 800,000 jobs will be created from these actions over the next 10 years.

As these projects begin and when coupled with the billions from the federal stimulus package for
projects, the future of the state through implementation of capital improvements along with
corresponding innovation from business and industry should bring a strong return to California’s
economy.

In the meantime, the question is - Can California possibly bounce back from all of these issues
towards a return to prosperity? While unfortunately, none of the reports reviewed provided a road
map for recovery, they did illustrate the issues that are most pressing that need to be addressed
As illustrated above, it will take time. It is as chaotic coming out of a recession as it is going into
one. The California Business Minute believes that California's economy can be resurrected by its
business community returning financial stability and employment opportunities, while simultaneously,
public policy efforts take place to achieve solutions and reforms to help the business community
achieve it. It may be chaotic, but a synergy between stakeholders that are focused and time bound
is the prescription that can return prosperity and the shine to the Golden State!

We hope that was not too harsh. We appreciate bringing this series to you and would
appreciate any of your comments.

TJohnson@CaliforniaBusinessMinute.com

HARSH REALITIES: The Issues Facing California and its Economic Recovery

Tim Johnson — Thu, 15 Oct 2009 08:04:00 GMT

This is the third part of the three part series that reviews three of the most compelling
economic policy studies on the California economy completed in 2009.

The report, ‘New Patterns of Immigrant Settlement in California’, July 2009 by Sarah Bohn
of the Public Policy Institute of California, PPIC has identified a variety of interesting changes
in immigration.

First the report corrected several previous statements. One is that while California still remains
the home for the most immigrants in the nation, its destination for immigrants has declined
significantly. In fact the shift began in the 1990’s and has continued to decline through
today. Additionally, there was no evidence that illustrated the movement was caused by access
to social service programs for immigrants but rather based upon available jobs and wages

Second, the report in the Technical Addendum identified why or what are the theoretic causes
behind immigration. The report illustrates two reasons: The decisions are made at the individual
or household level whether to migrate and where. The report identifies that this decision falls into
economic, social and institutional categories. When determining economic factors, it is primarily
based upon neo-classical economic theory, involving costs and benefits of migrating but also where
to migrate. As it pertains to the social factors, it is predicated upon the concentration of like co-
ethnics as a strong factor of location choice. And for institutional factors that affect immigration,
these involve state welfare benefits, and border crossing locations, specifically for undocumented
immigrants.

Second, the report brings to light for the reader a specific concern associated with the research
apparently quickly uncovered and that is there is no comprehensive data that allows research to
identify immigration status.

The PPIC report has however tried to cobble together an analysis of both documented and undocumented
immigrants. The question associated with this report comes to light is how one identifies and validates
an undocumented immigrant?

Thirdly and more important, is the most significant finding of the research is that while California remains
the largest home to immigrants, more than any state in the nation, its popularity as a location has dropped
steadily by not only percentage but also by aggregate number. This was also evident as well as for other
states traditionally known for the movement of immigrants to their states, such as New York, Florida, Texas,
Illinois and New Jersey. But due to changes in preferences by immigrants, other states have become
impacted by immigrant movement. For example, based upon percentages, Nevada has become the number
one state for immigrants at 85 percent growth from 2000-2007 on a 10 year basis. Arizona is second at
78 percent, followed by Georgia at 71 percent, followed by North Carolina at 64 percent and Colorado
at 51 percent, capping off the top five highest growing states. Thus, the report illustrated that these demographic
shifts have policy implications at the federal, state and local levels because many communities are confronting
issues of integrating immigrants for the first time.

But for the reader, for example, the report illustrates that since 1980, and then in ten year increments from
1980-1990, 1990-2000 and then 2000-2007, based on a 10 year basis, immigration has slowed in the state.
The report identifies the reduction in percentages. Hence the need to read and refer to the Technical Addendum
because only in the Technical Addendum does the reader get an appreciation of the dramatic reductions in the
aggregate sum. But California is strongly in the number one position by the aggregate total of immigrants
illustrated by the fact that 36 immigrants reside in the nation with 26 percent of them in California.

Also within the Technical Addendum, there is a chart that illustrates the breakdown of immigration by
county. It is this chart that provides some of the most important information for business, community,
economic developers, workforce training and redevelopment professionals. For example, Alameda,
Kern, Riverside, San Bernardino and Sacramento Counties have been the fastest-growing immigrant
populations since 1990. The growth in Alameda and Sacramento Counties has come predominately
from an in increase in new immigrant arrivals, while growth in Riverside and San Bernardino counties
stems more from relocation by more established immigrants, mostly from Los Angeles County. And
Kern County has seen a little growth of new immigrant arrivals and al larger wave of relocation by
established immigrants. Strangely, agricultural based economies where one would think that most
immigrant growth has occurred specifically in the Central Valley, Sacramento Valley and Salinas Valley
and the counties that comprise these regions were not major growth areas. Certainly, Kern and
Sacramento Counties were identified, but counties such as Fresno, Merced, San Joaquin and Monterey
were not major recipients of immigrant growth since the 1980’s.

Finally, the last element raised by the report is the preference by the predominate immigrants to California.
Latinos and Asians have had a change of preference and California is no longer their first state of choice.
Apparently based upon choices of finding work, Latino immigrants were less likely to choose California
in 2007 than they were in 1990. Immigrants employed in construction, construction, and some service
industries, specifically hospitality preferred other states. This preference appears to be directly based
upon economics, specifically for wages and jobs.

To read the report go to www.ppic.org then to publications.

HARSH REALITIES: The Issues Facing California and its Economic Recovery

Tim Johnson — Wed, 09 Sep 2009 20:10:52 GMT

This is the second part of the three part series that reviews three of the most compelling economic policy
studies on the California economy completed in 2009.

This report, Manufacturing 2.0, A More Prosperous California completed for the California Manufacturing
Technology Association, CMTA by the Milken Institute illustrates that California’s economy has been built
on the success of manufacturing.

The report illustrates California’s manufacturing history started with the development of mechanized
agronomy at the end of the 19th century, continuing into aerospace and the dominance of computers
and software in the 20th, to the growth of biotechnology specifically in the 21st.

The report compares California’s manufacturing sector to the manufacturing sectors and the state
programs of Arizona, Indiana, Kansas, Minnesota, Oregon, Texas, and Washington. The information
used covers 200-2007.

The view of the report illustrates the historic leadership of California’s manufacturers as pioneers who
were not only creating businesses and jobs but also whole new industries.

And while the report shows that manufacturing—both traditional and high-tech—still drives California’s
economy, the report claims the state is losing ground to other states and nations because of its regulatory
climate, tax burden and reputation as a difficult and costly place to do business.

The report illustrates that manufacturing is a critical engine of economic growth and a catalyst for innovation,
and that the manufacturing sector is an excellent indicator of the economy of California. The report uses a
metaphor, that manufacturing is to California’s economy like a canary is to coal miners in a coal mine. And
apparently based upon this report, like California’s manufacturing sector, the canary is sucking wind.

While this report is chocked full of information and presents some good ideas for enhancing the business
environment of the Golden State, it is unfortunately a difficult read. It is a disjointed, fragmented and choppy
read that takes too much time digest and takes away from the valuable information presented.
For example as identified above, the reasons identified why California is losing ground in the manufacturing
sector adds government spending as though this concept was added as an afterthought or it illustrates that the
report was written in sections by different people and when combined was not incorporated earlier causing a
disjointed read.

It is unfortunate too, because the report calls California, the ’Cradle of American Ingenuity’ and the report
additionally states that ingenuity begins with California manufacturers and their capacity to compete.

This phrase should have been the title for this report. In addition, the progenitor’s of this report should have
laid out its methodology in a succinct format, e.g., purpose of the report, value of manufacturing, California’s
manufacturing sector 2000-2007, comparing California, then identify how to build a better manufacturing
sector in California by illustrating ‘Best Practices’ from across the nation and globe or new concepts to be
implemented to enhance the state’s business environment to ensure manufacturers have the capacity to
compete.

For example, it identifies an element in the section ‘Need to Action’ the concept of creating a network of
education, training, research, and business incubation centers, but no reference is made to the existing
programs in the state like UC’s Connect program which so many from across the nation want to replicate.
Nor does it even discuss innovative approaches such as the California Innovation Center being created
at Beale AFB as a leader in the development of autonomous technology- robotics program, which California
manufacturers have become a innovative leader.

In addition, it leaves the reader wondering if the problem with California is with the corps of business,
community and economic development, work force and redevelopment professionals and if so, why did
they not state that as an issue for resolution to enhance the state’s business environment?

The report continues on by illustrating that California faces two broad, yet distinct, competitive disadvantages:
The state’s regulatory climate and the state’s tax burden (again leaving out government spending). But the report
provides only antidotal nformation for this claim using a variety of national indices that rate the states based
upon regulatory environment and taxes. California is ranked in the bottom of many of these the national rankings.
According to Jed Kolko of the Public Policy Institute of California, the state consistently scores poorly on business
climate rankings. These rankings, however, focus primarily on tax and regulatory costs, which are only one part
of the business climate. The business climate should instead be defined to include all costs and benefits that
businesses face from locating in California. The business climate also should take into account the skill level
of the workforce, the availability of capital and support for new business and the amenities that make California
an attractive place to live.

Then the report proceeds from the State of Manufacturing to another section entitled the Challenges to California’s
Manufacturers. It goes on to identify that in 2007,the California manufacturing industry paid an average wage of
$66,200, well above the national average and substantially more than health care and social assistance services—
California’s fastest-growing job sectors. Workers in California’s "five best-paying manufacturing industries—three of
them in high-tech manufacturing—earned more than $100,000 annually on average. Great information, but no data
on what the salary levels were in the subsectors that have decline. Additionally the report discusses the large number of
manufacturing businesses leaving the state. Again it is only antidotal information about the number of business moving
out of the state in the report is unfounded. The most recent report on the subject by the Public Policy Institute of California
identified that the state loses very few jobs to other states. Businesses rarely move either out of or into California and,
on balance, the state loses only 11,000 jobs annually as a result of relocation—that’s just 0.06 percent of California’s
18 million jobs. Far more jobs are created and destroyed as a result of business expansion, contraction, formation, and
closure than because of relocation. Business relocations, although highly visible, are a misleading guide to the overall
performance of the California economy. The employment growth rate, which takes into account job creation and destruction
for all reasons—not just relocation—is a much better measure of the state’s economy.

Thus, it appears more literature review should have been considered and three sections should have been consolidated
from the information presented - the State of Manufacturing, Challenges to California’s Manufacturers and Why Manufacturing
Matters.

Need for Action
The report calls out several recommendations in a section entitled Need for Action. These apparently are items that need
to be implemented to help bolster the manufacturing beyond the levels of venture capital funding and amount of research
and development spending that already exist in the state. The authors believe California has great capacity to innovate
but isn’t living up to its potential. The reader is left to determine what the potential is. But the report does not
identify what that potential is, but identifies it must require an action to bridge
this gap, an action identified as a new partnership between manufacturers and the
public sector. And this cooperative undertaking should include the following
initiatives:

• Streamlining the regulatory procedure for manufacturers, increasing transparency and accountability
in the regulatory process, and encouraging long-term investment through new policy tools—all of
which can be achieved without relaxing or changing a single regulatory standard

• Enhancing public incentives for manufacturers through better planning, coordination across government
agencies, and partnering with the private sector

• Launching an industry-led campaign to encourage Californians to pursue careers in manufacturing,
highlighting the attributes of modern manufacturing, its importance to the economy, its record of
environmental stewardship, and its high wages

• Creating a network of education, training, research, and business incubation centers around the state
to develop a highly qualified manufacturing work force, to invent and commercialize advanced
manufacturing techniques, and to assist start-up businesses

• Creating a public-private initiative to conduct research, develop new technologies and processes, and
commercialize more efficient and environmentally sustainable manufacturing practices with incentives to
facilitate adoption of new standards

In addition the report identifies that government plays an extremely important role in shaping the competitiveness
of manufacturing, the overall business climate, and the robustness of the economy, but the report fails to provide
insight on the level of government action, state, regional or local.

The report continues, illustrating that whether the goal is to retain companies and help them grow or to attract new
ones, governments have numerous tools:

• Off-setting certain costs through tax credits;
• Improving infrastructure and the work force;
• Facilitating access to credit;
• Funding or encouraging basic research;
• Helping promote industries or products;
• Convening key stakeholders to increase cooperation and create economies of scale.

Are they suggesting the elements used by government are not used or under- used or should be enhanced?
And of further interest, the report previously identified that the two key issues facing manufacturers is the
regulatory environment and tax burden, but there was no reiteration of how such actions would amend the
regulatory and tax environments. They did not apply any examples. The report makes sweeping statements.

A Call to Action for California
The report identifies in a section entitled A Call to Action for California a series of policies that the future of
California manufacturing will be influenced by the method and extent to which the public and private sectors
individually and cooperatively address the industry’s challenges. This section includes big and small ideas
to consider in the face of today’s economic challenges. These suggestions are guided by the following principles:

• Broad economic reforms are needed in addition to specific initiatives to improve the competitiveness of the
state’s manufacturing sector;
• Limited resources are better spent on improving existing government programs rather than creating new
   ones and on coordinating efforts across different jurisdictions in the state to avoid duplication and
   realize efficiencies;
• Government incentives should focus on the inputs critical to manufacturing rather than on specific reforms;
• Public-private partnerships should be greatly enhanced to leverage collective resources and coordinate
and improve efforts;
• Increasing the state’s manufacturing base requires long-term planning rather than short-term, ad hoc policy
   initiatives;
• Investments should focus on increasing productivity by leveraging technology and innovation;
• Removing as many inefficiencies in the business-government relationship
  as possible is critical to enhancing competitiveness;
• Improving the transparency and accountability of government decision- making—including how incentives
are used—will ensure effectiveness and equity;
• Encouraging environmentally sustainable manufacturing processes will
   make production more efficient while reducing the impact on the community.

The question must be asked why were these not identified in a methodology and appear to the reader before the
Need for Actions.

Nevertheless, the report does provide an excellent analysis on the loss of jobs and corresponding wage and
salaries, in the section, Why Manufacturing Matters, but it fails miserably in measuring the enhanced manufacturing
performance of California’s workforce specifically identified by Christopher Thornberg of Beacon Economics.
According to Thornberg, between 1997 and 2008, manufacturing output in the United States increased by 30 percent
in real terms, as identified by the U.S. Bureau of Economic Analysis. Over the same period, manufacturing output
increased by 90 percent in California – three times the national average. Some of this increase was driven
by the unprecedented productivity gains in information technology. But even without information technology,
manufacturing output in California has outperformed the nation as a whole.

In addition, in a report by Jed Kolko of the Public Policy Institute of California workers in California, on average, earn
12 percent more than the national average—even when adjusting for differences in workers, occupations, and
industries. However, output per worker in California is 13 percent above the national average. Thus, California’s
higher productivity fully offsets the higher average wages. California’s immediate neighbors—Nevada, Oregon,
and Arizona—all pay their workers less and have lower output per worker.

Again another criticism of this report is that it presents the importance of manufacturing and its value almost mid way
through the report. It would have been of greater value to have had this information presented sooner.

To retain and attract manufacturers in the Golden State, the report examined what other states are doing but lacked
details other than policy in nature that supposedly have created business-friendly policy frameworks, tax incentives,
and other assistance programs. Again, the report compared California to the states of Arizona, Indiana, Kansas,
Minnesota, Oregon, Texas, and Washington.

The report identified that the most successful models include a complementary set of incentives and initiatives
that address the impediments to creating a more favorable climate for manufacturers. These models have the
following critical elements:

• Focus on key high-value industry clusters with potential for growth such as life sciences, high-technology,
renewable energy, and aerospace;
• Access to a publicly supported pool of risk capital;
• Enhanced university-based R&D funded by the government;
• Public-private-university partnerships to facilitate commercialization of government-funded research;
• Centers of excellence to educate workers in the skills needed by key sectors;
• Support for entrepreneurs through business assistance programs and incubators offering low-cost
commercial space and access to mentoring, "financing, and peer networks.

Again few if any examples are identified from the other states and their success in bolstering manufacturing.

Then the report reiterates the five actions to improve the business environment-
1. SMART Regulation
2. Enhanced Incentives
3. Modern Manufacturing, Public Awareness
4. Centers of Excellence – Education, Innovation and Entrepreneurship
5. Public-Private Initiative

One of the key elements illustrated is streamlining the regulatory processes throughout California. The report talks
about making California more competitive without relaxing a single regulatory standard by making the process
smarter, more open, and more efficient and by holding all government officials accountable for their decisions.
The action to achieve this is based upon embracing technology, specifically e-commerce and the use of the internet.
But there is no discussion about the needed investment to accomplish this, particularly in an era when public
sector budgets have been slashed and employees have been laid off.

Additionally, although the report never states that economic developers are to blame for these issues either directly
or indirectly, the issues of lack of service in the section Call to Action in response to the challenges issued certainly
illustrate it is this professions’ fault.

The report has some good points, but lacks examples supporting its recommendations. There are good items such
as Made Green in California certificate and the California Green Awards for Manufacturers, but the report makes no recommendations who should lead this direction.

Finally, it is exhausting trying to read this report. It is fragmented, disjointed and poorly organized. But the five major recommendations do deserve to be reviewed because the elements identified need to be fully fleshed out and vetted,
because it should be determined who in the business, community and economic development workforce training and redevelopment professions should or could help address these issues? and lastly to determine if the economic
developers are to blame for the lack of a coordinated statewide incentive program and failure to steward
regulators to help manufacturers.

To read the report, go to the California’ Manufacturing and Technology Association website at
www.cmta.org. Go to the homepage top of the page to download the report.

HARSH REALITIES: The Issues Facing California and its Economic Recovery

Tim Johnson — Wed, 26 Aug 2009 04:39:00 GMT

Part #1 Assessing the State of the Golden State

The California Prosperity Project is a major undertaking by the Pacific Research Institute to help
reform government policies with the goal of putting California’s economy back on track and moving
towards greater and lasting prosperity. According to the Institute, the Prosperity Project is a
multiyear project aimed at explaining to Californians the underlying problems plaguing their
economy and more important, the solutions to these problems. The Institute believes it is impossible
for fresh, new ideas to flourish while old, bad ideas remain intact. The Institute’s goal is to inform
Californians of the severity of the problem facing the state so it can begin to create a climate of
opinion open to change.

The Prosperity Project will include a series of studies that will be completed over the course of 2009
and 2010, culminating in the release of a road map to recovery just prior to the general election of 2010.

The Institute’s methodology for this report rests on two core approaches. The first is to establish the
problem. This first approach is entirely aimed at establishing the scope and depth of the economic
problems facing the state. The second approach is to provide workable solutions based on sound
empirical research.

The report, ‘Assessing the State of the Golden State’ is the first installment in the California Prosperity
Project. It measures the economic performance of California against the other 49 states on a range of
economic indicators—income, labor, migration, and entrepreneurship—to provide both a picture of the
state’s specific economic performance in individual areas and a more comprehensive view of the state’s
overall performance.

The report written by Robert Murphy, Ph.D. and Jason Clemons illustrates that although California with
all of its advantages, such as its position to the Pacific Rim and North American markets, its diverse
agriculture sector to advance research and development, premiere universities which serve ‘hubs of high
tech’ innovation, and a geographically gorgeous location, is unfortunately economically ill. The economy
that has manifested itself in the ongoing budget crisis apparently goes well beyond the current economic
downturn that has impacted the other states according to the authors.

This report assesses the economic performance of all 50 states from several time frames over periods
from 2003- 2007 and 2004-2008, with particular attention paid to four main categories:
1. Income
2. Labor
3. Migration
4. Entrepreneurship

INCOME
The income category is broken down into three components: (i) growth in gross state product, (ii) growth
in per capita personal disposable income, and (iii) the average poverty rate.

The analysis illustrated that California’s Gross State Product, GSP grew at 3.6 percent, which placed
California 10th highest in the nation. However, the report rightly illustrates that California’s GSP began
to falter in the later part of the timeframe of 2003-2007.

The analysis used percentages rather than presenting the aggregate sum to reflect the components.
So, in the case of measuring California’s GSP (which is identified as one of the top ten largest economies
in the world) against much smaller states, the percentage of the Golden State’s growth will always look
smaller compared to smaller states such as Nevada and Idaho similar to the national total of the U.S..
While the authors validate the use of percentages within their methodology it would have been of value
to also see the aggregate sum comparison given the state’s economic position in the world. Given that
California’s GSP makes up nearly twelve percent of the nation’s GNP, the reader should look to the
states of New York, Texas, Florida and Illinois. These states when added with California make up nearly
50 percent of the nation’s GNP. So, how can one compare the Golden State against a smaller state
utilizing a percentage basis when smaller aggregate economic growth can create a larger percentage?
A two to four percent GSP can illustrate a very robust economy as was the case for California. So
should have the analysis compared California against the twenty largest economies in the world instead?
Jason Clemons one of the authors provided insight that there is at least a potential for some discussion
in future analysis for that examination.

In the second component presented, related to the growth in per capita personal disposable income, it
Illustrated the necessity to compare successful states with California to ascertain opportunities and
public policy development to enhance the state’s economy. In the case of New York and Texas, they
rank much higher than the Golden State, but closer to Florida and nearly even with Nevada, which has
a lower tax rate) and yet higher than Illinois. But there was no discussion why these states are and have
been more successful. Again, the need for further discussion.

The third component relates to poverty rates. The report quickly points out that although it would be
reasonable to evaluate a state based on its success in reducing its poverty rate, in practice this approach
leads to difficulties of weighting. For example, should a state be judged by the absolute reduction in terms
of percentage points, or in relative terms by the percentage fall in the poverty rate itself? To avoid such
difficult and often arbitrary decisions, the report relies on a simple arithmetic mean (average) of a state’s
annual poverty rates from 2003 to 2007.

California’s poverty rate was lower than New York and Texas but slightly higher than Illinois and Florida.
Again, how would California rank against world economies?

LABOR
In the labor category there are four indicators: (i) growth in private employment, (ii) the relative size of
private versus government employment, (iii) the average unemployment rate, and finally (iv) the extent
of severe (long duration) unemployment.

In this analysis, the report restricts the measure to private-sector employment so as not to “reward” a
state that expands employment through hiring more government workers, who ultimately have to be
financed by taxing private sector
workers.

Thus, in the first component, growth in private employment 2004-08 illustrates that California was in
the bottom twenty of the list of 50. However, further review shows that California is really in alignment
with the lower 50 percent of the nation in job creation. And, while no further detail is given, there is no
explanation on the type of jobs created during this same period. So, there is a potential for further
discussion and examination. For California, the state possessed the headquarters of the third most
Fortune 500 firms in the nation during this period and companies were created in the state that could
become fortune 500 firms. California ranked only behind New York and Texas for Fortune 500 firms,
illustrating quality jobs and career ladder opportunities.

The second component, the relative size of private versus government employment, is one of the most
obvious and significant examples of an issue facing the state. The size of government, specifically local
government is enormous compared to the private sector. California has one of the worst ratios. In recent
state Employment Development Department data, it illustrates that state government employment makes
up only 11 percent of the total public sector jobs in the state of nearly 2.5 million public sector workers.
So it is the enormous growth of California’s local government’s that have seen significant growth, specifically
since 2000. Thus it appears that the issue with the poor government to private sector employment ratio is
caused by local government. This certainly requires further discussion.

The third component, the average unemployment rate illustrates that California had one of the lowest
unemployment rates in the nation and lower than New York, Texas, Florida and Illinois. However, the
extent of severe unemployment captured by this study illustrates California as having a higher proportion
of severe unemployment, but there is no detail that illustrates the reason for this severity. Speculation
for this could be caused by the seasonality from the state’s agricultural community, specifically in the
Central Valley, Sacramento Valley and Salinas Valley, specifically as it pertains to not only the need
of farm workers but also non durable products such as food processing.

MIGRATION
The report illustrates the in and out migration of people to the states. While California migration illustrates
a high proportion of people leaving the state, it does not disaggregate the age of the population that out
migrated. Additionally this section should also illustrate the internal growth of each state’s population.
California has added hundreds of thousands just through increased births, and over a period of four to six
years can add a population the size of at least 15 individual states in that time period.

ENTREPRENEURSHIP
The authors conclude that the purpose of this study is to convince Californians and policy makers in the
state that there is a problem. Yet they believe that state legislators and citizens should not simply throw
up their hands in helplessness. The authors urge citizens and legislators alike to realize that state
government policies wield a definite impact on economic performance measures such as migration.

However, in the context to reviewing the state, they might have chosen other measurements. For example,
if they were to measure economic growth, they possibly could have gone beyond the examination of
population but also included the infusion of capital or intermediation of capital, harvesting of natural
resources and changes in technology during the period reviewed. And if they had looked at California
from an economic development perspective they could have done further analysis beyond income growth
such as incorporating wealth generation, job growth and investment opportunities.

However, we are going to reserve judgment on this study as the Pacific Research Institute identified that
they will in their next installment of the California Prosperity Project analyze specific policies that California
can enact to improve its economic performance.

SUMMARY
In the meantime, the authors suggest that Californians and its policy makers should study the relatively
successful states to understand the reasons for their superior performance. For example, this report
ranks Nevada as the top performer. Recently, economists from the University of Nevada, Las Vegas
illustrated in a forum covered in an article in the Las Vegas Sun newspaper that Las Vegas and the
state are over capacity for everything from housing, hotel rooms and casinos. They identified that
Californians have stopped coming to the ‘Sin City’. And to add insult to injury, Nevada just announced
a mass marketing campaign in California to recruit business away from the Golden State. Strange,
that if Nevada was all that entrepreneurial in nature, they need to recruit businesses to their state.
And of interest, Nevada has a higher unemployment rate than California, even though it has much
lower taxes, which should be discussed as a key component as a function to growing an economy
in the Institute’s future analysis.

However, the authors do leave the readers with sage advice:

“If California is to have any hope of climbing out of its present
economic and budgetary nightmare—let alone lay the foundation
of a solid recovery so that such crises do not return—then
state policy makers must seriously confront its underperformance
not only against other states during the past few years, but also
against California’s own standing in previous times when the state
enjoyed much greater prosperity.”

For further information see-http://liberty.pacificresearch.org/publications/assessing-the-state-of-the-golden-state

Next, Part 2, An Overview of the Report- Manufacturing 2.0, A More Prosperous California by the Milken Institute.