CEOs say California worst place to do business, Texas best

http://www.sacbee.com/2011/05/05/3604992/chief-executives-say-california.html

by cwan • 15 years ago

47 88 15 years ago

sosuke• 15 years ago

So would it be safe to say that California is probably the best for employees and Texas the worst?

ronnier• 15 years ago

I wouldn't say that at all. Last January I moved from Dallas, Texas to take a job with Amazon in Seattle. Texas is a great place to work. Plus houses are affordable, and new, and large.

bugsy3• 15 years ago

Yes.

Turing_Machine3• 15 years ago

If you're the type of employee who views his employer as an adversary, perhaps.

bluedanieru6• 15 years ago

You don't have to view your employer as an adversary to support labor protection, the same way you don't have to think your neighbor is a criminal to support your local police department. Stop it with the false dilemmas.

sc68cal3• 15 years ago

It's not a matter of viewing them as an adversary, it's a matter of balancing your interests with the interests of the company.

A company attempts to maximize profits while reducing labor costs. An employee attempts to maxamize profit from their labor, which is a fairly static quantity.

New tools can come out that enhance productivity, but that only sets the baseline productivity that much higher. Wages rarely increase to match a jump in productivity.

zbowling2• 15 years ago

I worked in both places. Texas isn't bad. No income tax and cost of living is a ton lower. My salary is 30% higher but my living expenses (with less SQ feet) is a ton more and I have income tax here so proportionally I make less.

mikiem• 15 years ago

No. Absolutely not. Not financially anyway. CA has a very high state income tax and very high cost of living.

arturo111• 15 years ago

From my observations I would say so. Moved to Texas for job and find even senior Tech people are treated fairly poorly by management. And contractors even more so. That is what prompted me to post this: http://news.ycombinator.com/item?id=2525345

bugsy3• 15 years ago

And yet all the really cool stuff is designed in California and Texas makes cotton and corn and most of the state is an inhospitable desert.

amyesheplear1• 15 years ago

Methinks you've not seen much of Texas. Piney woods, hill country, the gulf coast, the list goes on. Just google a pic of caddo lake for one example of an extreme definitely non-desert environment. Also, i've not seen much corn nor cotton here, just an observation. So far as business goes, it should stop surprising people already, large companies which relocate from NY and CA are the norm here, have been for the two decades I've resided in Texas.

giardini5• 15 years ago

Hush! Don't tell them! Every time a post like yours goes out another company relocates to Texas.

Please emphasize the Great Texas Desert, the skyrocketing cost of hay (for feeding your horse, of course), and the dangers of rattlesnakes, wild indians, and 200-pound snapping turtles (in the few places in Texas where there is water).

Gotta go clean the horseshit off my driveway now. Later, Dude!

P.S. Texas does produce a lot of cotton and is an important state agriculturally. But it isn't particularly telling in comparison: CA produces lots of fruits!

bugsy3• 15 years ago

If you've not seen much corn or cotton then I'm pretty sure I've seen much more of Texas than you have.

BasilAwad2• 15 years ago

you forgot oil&gas. but hey, we have sxsw.

wattsbaat• 15 years ago

There's plenty of desert in California.

sc68cal3• 15 years ago

Texas was followed, in order, by North Carolina, Florida, Tennessee and Georgia. Ranking 46th through 49th in the rankings were Michigan, New Jersey, Illinois and New York, respectively.

I would attribute this to the amount of local taxes and labor laws that these states have. The "Worst" rankings are for states that have taxes and robust labor laws/strong unions.

Let's face it, they don't like Texas for their education systems. They like it because their overhead is much cheaper. Plus, East Texas is patent troll paradise.

Not that there is anything wrong with those motives, but it is useful to keep in mind.

bluedanieru6• 15 years ago

I think this 'study' presents more useful information about the CEOs polled than anything else. Namely, that their insight into the health of an economy doesn't go much further than 'low taxes and corrupt government good, labor protection and regulation, bad'. Honestly, Tennessee is a better place to do business than New York? Moreover, it's one of the best while New York is one of the worst? So why does New York have a substantially larger economy? That is just a ludicrous statement, and it is empirically false.

This is little more than another exhibit to show how little American CEOs do to earn their ridiculous salaries.

Duff2• 15 years ago

New York in many ways is living off of past glories. There are two New Yorks... NYC and the rest of the state. The rest of New York is more like West Virginia. Read about places like Utica, Amsterdam, Jamestown and Binghamton. Buffalo is like Detriot -- 75% decline from its peak population.

Even much-vaunted New York City is not as strong as it might appear at first glance. NYC in 2011 is a single-industry town... finance IS NYC. Even the feature that defined NY for centuries -- New York Harbor -- contributes almost nothing to the state, as the freight terminals fled overegulation to New Jersey (of all places) in the 1970's.

30-40 years ago, the city had a diversified mix of finance, manufacturing and service industries. There were over 10,000 manufacturing firms in the city in 1970. Now both the NY state and city are living off of a sole benefactor -- Wall St.

giardini5• 15 years ago

Listen to yourself. It's people with radical views such as yours who drive businesses out of a state. You're very narrow-minded. Put yourself into a CEO's position.

"why does New York have a substantially larger economy?"

Well, location, history (it was there first), a port (its not land-locked), huge population, and many other factors you've disregarded might be the reasons, for starters.

The only quote you give

'low taxes and corrupt government good, labor protection and regulation, bad'

is not in the article: it isn't a quote so why the quote marks? That's outright deception.

What an utterly ignorant and vicious post!

baguasquirrel• 15 years ago

It's worth noting that Toyota has its plants primarily in the states that have scored the highest in this survey. San Antonio is one of their biggest plants, IIRC?

If you want to be in tech, OTOH, the two worst states are the only ones with VCs you actually hear about on HN.

It does make you think about American management culture.

[edit: I just noticed Illinois is third worst, hehhehheh. I wonder what DHH is thinking.]

pauldino• 15 years ago

Original story, with full rankings and more detail: http://chiefexecutive.net/best-worst-states-for-business

impendia3• 15 years ago

The rant about California's environmental laws is really grating.

earl3• 15 years ago

It's almost as if people prefer not to have poisoned water, air, and land; to eat safe food without chemicals; to not ingest carcinogens; etc. This is a real pain for polluting corporations, yes.

qq66• 15 years ago

For being the worst place to do business, this state sure has a lot of businesses.

raheemm• 15 years ago

So what does that say about this poll? Its like the cat is dead and alive.

jbooth• 15 years ago

"More than 500 U.S. CEOs polled by Greenwich, Conn.-based Chief Executive magazine based their opinions on numerous factors..."

It says that it's a poll of 500 assholes who read Chief Executive magazine. I bet at least 250 of these guys own monogrammed towels.

natrius• 15 years ago

Tell that to the millions of your fellow citizens who are unemployed. California can be a great place to start a tech or entertainment company while being a miserable place to run any other type of business. Inertia is the only reason it's still good for those sectors. That state's current trajectory is unsustainable, so something will have to change for it to still be a great place to start a tech business in twenty years.

impendia3• 15 years ago

Tech is very different from most other businesses.

Say you manufacture toilet paper. Then you probably do want to locate your business in some state with friendly tax policies, and where you will find a ready supply of workers who will be quite happy to work for $12 an hour.

But for economic reasons, good tech people have the ability to be picky. They can move anywhere, and most of them prefer to live in beautiful places with a lot of diversity and culture. Hence places like the Bay Area. True, you can't buy a house here for a sane amount of money, but that doesn't matter either to the very rich, or to the very ambitious (who are happy to cram into some tiny apartment in their twenties).

Meanwhile, the successful and ambitious will draw many others who wisely choose to follow the action. California has a dysfunctional government, but it has a lot of things going for it. Silicon Valley isn't going anywhere anytime soon.

vaksel• 15 years ago

i have a feeling, that these same CEOs would pick Nigeria as a better place to do business than United States...just because they get to pay a few bucks less in taxes

he7787• 15 years ago

That's quite a straw man. Economic freedom and property rights are more important than how much taxes you pay.

j_baker2• 15 years ago

Exactly. CEOs need the economic freedom to treat people as property.

po4• 15 years ago

He's not setting up a straw man argument; the original article is a poll of 500 top CEO's asking which state they prefer and he's saying the results are not surprising. He's not trying to refute the results of the poll.

In fact, it looks like you're now starting to set up a straw man by bringing in property rights and economic freedom which are so general and irrelevant to the article as to be nothing more than a dog whistle.

po4• 15 years ago

The Bermuda's 0% tax rate is a particular favorite. There were $51B in untaxed profits there in 2006.

he7787• 15 years ago

...and Bermuda enjoys one of the highest per capita incomes in the world.

iamelgringo• 15 years ago

If that's the case, then why are so many founders flocking to the Valley? Why does the state of California have the 8th largest GDP in the world? Why does the Market Cap of all the companies within a 1 mile radius of highway 101 between SF and SJ top $500B?

Methinks that study is missing something. I suspect the regulations make starting a certain type of businesses (manufacturing, mining, logging) pretty miserable here. But those regulations also force executives to focus on starting a certain type of high risk/high reward type of business like software, bio tech, entertainment business's essential in the state.

andrewvc• 15 years ago

Well, I'm in Los Angeles, and tech / startups are booming down here. I'd say there's something more than inertia at work.

dantheman2• 15 years ago

There are many, many, many reasons I'd like to live in CA, specifically san diego, la, or sf. None of them have anything to do with the government, in fact the government & its costs are a significant downside.

Why do industries concentrate in any area? It's called preferential selection and has strong historical/inertial ties. This can be seen in all sorts of other areas, for instance in NYC when building a new bridge back in the day it replaced the ferry dock, because that was where the roads already led to and it could handle the traffic. California is one of the most resource rich, and beautiful places to live in the entire country. It's easier to kill off industries than people think, and the advantages of being in a hub are getting less and less as technology improves.

he7787• 15 years ago

I can assure you that SV executives flock to SV because of talent, in spite of California's tax system and business policies. We'd flock to Wyoming if Wyoming had more talent.

nostrademons• 15 years ago

I suspect the survey's polling a large variety of industries, many of which wouldn't do well in California at all. If you limit it to the music, movies, microcode, and high-speed pizza delivery that America does best, California's a much more appealing place.

protomyth• 15 years ago

The value proposition for network and resources in the Valley outweigh the government problems. It is a fine line though. Check the recent SF / Twitter tax situation. If California makes the wrong decisions on how to deal with debt and unpaid obligations (public pension), then expect the scale to tip.

Aloisius• 15 years ago

Feel free to move guys. I'd be happy to pick up your ex-employees.

sachinag• 15 years ago

There's a huge difference in the needs of CEOs of large enterprises, where a 1% reduction in taxes can make a significant and material difference, and the needs of startup CEOs, who need access to risk capital and risk-tolerant employees.

zbowling2• 15 years ago

As a Texan that moved to work on a startup here in SF, Texas does have things a little more streamlined. Problem is talent, resources, and support is much better for tech here. If it was purely based on business economics, Texas is a lot cheaper.

_delirium• 15 years ago

I wonder what the correlation looks like between these rankings and an objective measure of business activity, like per-capita GDP of the states, or total business revenues. Eyeballing it, it looks like a negative correlation: their top-5 states are all poorer than the national average by per-capita GDP, while 4 of their 5 "worst" states are above the average (Michigan is the exception).

So the CEOs are either predicting future changes, or mistaken in their analysis of what's good/bad for business. One way to distinguish those two cases would be to look at an older survey and see how the rankings fared as predictions of future state prosperity.

abbasmehdi6• 15 years ago

California is lawsuit friendly, has high taxes, very expensive to live, has high cost of talent, is saturated with competitors for the same talent pool thanks to the SV, and has poor public transportation.

I live here but if you just took a raw numbers, by simply moving your business to dallas you can improve your bottom line by about 30 percent. But then again who wants to live in Texas anyway? I'd do Florida though! :)

giardini5• 15 years ago

Florida's weather is a problem (hurricanes really _do_ disrupt business). Texas, north of Houston (which has extremely humid summers), is very nice. If you worry about the educational system then put your children in a private school.

CA's educational standards (as well as other standards) cannot be maintained in the long run: the political system won't allow it. Within a few years we'll see significant downsizing of CA government and government services. For some this will be a lowering of standards but it is necessary.

abbasmehdi6• 15 years ago

I'm biased - my fiancé wants us to live in Miami (her hometown). You can buy a place in Miami under $300k that does not suck – nice 3 bdr place in a nice neighbourhood or a 2 bdr ocean side condo (look it up, I was shocked), really! By Cali standards that’s l-o-w!!

I was talking to a friend of mine a few days ago and we were talking about the best place to live in the US. We were thinking in terms of a) reasonable cost of living (a million dollars should buy a mansion not a house), b) good weather (all four seasons at worst - no harsh summer/winter), c) low crime rate, d) high average IQ (no 'steel towns'), e) not under the constant threat of natural disasters and f) race not an issue (I don’t back down from racists which makes my fiancé nervous and ruins my day a bit ;)).

I have lived in the Pacific NW (rain sucks! I often joke I'd rather be in prison ;)), lived in So Cal (traffic sucks, homes cost way too much, the crowd is whack mostly, the air quality is bad, nothing is close etc.), short stint in Chicago (living there despite the weather is an act of arrogance against Mother Nature).

Long story short we concluded the best spots are 1) Denver, 2) San Diego, 3) Atlanta, 4) Salt Lake City.

If you have heart disease in your family (I do), don’t move to Denver. I’ve been told high altitudes are bad for heart patients (even future heart patients like myself.)

kwis• 15 years ago

> by simply moving your business to dallas you can improve your bottom line by about 30 percent

Assuming that Dallas has a talent pool that fits your ambitions and is willing to work at your company.

I wouldn't launch a paper mill in San Jose, or a startup in Montana.

abbasmehdi6• 15 years ago

The talent to company ratio is much lower in California vs. say Texas (can be proven by the number of foreign worker visas petitioned by California companies as a ratio of its population).

I'd rather have (near) first picks from the University of Texas Austin, than third or fourth round picks from Stanford.

The top 10% of a top tier school beats trying to compete with Google, FB, MS and every known tech company in the world while being in the Valley, or paying for huge relocation costs to bring people in from other states or countries while being under the constant threat of them being picked out by recruiters for other companies.

impendia3• 15 years ago

Poor public transportation, compared to which of the states that did well on the survey?

I grew up in Durham, NC and went to college in Texas. Everybody drives in both places. Now I live in SF and take the train every day to Stanford. Transit here could be better to be sure, but it could be a lot worse.

abbasmehdi6• 15 years ago

I was talking about public transportation in absolute terms not relative (because for anything someone complains about one can always find something worse - that isn't justification, inadmissible as evidence in court and unacceptable to me ;) ). Yes, you are lucky my friend, you have landed in the lap of California’s finest public transportation system. I love it too (when I visit). Unfortunately its impact is small when you’re talking about the state of California and therefore cannot give it state-level credit (everywhere else in California public transportation sucks like NC).

BasilAwad2• 15 years ago

Makes me feel better about staying in Austin as opposed to moving to California. I know there is less talent and risk capital here but UT-Austin is a big school with some great talent. For example, there's a bunch of honors program students that choose UT over other schools for scholarships, proximity to home, and lifestyle. In terms of risk capital, if you can't find an investor in Texas then raise capital in California and come back to Austin :D

Mrdev4• 15 years ago

Red states are good, blue states are bad. Seeing how most CEO's are Republicans and most red states have no problem giving huge tax breaks, not surprised.Ask Jerry Jones,Texas is big on corporate welfare.

http://www.dallasnews.com/news/state/headlines/20100908-Stud...

Sizlak• 15 years ago

Maybe that's one of the reasons why I don't want to live in Texas.

hammock• 15 years ago

I would like to see methodology on this. If Calif. and Texas CEOs were merely asked "rate your tax policy environment, work force quality, quality of living etc in your home state on a 1 to 10 scale" and then the results were compared across states, then the study would be filled with bias based on the respondent's frame of reference (e.g. in their mind they could be comparing/weighing their own state against number of variable things that need to be controlled for).

A study asking them to rate tax policy in each of 50 states would also be inadequate since the average CEO probably does not have enough knowledge to answer that question about all 50 states.

CEOs say California worst place to do business, Texas best

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