Forget the myths, L.A. business climate is better than you think

bizclimate.jpgSure, the business tax can use an overhaul (once somebody figures it out) and it's still tough to get permits from the Department of Building and Safety. But overall the city of L.A. is quite accommodating - probably too much so, given the volume of recent development deals. As I point out in the October issue of Los Angeles magazine, the "bad climate" designation never made much sense. If L.A. is so awful, why are thousands of companies starting up here each year? And why are shopping malls jammed to prerecession levels? PricewaterhouseCoopers studied 27 cities around the world in dozens of areas - from health care to intellectual capital - and in the "ease of doing business" category L.A. ranked seventh, ahead of Tokyo. Doesn't seem shabby to me.

Business owners may grouse about the state's encumbrances and threaten to pack up for cheaper locales in Florida and Texas, but they rarely make the leap. Life is too good here. In a typical year, says economist Jed Kolko, California loses a net 25,000 jobs while picking up 16,000. That's in an economy of 18 million jobs (4.4 million in L.A. County). Between 1992 and 2006, when businesses were supposedly fleeing the state en masse, California ranked 21st lowest in out-of-state relocation, according to Kolko, who along with economist David Neumark has studied migration patterns extensively. Even among businesses ... that don't have to be in L.A.--what economists call "footloose businesses"--departures are not common.


Just invoke the words "job creation" and you'll likely go far, whether it's the monster Millennium Hollywood development, which would upend the area's scale and livability (and could be located over a seismic fault); or the $59 million tax break for the Australian shopping mall developer Westfield Group, which is looking to speed up an expansion on the western edge of the San Fernando Valley; or the favored treatment of the entertainment business, which has lobbied for overgenerous tax breaks; or the waiving of well-established zoning restrictions so that more stores and affordable-housing units can be put up near transit corridors--despite little evidence that this will mitigate congestion. What elected officials don't realize or choose to ignore is that their benevolence seldom determines whether a company stays or goes, hires or fires.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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