"The annual net employment change in California due to relocation -- a loss of about 9,000 jobs -- represents only 0.05% of California’s 18 million jobs."
And with that, new data today from the Public Policy Institute of California again calls into question political claims that a mass exodus of businesses from the Golden State is underway, a claim we examined last week as part of our coverage of the race for governor.
The new look at whether businesses are moving jobs out of state, and how many are doing so, will no doubt fail to end the heated debate about the issue. Even so, today's PPIC report fails to find much hard evidence for a growing trend.
And in what may be one of the more intriguing findings, analyst Jed Kolko says the data shows that several other states across the nation have a much larger percentage of job loss that can be attributed to companies moving out of state. Tops on the list: the District of Columbia, where 6.9% of jobs from 1992-2006 were lost due to an exodus, followed by Delaware (4.5%) and New Jersey (3.9%). Compare that to California's record over the same 14 year period: 1.7%.
Last week, we reported that one of the more frequent anecdotes offered by Republican nominee Meg Whitman appeared to miss the mark. That's the case of aerospace giant Northrop Grumman, which decided earlier this year to relocate his corporate HQ -- and about 350 jobs -- to northern Virginia, while still keeping some 30,000 jobs here in California (that's about one quarter of their global workforce).
Whitman continues to mention the company by name on the campaign trail, doing so again two days ago at a stop here in Sacramento. "You watched Northrop Grumman move its corporate headquarters to northern Virginia," she said. (Note: this time, she clarified that it was the company's HQ that left, and not -- as she's done in the past -- that the entire company left.)
"Jobs are leaving for neighboring states," she said. "I want to be the governor that stops that exodus."
And yet, based on the PPIC report, such comments are reflective of anecdotal evidence, not substantive research. Here's the report's conclusion on the real factor(s) behind job creation and loss in California:
Most job gains are due to the births and expansions of locally owned businesses; most job losses are due to the contractions and deaths of locally owned businesses. Businesses headquartered outside a county contribute much less to local employment fluctuations. The homegrown shares of job gains and losses are even higher in smaller cities and towns and in rural areas. Among the non-metropolitan counties in California, 79% of job gains and 74% of job losses are homegrown. Thus, although luring businesses from elsewhere or convincing them to open or expand locally is a common economic development strategy, and preventing businesses from leaving the state is a political refrain, most job gains and losses are homegrown.
Don't expect such research to squelch the issue on the campaign trail, or among those who steadfastly insist that the anecdotes point to a trend not yet seen by researchers. And as mentioned last week here on the blog, one wonders whether Whitman's criticism of business climate issues since, oh say late 2003, won't start to eventually rankle the guy whose corner office she hopes to occupy come January.
