Regulations, Taxes Driving Businesses Away, Survey Finds

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Regulations, Taxes Driving Businesses Away, Survey Finds

By RiSHAWN BIDDLE

Staff Reporter

The president of the Los Angeles Economic Development Corp. went to Sacramento last week with a message to state officials: Companies frustrated by regulations and high taxes are heading out of the state and taking jobs with them.

Armed with the preliminary results of a survey of Southern California businesses begun last month and expected to be finished in October, Lee Harrington presented the early findings to members of a state Senate select committee on ending poverty.

Of the six members on the committee, only two, Sen. Richard Alarcon, D-Los Angeles, who chairs the committee, and Sen. Ross Johnson, R-Irvine, attended the presentation.

The survey is being touted by the LAEDC as a sort of “early-warning system” to alert the state on what conditions will cause businesses to stay or head to other locales.

“You want to end poverty?” said Harrington after his testimony, “First we need to hold on to the jobs we have. First, just make sure you get the jobs, then get the jobs with the highest benefits, because government can’t create wealth.”

Of the 1,000 companies surveyed, nearly a third cited excess regulations as a barrier to expansion while more than a quarter claimed high taxes barred future growth.

The opinion is widespread: More than 40 percent of firms in the wholesale, manufacturing and transportation sectors complained about regulations. More than 35 percent of all three sectors share the same gripes when it comes to taxes.

The lack of well-trained employees was a big issue for better than 20 percent of those surveyed, but that was countered by nearly the same percentage responding that they had difficulty recruiting and retaining key personnel.

EDC officials speculate that the latter has to do with the high cost of housing in the state, as well as other “quality of life” issues.

“People perceive that homes are too expensive. It’s a tough environment already and the state is making it even more difficult,” Greg Whitney, an EDC vice president, said of the regulatory environment.

The early results did show some bright spots, particularly in the services sector.

While a quarter of the firms surveyed said they planned to expand operations in the state, the percentage was higher among service firms.

About 45 percent of accounting firms surveyed said they had plans to expand, while nearly a third of finance sector firms considered the state’s second-fastest growing job sector said there were plans to grow their businesses.

Government Sector to Lead Paltry Growth in Downtown Workforce

By RiSHAWN BIDDLE

Staff Reporter

Downtown will see a small number of jobs added to its rolls this year, according to a new study, but only because of continued public sector expansion.

The area will take on another 1,218 jobs, increasing the total by less than one percent, to 478,017, according to the report, being released this week by the Los Angeles County Economic Development Corp.

Government agencies, the single largest employer downtown, will account for 82 percent of the jobs created, the report concludes.

That sector is projected to add another 1,000 jobs because agencies will have to add new homeland security-related jobs despite slashed budgets. That will likely increase the number to 272,211.

But the private sector, which has struggled with the recession in financial services as well as the dwindling apparel industry, hasn’t shown signs of recovery.

Apparel outfits and other manufacturers will likely slash 1,500 jobs in the coming year because of cheaper labor costs overseas; those firms reduced their headcount by 2,500 jobs last year, employing just 27,190 employees.

“Downtown has a lot of exposure to apparel, which has been hard hit because of cheaper workers overseas,” said LAEDC Chief Economist Jack Kyser.

Law, accounting and management consulting firms are projected to cut nearly 1,300 workers from their payrolls, while information companies will likely drop 1,000 more workers by the end of the year.

A likely bright spot will be hospitals and colleges such as USC, which are expected to create another 500 jobs. Another is the leisure and hospitality sector, which will likely hire another 500 workers, despite evidence that vacancy rates will barely budge.

Restaurants and hotels were one of the few bright spots last year, even as hotel occupancy dropped to less than 51 percent from 55.6 percent in 2001. Thanks to the opening of new restaurants and the Standard Hotel, the sector added 1,100 new jobs.

But most of the private sector chopped their payrolls instead of adding to them.

Law firms, management consulting firms and accountancies lopped off another 1,273 positions last year (including Arthur Andersen’s closure), while information services firms slashed another 2,100 jobs. Overall, five sectors including retail shed 6,149 jobs.

All told, there were 476,799 jobs in the downtown area last year, less than a 1 percent increase over the previous year.




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