Manufacturing can’t slip away

July 23, 2009
By: Huntington Beach Independent
Jim Silva

It is no secret that California is hemorrhaging jobs at a dangerous  
rate. Unemployment topped 11.5% in May, with 68,900 jobs lost that month  
alone. It’s easy to blame these losses on the international economic  
recession, which has led to widespread layoffs as businesses struggle to  
keep their heads above water. But the truth is that not all of these  
jobs are disappearing into thin air — many of them are simply leaving  
the state. In fact, entire industries are fleeing California in search  
of relief from the excessive regulation and taxation that makes it  
difficult to do business in this state.

Manufacturing is one such  
industry. The loss of manufacturing jobs is particularly damaging to  
the state economy, considering that the high-paying industry has a  
ripple effect, creating 2.5 jobs in other sectors for every  
manufacturing job created. With 536,000 manufacturing job losses since  
December 2000, it is easy to see why California simply cannot afford to  
push the manufacturing industry out of the state. But that’s exactly  
what it’s doing — in more ways than one.

For example, you may be  
surprised to hear that our state K-12 education plan discourages careers  
in manufacturing by strongly favoring a university path for graduates  
over technical career training. Requirements to graduate high school in  
California leave little room for students to deviate from the  
college-bound path. But the truth is that only 25% of high school  
graduates complete the remaining preparatory classes that qualify them  
for admission to most four-year colleges.

As a former educator, I  
strongly believe in the value of a college education. However, my 28  
years of teaching high school taught me that not every student is  
interested in a university education. While many graduates enroll in  
community colleges, many more are simply uninterested in continuing  
formal education and aspire to enter the workforce immediately. By  
forcing students into a one-size-fits-all curriculum that leaves little  
opportunity for career training, we are effectively discouraging  
students from considering a well-paying career in traditional  
manufacturing at a time when college costs are soaring and financial aid  
is limited.

Additionally, manufacturing businesses face  
burdensome hurdles in California. A recent study conducted by the Milken  
Institute and commissioned by the California Manufacturers and  
Technology Assn. reveals that California faces two competitive  
disadvantages when it comes to retaining the manufacturing industry: its  
restrictive regulatory climate and excessive tax burden. This should  
come as no surprise to anyone familiar with California’s reputation as a  
difficult place to do business.

Studies, surveys and assessments  
consistently rank California’s unpredictable regulatory environment as  
one of the most challenging. Specifically, the Milken report cites  
California’s labor laws, which have undergone an average of 15 statutory  
changes per year from 1992 to 2002 — a figure four times larger than  
the average of state legislatures nationwide. In recent years, Assembly  
Bill 32 has presented particular challenges for the manufacturing  
industry by imposing an arbitrary cap on carbon emissions.

The  
fact that California has some of the highest income and corporate taxes  
in the nation doesn’t help matters. Using data from 2000-07, the Milken  
Institute study compares California’s tax burden to that of seven states  
which gained manufacturing jobs in the same period California  
experienced losses. California’s total taxes per capita were the highest  
of the seven peer states. California was also the only peer state to  
increase its individual tax rate in the period of analysis, and when it  
comes to corporate taxes, California has the 12th highest in the nation.

While  
California certainly isn’t living up to its economic potential, it’s  
not too late to reverse the downward trend. As our state faces a  
$25-billion-and-growing budget deficit, we must do all we can to keep  
valuable industries in the state and contributing to our fledgling  
economy. Relaxing regulatory hurdles and offering incentives to the  
industry by way of tax credits will provide incentives for manufacturing  
firms to stay put in California. At the same time, we must encourage  
careers in traditional manufacturing by offering greater opportunities  
for technical career training in high school.

A robust  
manufacturing industry once helped catapult California’s economy to one  
of the healthiest in the world.

Letting the manufacturing  
industry slip away from the state is simply not an option if we ever  
expect our economy to recover.