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LOS ANGELES—It doesn't really matter all that much that California has gotten a bad reputation as a state that is unfriendly to businesses. Despite the bad rap, businesses continue to move and grow in California. In fact, the State is leading the nation in terms of job growth and job creation, according to Christopher Thornberg, founding partner at Beacon Economics. Thornberg spoke about the issue at the USC Gould Real Estate Law and Business Forum last week.

California has ranked number 50 on the list of the best places to do business for the last 12 years, including 2016. However, Thornberg says, “Turns out, it doesn't matter all that much.” Because, although California isn't business friendly, the state creates one out of every six jobs in the US. “The state has not been a drag, but has been a leader of growth in the US economy,” says Thornberg.

All of this activity, however, may be slowing down. The unemployment rate in California has fallen to 5.5%. Throughout this cycle, the bulk of job growth has come from California taking unemployed and employing them. “Our success is going to start slowing down,” says Thornberg. “We are going to start hitting the breaks.” He adds that we have been focusing on the supply side of workers rather than the demand side, which is focusing on companies needing jobs.

In California, San Francisco and Los Angeles may be the biggest markets, but the ones driving growth are Greater Sacramento and South Central Valley. These are markets that are seeing the most job growth of high income-paying jobs. “People say we only make bad jobs in California, but that isn't true,” says Thornberg. The share of workforce in the low income category is going down.”

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Instant Insights /

Does It Matter That California Isn't Business Friendly?

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