New Study: California Has Highest Workers’ Compensation Rates

Posted October 25, 2014 by bizlocate
Categories: Business Relocation, Site Selection

Tags: , , , , , , ,

California businesses concerned about labor-related costs are learning that their state now has the most expensive workers’ unemployment rates in the nation. That finding is despite reforms that were designed to lower costs from when the state also had the worst ranking in the past. The high-cost states following behind California are Connecticut, New Jersey, New York and Alaska, in that order.

The least expensive states were North Dakota, Indiana, Arkansas, Virginia and Massachusetts.

Workers’ Compensation Premium Index Rates

2014 Workers' Compensation Premium Index Rates

The source of the rankings (and the map) is a study issued by the Oregon Department of Consumer and Business Services, which updates such work every two years and provides the findings to the Oregon legislature. The agency has been conducting such studies since 1986.

According to the Los Angeles Daily News, Jerry Azevedo, a spokesman for the California-based Workers’ Compensation Action Network, said:

“California’s workers’ compensation system is incredibly inefficient. It does not do a good job of achieving its goal. For as much as employers pay, they don’t get a lot out of it. … You would think that since California has the highest cost system that we’d also have the most generous benefits — but we don’t. We plow a lot of money into the system but too little of it ends up in the hands of injured workers.”

Much of the money goes to lawyers who dispute medical treatments, while other money goes to commissions paid to brokers and various administrative costs, Azevedo said. The Daily News reported that California’s system is experiencing more claims — particularly in the Los Angeles region. See more of the story at  California ranks highest for workers’ compensation costs.

The researchers provided a comparative column that shows at a glance how far up or down the scale a state has moved since the last report in 2012, which is shown below.

Workers’ Compensation Premium Rate Ranking
2014 2012   Index Percent of Effective
Ranking Ranking State Rate study median Date
1 3 California 3.48 188% 01/01/14
2 2 Connecticut 2.87 155% 01/01/14
3 7 New Jersey 2.82 152% 01/01/14
4 5 New York 2.75 148% 01/01/14
5 1 Alaska 2.68 145% 01/01/14
6 6 Oklahoma 2.55 137% (A)
7 4 Illinois 2.35 127% 01/01/14
8 14 Vermont 2.33 125% 04/01/13
9 30 Delaware 2.31 125% 12/01/13
10 15 Louisiana 2.23 120% 01/01/14
11 8 Montana 2.21 119% 07/01/13
12 9 New Hampshire 2.18 118% 01/01/14
13 10 Maine 2.15 116% 04/01/13
14 19 Idaho 2.01 109% 01/01/14
17 13 Washington 2.00 108% 01/01/14
17 16 South Carolina 2.00 108% 09/01/13
17 12 Pennsylvania 2.00 108% 04/01/13
20 27 New Mexico 1.99 108% 01/01/14
20 20 Rhode Island 1.99 107% 07/01/13
20 17 Minnesota 1.99 107% 01/01/14
21 36 Missouri 1.98 107% 01/01/14
22 19 Tennessee 1.95 105% 03/01/13
23 12 Wisconsin 1.92 104% 10/01/13
24 25 Iowa 1.88 101% 01/01/14
25 23 South Dakota 1.86 100% 07/01/13
27 35 Hawaii 1.85 100% 01/01/14
27 25 North Carolina 1.85 100% 04/01/13
28 29 Florida 1.82 98% 01/01/14
29 21 Alabama 1.81 97% 03/01/13
30 33 Nebraska 1.78 96% 02/01/13
31 31 Wyoming 1.76 95% 01/01/14
32 27 Georgia 1.75 95% 07/01/13
33 28 Ohio 1.74 94% 07/01/13
34 32 Michigan 1.68 91% 01/01/13
35 34 Maryland 1.64 88% 01/01/14
36 38 Texas 1.61 87% 06/01/13
37 37 Arizona 1.60 86% 01/01/14
38 42 Mississippi 1.59 85% 03/01/13
39 41 Kansas 1.55 83% 01/01/14
40 22 Kentucky 1.51 82% 10/01/13
41 43 Colorado 1.50 81% 01/01/14
43 40 West Virginia 1.37 74% 11/01/13
43 39 Oregon 1.37 74% 01/01/14
45 45 Utah 1.31 71% 12/01/13
45 47 Dist. of Columbia 1.31 70% 11/01/13
46 46 Nevada 1.26 68% 03/01/13
48 44 Massachusetts 1.17 63% 09/01/10
48 48 Virginia 1.17 63% 04/01/13
49 49 Arkansas 1.08 58% 07/01/13
50 50 Indiana 1.06 57% 01/01/14
51 51 North Dakota 0.88 47% 07/01/13
(A) In Oklahoma, the dates are 1/1/12 for the State Fund and 1/1/14 Private
Notes: Starting with the 2008 study, when two or more states’ Index Rate values are the same, they are assigned the same ranking. The index rates reflect adjustments for the characters of each individual state’s residual market. Rates vary by classification and insurer in each state. Actual cost to an employer can be adjusted by the employer’s experience rating, premium discount, retrospective rating, and dividends. Link to previous reports and summaries.
Employers can reduce their workers’ compensation rates through accident prevention, safety training, and by helping injured workers return to work quickly.
Source: Oregon Department of Consumer & Business Services, Information Technology and Research Section

The study is based on methods that put states’ workers’ compensation rates on a comparable basis, using a constant set of risk classifications for each state. The study used classification codes from the National Council on Compensation Insurance (NCCI) with a focus on 50 classification codes. Certain weightings were assigned to control for differences in industry distributions among the states.

The full report will be published later this year, but a summary is available here.

Information about how the study was done can be found here.

Joseph Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of businesses relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.


Special ‘California Alert’ to the U.S. Site Selection Community

Posted October 21, 2014 by bizlocate
Categories: Businesses leave California, California Business Environment, California Regulations, California taxes, cap-and-trade, Economic Development, Gov. Jerry Brown, Site Selection, Worst States for Business

Tags: , , , , , , , ,

California, long known to be unfriendly to business, is now inhospitable to site selection consultants. Gov. Jerry Brown’s Office of Business and Economic Development has banned commissions that have long been a tradition in the business in the United States and internationally. Or perhaps it’s better to say the state is limiting commissions.

According to the Sacramento Business Journal, the agency, known as GO-Biz, has placed on ban on commissions to consultants for aiding companies in securing a tax credit should they decide to move to or expand in the state.(1)

Since the story appeared, one consultant clarified that commissions are still permissible under some circumstances, but the state limits the ability for consultants to earn more than what the state deems reasonable.

Regardless of whether it should be called a ban or a limitation, a tax consultancy firm has filed suit against what it calls “regulatory overreach that impacts the ability of taxpayers to obtain representation to pursue their right to a tax credit for driving economic growth and job creation.”

In all candor, the GO-Biz restriction doesn’t affect my business.

My projects are done on a flat-fee basis, so no commissions are involved. Moreover, a good part of my client work involves companies seeking out-of-California locations with friendlier business environments.

When I’ve had companies interested in establishing a presence in California, I “ran the numbers” on a completely objective basis. The data on taxes, workers’ compensation, unemployment insurance, cap-and-trade fees to reduce global warming – and more and more – caused them to do what I call a “U-Turn” and head off to other states.

Said one client, “We knew California was going to be more expensive, but we thought we could afford to move there anyway so we began the planning.” After reviewing the cost comparisons with its current community, the company will stay put in its Mountain Time Zone location.

California’s voters seem determined to reelect politicians who could be called “California’s Wrecking Crew” – people who are hostile to business, love hiking taxes again and again, and waste tax dollars on boondoggles – with Gov. Jerry Brown but one example.

The state’s business environment is sure to worsen in 2015, 2016, and who knows for how long after that. Doubters should consider Gov. Brown’s plan to toughen carbon regulations to an unprecedented degree, thus increasing costs (again) on all businesses in all parts of the state.

When that happens, Sacramento will once more demonstrate that it’s the “marketing department” for the site selection consulting profession.

(1) See: Allen Young, “Dallas company sues GO-Biz over tax credit,” Sacramento Business Journal, Oct. 3, 2014

California: More Irresponsibility in Government

Posted October 3, 2014 by bizlocate
Categories: Best States, Business Relocation, California Business Environment, California taxes, Gov. Jerry Brown, Leaving California, Site Selection, Worst States

The California Assembly and Senate approved more than 1,000 pieces of legislation this year, of which Gov. Jerry Brown signed 930 into law.

So a pile of directives and restrictions from the “we know better” crowd is piled upon what is already probably the biggest mountain of regulations found in any state.

How many of those laws will spend how much money, in what ways, on what programs? Well, it’s difficult to understand the state’s public spending. In a Public Interest Research Group 2014 report on transparency, California received an “F” for how it details expenditures for people seeking information online.

Meanwhile, the quality of life continues to deteriorate in California, which has the nation’s highest poverty rate (whether measured on an absolute or per capita basis), poor public education, a high tax burden and terribly congested and poorly maintained roads.

Don’t expect the situation to improve. It appears that the elitist-thinking California electorate, primarily those living along the coast, will re-elect the same people to office who do more to damage California than to help it.

California’s ‘Score’ for Business Deteriorates

Posted September 12, 2014 by bizlocate
Categories: Best States for Business, Business Location, Business Relocation, Businesses leave California, California Business Environment, California Regulations, California taxes, Economic Development, Gov. Jerry Brown, Site Selection, Worst States for Business

Down again.

That’s what we can say about California’s “business attractiveness” as it lost its tenth place ranking in a survey of site consultants, published yesterday by Area Development Online. Here is what Editor Dale Buss had to say about the state losing the ranking it had in last year’s survey:

“The state’s reputation with site consultants keeps taking hits — witness Toyota’s announcement earlier this year that it plans to move its corporate headquarters and 4,000 jobs to suburban Dallas from southern California. And so this year, California placed in the top states in only three of the 18 sub-categories, notably ranking third for access to capital and project funding, no doubt a legacy of the continued success of Silicon Valley.”

The new survey was interesting in other respects, too, in that Georgia took over the top spot, with Texas moving to second place. States in the South and mid-South dominate the list because of their continuing momentum in business development. Also, some states in the Midwest “are scratching their way back into position as major players in the U.S. economic-development derby.”

Area Development did an excellent job explaining the survey’s findings. For the story, along with state profiles, see “Top States for Doing Business 2014: Georgia Unseats Texas, Industrial Midwest Rises.”

The finding should unnerve California business leaders because site selectors surveyed over the years by the publication have been kind to California – especially when compared with other surveys that usually portray conclusions that are less kind.

I would be remiss if I failed to remind business owners and corporate leaders that this year Chief Executive magazine found California to be the “worst state for business” — for the tenth year in a row. CEO’s comments include: “California could hardly do more to discourage business if that was the goal.” “The state regulates and taxes companies unreasonably.” “California is getting worse, if that is even possible.”

Moreover, CNBC’s 2013 “Top States for Business” scored states on 51 measures of competitiveness, weighted states based on other criteria, and found California ranked low at 47.

As if that weren’t enough, 24/7 Wall St. ranked California 50th in its evaluation – for the third year in a row.

Incidentally, after reading the Area Development story, the next item to pop up on my news screen was headlined, “California Rocket Company Moving to Texas.” Turns out Firefly Space Systems of Hawthorne will relocate its headquarters to Cedar Park, near Austin, where it will hire up to 200 workers, mostly highly paid engineers. It will develop rocket engines in collaboration with the University of Texas.

Twenty-five years ago California was among the best states for business. Sadly, it’s lost that distinction, and I expect little improvement in the business climate. When I consider the strength of business-hostile interest groups, the attitudes of elitist voters along the coast, and Gov. Jerry Brown surrounding himself with business-clueless advisors, I see more regulations and higher taxes in the future for California businesses.

Joseph Vranich of Spectrum Location Solutions, based in Irvine, California, helps companies find optimal locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of business owners relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.

© Excerpts from this blog may be used, but only if attribution is given to “Joseph Vranich of Spectrum Location Solutions in Irvine, Calif.”

It’s official: Tesla selects Nevada for its ‘Gigafactory’

Posted September 5, 2014 by bizlocate
Categories: Site Selection

Elon Musk, Chairman and CEO of Tesla Motors, announced today that the company has selected Nevada in which to locate its $5 billion battery Gigafactory. The company’s news release is here.

Why Nevada over California? Well, for a few insights about that question, see the Oakland Tribune editorial published today, “Tesla’s Reno deal is another example of California’s bad business climate.”

I’ve had the pleasure of working with representatives in Nevada — in the Governor’s Office of Economic Development and the Economic Development Authority of Western Nevada. These are some great people and I’m sure they’ve worked hard on this project. I presume they will participate in a well-deserved celebration tonight.

Joseph Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of businesses relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.

California Gas Prices to Jump 13-to-20 Cents per Gallon Jan. 1— This is Not a Joke

Posted August 27, 2014 by bizlocate
Categories: Best States for Business, Businesses leave California, California Out-Migration, California Regulations, California taxes, cap-and-trade, gas tax, Gov. Jerry Brown, Leaving California, Worst States for Business

Tags: ,

It isn’t often that I’m speechless — but I’m speechless.

California Gov. Jerry Brown and the legislature refuse to stop an unprecedented increase in gasoline prices. So, effective January 1st, the cost of a gallon of gasoline in California will spike between 13 and 20 cents per gallon. No other state will do this.

The price hike is an outgrowth of a state law, the California Global Warming Solutions Act, AB 32, which created a cap-and-trade system relating to carbon emissions. Even though the state issues only about 1 percent of the world’s greenhouse gases, it nevertheless has instituted draconian regulations that will cost industry billions of dollars in fees to purchase carbon credit allowances. The gasoline price increase will result from energy companies being required to pay higher fees, which will be passed onto businesses and consumers.

And it could get even more expensive. California’s Legislative Accounting Office found that increases resulting from cap-and-trade penalties could exceed 50 cents per gallon by 2020.

All of this is on top of California’s current gasoline tax. The Tax Foundation puts the state in 1st place nationwide with the highest rate of 52.89 cents per gallon. Adding in the 18.4 cent federal excise tax means California consumers now pay 71.29 cents per gallon to various public treasuries.

The new requirement will harm business operations in California for several reasons:

  • Any company with a union agreement that ties compensation to the cost-of-living will see an increase in labor costs as soon as contract provisions permit. (Keep in mind that Californians are now seeing costs increase for taxes, apartment rentals, utilities and food.)
  • Next, countless small businesses that rely on gasoline-powered pickup trucks and delivery vans (e.g., farmers, contractors, retailers) will see costs rise.
  • Finally, much of the new “river of  revenue” to the state will be wasted, in typical Sacramento fashion, further entrenching the state’s 373 public agencies, commissions and boards.

Anyone with a heart will recognize the harm done to individuals, particularly the poor, or people in agricultural areas who must drive long distances for their jobs.

Measures like cap-and-trade are supported by more than environmentalists — they are promoted by the ultra-rich and celebrities living in their San Francisco, Silicon Valley and Los Angeles enclaves.  That group, I presume, will celebrate the New Year with extra high-fives all around. That is, before they head off to their limousines.

See more about this sad state of affairs in two stories in the Sacramento Business Journal“Steinberg: Cap-and-trade expansion will not be delayed” (Aug. 26 story) and “Analyst: Cap-and-trade will push gas prices up as much as 20 cents” (Aug. 7 story).

Joseph Vranich of Spectrum Location Solutions, based in Irvine, California, helps companies find optimal locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of business owners relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.

 © Excerpts from this blog may be used, but only if attribution is given to “Joseph Vranich of Spectrum Location Solutions in Irvine, Calif.”

Arthur B. Laffer: ‘Making Excuses for Companies’ Flight’

Posted May 24, 2014 by bizlocate
Categories: Site Selection

Tags: , , , , , ,

The Times is delusional about why companies leave California

The Los Angeles Times long has been an apologist for California’s welfare state, which may be OK when the consequences are benign. But those consequences are no longer benign, and the evidence is no longer even slightly ambiguous.

In “Was Toyota driven out of California? Not so fast,” the Times pooh-poohs the “new round of hand-wringing” following the U.S. headquarters of Toyota’s highly publicized departure from Torrance to Plano, Texas.

Read more at ‘Making Excuses for Companies’ Flight’


Get every new post delivered to your Inbox.

Join 125 other followers