Why is California bleeding manufacturing jobs?

Regulation, competition from neighboring states gets the blame in new report


A new report by the Milken Institute shows California has lost more than one-quarter of its manufacturing jobs since 2000, with some of the sharpest declines in the high-tech manufacturing sector.

The job loss in California is much higher than in neighboring states, and so not all of the job loss is being pinned on foreign migration of jobs. In fact, wages higher than the national average and intrusive regulation from the California Legislature gets most of the blame, according to experts.

The study found California has lost 26% of its manufacturing jobs, and 35% of the manufacturing jobs in the high-tech area. The Milken Institute performed tyhe study for the California Manufacturers and technology Association, which told the San Francisco Chronicle that regulation was making the state less atrtractive to manufacturers.

"Everyone says the regulatory burden in California is too much," Gino DiCaro, spokesman for the Manufacturers Association, told the Chronicle. "Over time, we're dropping off the list of states that companies are willing to consider."

Not everyone buys into that theory, however. The Los Angeles Times quoted Christopher Thornberg of Beacon Economics as saying, "At least up to the last couple of years, the pace of job loss in manufacturing in California was no different than anywhere else."

The California Chronicle published a quote from California Manufacturers & Technology Association president Jack M. Stewart. "California's economy has been built on manufacturing. The sector's steady decline is undoubtedly a 'canary in a coal mine' for the state's economy," Stewart said. "California has the capacity to innovate and make things but it is not at all living up to its potential."




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