California Ranked Worst for Business

California Governor Arnold Schwarzenegger had a motorcycle accident recently. But he should see the even bigger train wreck that’s headed his way: Readers of Chief Executive have for the second straight year named his state as the worst in the nation for doing business. “I ran a public company in Sunnyvale, California,” said one of the 339 readers who responded to an email survey. “Never again in California. Go Texas!” Another said flatly, “We won’t do business in California at all.”

Texas once again ranked as the best state. Respondents cast 124 votes for Texas, followed by a relatively distant Nevada with 73 votes. The depth of animosity toward California was even more intense than admiration for Texas, however. Some 227 votes were cast for California as the worst state for business, followed by New York, again a distant second, with 142.

 The politically “blue states,” where state governments tend to over-regulate, are clearly going to lose more jobs as CEOs shift economic activities elsewhere. California, New York, Massachusetts and Michigan all fell into that category. As one reader put it, “The Northeast and Midwest continue to isolate themselves from the world’s manufacturing. They will continue to lose manufacturing jobs.”


Louisiana made it into the top five worst states because of the impact of Hurricane

Katrina and the slipshod recovery effort.


Among the top five best states, which all are considered “red,” the one that moved up in the rankings is North Carolina. “We operate manufacturing plants in North Carolina, California and Iowa,” said Barry D. Harper, CEO of Harper Brush Works, in Fairfield, Iowa. “North Carolina is by far the most business-friendly of the three states. It is working hard to improve its education and infrastructure.”


Asked to rank the most important attributes of a state’s business climate, 20.6 percent of respondents put work force quality at the top of the list, 18.3 percent named labor costs and 15 percent cited taxes.


Overall, CEO Confidence rose to 182.4 points in January, the highest since the magazine began polling its readers in October 2002, using 100 points as the starting benchmark.


 5 Best States

 5 Worst States

 2005 Rating  

 2005 Rating  

 Texas               1 California          51
 Nevada             2 New York          50
 North Carolina  3 Massachetts      49
 Florida              4 Michigan          45
 Georgia            5 Louisiana         38




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