What’s keeping unemployment high — 8.1 percent in California, 7.3 percent nationally?
The obvious answer is a lack of jobs. A more nuanced answer is our government. By government we mean red tape.
California is driving out jobs with its cap-and-trade tax on business, President Obama is going to do the same thing through his Environmental Protection Agency, attacking coal and probably gas-fired power plants. Look for energy prices to go higher. Then the EPA will tell the states to write greenhouse gas restrictions. If the EPA doesn’t like a state’s plan, it will rewrite the plan itself. Look for everything to be more expensive. Higher expenses mean fewer jobs.
Somebody who wants to build a small brewery and winery plus restaurant and Web development company in an unused warehouse in downtown Sacramento is being sued by neighbors over environmental issues — all the usual EIR suspects. This is the type of business that should just go through a basic checklist and start producing jobs. It is past time for the Legislature to reform the California Environmental Quality Act.
Nationally, the 2012 Federal Registry was 78,961 pages. This directory of government regulation was 44,812 pages in 1986 and 2,620 pages in 1936, according to Clyde Wayne Crews of the Competitive Enterprise Institute.
As noted by Niall Ferguson in the June 19 Wall Street Journal, today’s economy is 12 times larger than it was in 1936, but the Federal Register is 30 times larger.
“The cost of all this (‘economically significant’ proposed regulations), Mr. Crews estimates, is $1.8 trillion annually — that’s on top of the federal government’s $3.5 trillion in outlays, so it is equivalent to an invisible 65 percent surcharge on your federal taxes, or nearly 12 percent of GDP. Especially invidious is the fact that the costs of regulation for small businesses (those with fewer than 20 employees) are 36 percent higher per employee than they are for bigger firms,” Ferguson wrote.
California manages to stifle business in a myriad ways, such as the recently enacted law that forces antique dealers to fingerprint anyone who sells antiques to the shop or puts them on consignment and requires the business to make daily reports to the police department.
Another way California discourages business is Proposition 65 lawsuits.
“When Proposition 65 was approved by voters in 1986, the goal was simple: to protect California’s drinking water from chemicals known to cause cancer or reproductive harm, and to warn members of the public about the presence of those chemicals in their environment to help them avoid exposure,” according to John Kabateck, California executive director of the National Federal Independent Business.
“One of the requirements of Prop. 65 is that businesses with more than 10 employees post warnings when they knowingly expose workers or the public to listed chemicals. These warnings are listed on placards in the business or as part of the labeling on a consumer product. Consequently, a new industry of attorneys targeting businesses with drive-by lawsuits has now sprung up, resulting in over twice the settlement revenues as Americans With Disabilities Act (ADA) lawsuits. These lawyers allege that a business does not have adequate signage as required by Prop 65. They demand money, and business owners rush to settle for thousands of dollars to avoid litigating in court, which is much more expensive.”
Assembly Bill 227, by Assemblyman Mike Gatto, D-Silver Lake, would prohibit enforcement action by “a person in the public interest,” i.e., a pirate lawyer. It would give a business 14 days to come into compliance and pay a $500 civil fine. The bill specifies that businesses with fewer than 10 employees are exempt from posting Proposition 65 notices.
The bill is now in the Senate, which should pass it without undue delay for the governor to sign. That would be one small step for California to untangle some red tape.