Despite California’s reputation as not being business friendly due to its higher tax structure, a study that examined other trends showed the state is still a good place to do business.
The study found the state is attractive for creating and sustaining successful businesses, and also that California is creating jobs faster than the national average.
While many of those new jobs are created by existing businesses, many are also coming from new firms, according to the report.
The study relied on the U.S. Census Bureau’s Business Dynamic Statistics to calculate where California ranks, compared to other states, across a comprehensive range of economic indicators.
The study, California New Business Creation, was commissioned by the nonprofit group Next 10 and prepared by Beacon Economics. The study ranked all of the states and found California often ranked near the top of the ratings.
The report found that California ranked fourth in job creation stemming from new business startups in 2013, with a growth rate of 5.5 percent.
It also found the state ranked fifth in the creation of new businesses.
And the state landed in the No. 10 spot for the highest number of new small businesses.
“California consistently outpaces the country in business creation, including small-business startups. It also excels in job creation, both in terms of net new jobs and jobs at new firms,” said Christopher Thornberg in a statement. Thornberg co-authored the report and is the founding partner of Beacon Economics.
“While the state continues to face some of the same significant economic challenges facing the nation as a whole, overall it offers a solidly pro-business environment,” Thornberg said.
Next 10 is an independent organization that says its mission is to educate, engage and empower Californians to improve the state’s future. It was founded by venture capitalist and philanthropist F. Noel Perry.
The group also launched a Compare 50 website this week, providing data for all 50 states. Created by Next 10 with data compiled by Beacon Economics, it shows strong growth for new and existing businesses alike, the group said.
Using the site, users can look at a comparative state-by-state business index by selecting from 145 economic and demographic indicators.
Included in the data gathered, California continued attracting new residents between 2007 and 2014. Nearly 49,000 people with bachelor’s degrees or higher arrived in the state.
That number represents a net positive migration of individuals who earn more than $50,000 annually. Most residents leaving California, on the other hand, earn less than $50,000, the data shows.
And in 2014, venture capital investment totaled $28.9 billion in California, outpacing its nearest competing state by over $24 billion.
As for innovation, on a per capita basis, California, Massachusetts and Washington are waging a three-way race as the most ingenious state in the country.
Since 2007, the three states have traded places for the lead in the number of new patents granted each year, the report said.
“This report analyzes the most relevant available data, and provides a more comprehensive look at California’s business climate than is typically presented,” Perry said.
“Often the characterization of California as not friendly to business is based on the state’s high tax rates alone. A broader examination of business and labor indicators places California above average.”