Study: Counties competing for jobs

We have met the competition, and it is us.

A study released Monday showed that California is competing less with other states to attract and retain companies, and more with itself.

Differences in economic policies and conditions between counties, rather than states, was the largest contributor to businesses relocating. Companies most often moved operations to an adjacent county, according to a report by the Public Policy Institute of California, a independent think tank that measures the impact of public policy.

Sonoma County benefitted from companies that relocated within California, according to the study, which reviewed employment data from 1992 to 2004. It gained more than 3,300 jobs from Marin County during the 12-year period. Only two other counties in California attracted a larger share of another county's workforce, the study said.

Overall, Sonoma County's job market grew 2 percent from intra-state job migration during that time, adding 4,200 jobs. In contrast, it lost 0.4 percent of its jobs due to relocation to other states, or about 822 jobs.

The Public Policy Institute conducted the study to determine if the political rhetoric about California's "unfriendly" business climate -- and reports of an exodus of companies moving to other states -- bore out in the numbers.

It turns out that relatively few jobs left California for other states. Far more moved around within the state, escaping high-cost areas near San Francisco and Los Angeles.

"It tends to be away from the more expensive parts of the state to places where real estate tends to be cheaper," said Jed Kolko, co-author of the report. "Most of the moves were very short distances."

California did lose 0.06 percent of its 18 million jobs to other states from 1992 to 2004, but its share of total U.S. employment has grown since 2000 as new businesses expanded.

Also, it was common for a company to move only a portion of its operations, for instance leaving its headquarters in place but moving manufacturing to a location with more available land and less expensive labor and real estate costs.

While Sonoma County enjoyed the benefits of an influx of jobs from Marin, it is more likely those jobs would now go to the East Bay or Solano County, said Al Coppin, founder of Keegan & Coppin, the largest commercial real estate brokerage in the North Bay.

"There is cheaper housing stock in Solano and larger blocks of space for labor-intensive industry," Coppin said. "Generally, when they are expanding they are looking for more space, and less expense."

Losing some expansion to other areas is not such a bad thing, said Ben Stone, director of the county's Economic Development Board.

"As long as we retain the headquarters, that is most important," Stone said. "We retain the brain power and the business profits."

The study also concluded that state and local governments should focus more on fermenting business growth with economic policy, rather than trying to attract specific businesses with targeted incentives. Upstart businesses create far more jobs than companies that relocate, according to the study.

During the 12-year period, 230,000 jobs were created in Sonoma County as small businesses sprang into existence and others grew larger. But at the same time, other businesses withered, went bankrupt and closed, erasing about 213,000 jobs. So in total, the county had a net gain of 17,000 jobs, a much larger number than the 822 jobs lost to other states.

"Even though it is true Sonoma County loses jobs to other states, it is so relatively small compared to how many jobs get created and destroyed year to year," Kolko said. "The study shows that economic policy should really focus on the broader sources of job creation and destruction, such as helping companies expand or start up."

Stone advocates that finding.

"It is more about having a climate that is business friendly, then picking winners or losers," Stone said. "If you have a good business climate, the word gets around the business community."

You can reach Staff Writer Nathan Halverson at 521-5494 or nathan.halverson@press

democrat.com.