California regulation

Cite this Article
Larry Ribstein, California regulation, Truth on the Market (June 02, 2011),

PoL tips a Mercury News story about California regulation:

Carl’s Jr. is halting expansion in California and moving its headquarters to Texas. The California permitting process can take up to two years; combined with other regulations, it costs an extra $250,000 more to open a restaurant in California than in Texas.

Some details from the story:

The permitting process alone can take up to two years, while in Texas it can be done in as few as 11/2 months. * * *

California ‘s strict work rules classify general managers as employees, requiring that they take breaks at specified times, harming their ability to manage the business effectively.* * *

If you own a restaurant and your bartender chooses to forgo a break to collect extra tips, you can be sued for wage-and-hour violations. If your trash can is moved by someone else in your store, you can be sued under the Americans with Disabilities Act. If you try to bring renewable energy to the desert, you can be sued by environmentalists and unions. Is it any wonder that many owners are deciding doing business in California is not worth it?

Meanwhile, former TOTMer Todd Henderson visited a small SF business that makes what are reputed to be the best bags in the world and talked to the owner.  Todd reports that

the regulations here drive up costs, which makes his business tough. When I asked why [the owner] didn’t hire more staff, since a made-to-order bag takes 8 weeks to deliver, he told me there was too much uncertainty. Health care is too expensive, and he doesn’t know what costs are coming down the road. And getting good people is difficult when your standards are so high.

Fortunately there are states other than California.  We may soon find out exactly how much California dreamin’ is worth to small businesses. And of course the US isn’t the only country in the world.