A recent report for the Manhattan Institute by economic demographer Joel Kotkin on what he calls America’s “economic growth corridors” (see the link above) is full of interesting data and observations, but the section regarding the rise of high-tech industries in the Rocky Mountain states is especially compelling.
Kotkin points out that many high-tech companies are now investing far more heavily in Rocky Mountain States than they are in forced-unionism California, the historic high-tech hub of the western U.S. And Right to Work Utah has benefited most of all:
Nowhere is the shift toward the Intermountain West clearer than in Utah. There is now a plethora of high-tech firms, including Intel, Adobe, Twitter, and eBay, with large operations along Utah’s Wasatch Front from Salt Lake City to Provo.
Kotkin attributes much of the shift of job-creating investments out of Big Labor-dominated California to the Golden State’s sky-high real estate costs for businesses. Such costs are extraordinarily high in California compared not only to Rocky Mountain Right to Work states like Utah, but also to low union-density Colorado:
The cost of real estate for manufacturing in Utah and Colorado is 60 percent lower than in California. . . . Given the corridor’s generally more favorable business climate and lower housing prices, high-tech shifts from California to the Intermountain West are likely to continue, particularly as California continues to pursue a high-cost, high-tax approach to its economic future.
At first blush there is no obvious connection between California’s exorbitant real estate costs for businesses (and homeowners) and the fact that its overall union density is more than twice as high as Colorado’s and nearly three times as high as Utah’s in percentage terms. Therefore, some observers might be tempted to assume Big Labor is not to blame for this major deterrent to business investment in California.
But that assumption would be incorrect. Over the years, Golden State union officials have time and again used the massive political clout they wield due to their forced-dues privileges to oppose reform of counterproductive regulatory policies that are the principal reason California real estate is so expensive.
Just last week, in fact, the state’s top union bosses dumbfounded many observers by announcing they would fight a move in the Legislature this year to reform the so-called California Environmental Quality Act (CEQA) of 1970.
As currently applied, the CEQA hobbles construction investment so severely that even “green” Gov. Jerry Brown (a normal close ally of Big Labor’s) says he wants to speed up the CEQA’s legal process. Brown insists this can be done without weakening environmental protections.
But state AFL-CIO chief Art Pulaski is vowing to oppose any change in the CEQA. Apparently, union bosses like the leverage the CEQA gives them over businesses. To get a waiver from CEQA requirements, business owners typically have to acquiesce to union-only construction. The fact that the CEQA at the same time drastically lowers the total amount of construction in the state doesn’t seem to matter to Big Labor.
Of course, union-boss opposition to reforming the CEQA would not, in all probability, prevent reform from happening if unions in California were fully voluntary. It is only because of the lack of a Right to Work law in California that, when it wants to, the union political machine has plenty of forced dues-fueled financial resources to block legislative action on a wide range of issues, including environmental issues.