California next to last in new business creation

NUMBER 10: VIRGINIA - Economic Modeling Specialists used the Bureau of Labor Statistics Quarterly Census of Employment and Wages report to rank the states by their growth or decline in new business creation. Virginia had 1,208 net ew business establishments in 2010 after losing 968 firms in 2009. (Pictured is Mount Vernon)
NUMBER 9: NEW JERSEY - While New Jersey has struggled with large state budget deficits, its entrepreneurs opened 1,571 net new business establishments in 2010. That was a big improvement from 2009 when it lost 6,243 businesses, says Economic Modeling Specialists. (Pictured is the Atlantic City Boardwalk, first and longest boardwalk in the world.)
NUMBER 8: OREGON - In 2010, Oregon added a net 1,669, recouping the 1,653 it lost in 2009. The Beaver State also lost a net 2,250 businesses in 2008, according to Economic Modeling Specialists' analysis of Bureau of Labor Statistics data. (Pictured is Crater Lake.)
NUMBER 7: KENTUCKY - After losing almost 7,000 businesses in 2008 and 2009, Kentucky came back with 1,962 net new business establishments in 2010, says Economic Modeling Specialists. (Pictured is the Kentucky Derby.)
NUMBER 6: LOUISIANA - Home of the Mardi Gras had a new 3,714 net new business establishments in 2010, according to Economic Modeling Specialists. Perhaps rebuilding from Hurricane Katrina contributed to the state's addition of 1,058 new businesses in 2009 and 3,792 in 2008.
NUMBER 5: ILLINOIS - In 2010, 4,233 net new business establishments opened in the Land of Lincoln, says Economic Modeling Specialists. In 2009 it was one of only 12 states to add new businesses. Illinois ranked second to California that year with 5,803 net new businesses. (Pictured is Wrigley Field, home of the Major League Baseball Chicago Cubs.)
NUMBER 4: NEW YORK - The Empire State added a net 5,416 new business establishments in 2010, according to Economic Modeling Specialists. That was a strong rebound from adding only 780 new businesses in 2009, based on the Bureau of Labor Statistics Quarterly Census of Employment and Wages report.
NUMBER 3: TEXAS - The Lone Star State accounted for half the net new jobs in the United States from June 2009 to June 2011, 262,000. It also accounted for 5,658 net new business establishments in 2010, says Economic Modeling Specialists. (Pictured is the Alamo in San Antonio.)
NUMBER 2: MASSACHUSETTS - In 2010, the Bay State added a net 6,815 new business establishments, according to Economic Modeling Specialists. It added a paltry 198 net new businesses in 2009. (Pictured is the Mayflower II, a replica of the original ship.)
NUMBER 1: WASHINGTON -- Economic Modeling Specialists, using Bureau of Labor Statistics data, says Washington created the most new business establishments in 2010, 8,315. It created 3,565 in 2009 and 2,531 in 2008.

By Jan Norman | Orange County Register

August 29, 2011 at 9:50 a.m.

If new businesses are the flour and eggs of job creation, then California is starving to death, according to a new analysis by Economic Modeling Specialists Inc. in Moscow, Idaho.

Using Bureau of Labor Statistics’ data, EMSI says California between 2009 and 2010 went from first to next to worst among states for opening new business establishments.

Click on the slide show above to see the top 10 states in new-business creation.

In 2009, California had 12,529 new business establishments and in 2010, it lost 4,632 establishments. Only Michigan was worst, losing 5,480. (The list includes Washington, D.C., which ranks 13th in new-business creation.) In all, 29 states had a net decline in startups in 2010.

EMSI singles out California in its report:

“California’s economic woes and instability have been well-documented, and this data make another case for how bad things have gotten there. California had the most net new business establishments in 2009 (more than 12,500) and 2008 (32,000+); in fact, it ranked either first or second from 2001 to 2009.”

Clearly, the 2007-2009 recession affected Californians’ business creation. In 2006, they created almost 43,000 new firms, then 33,000 in 2008, 12,529 in 2009 and lost 4,632 in 2010, EMSI data show.

Some of the states hardest hit by the subprime lending crisis and popping of the housing bubble join California near the bottom: Arizona is 46th in new-business creation; Nevada, 45th; and Florida is 43rd. Other bottom dwellers are Michigan, 51st; Colorado, 49th; Ohio, 48th; Georgia, 47th; and South Carolina, 44th.

The significance of declining startups reaches far beyond the entrepreneurial aspirations of California residents. The Kauffman Foundation, which funds entrepreneurial research, says that startups account for most job growth in the country.

“Job creation is the number one issue facing families and policymakers during this economic recession, and this study shows that new businesses and entrepreneurs are the key factor in adding new jobs,” said Carl Schramm, president and CEO of the Kauffman Foundation. “If the U.S. economy is going to have a sustained recovery, it will be up to entrepreneurs to lead the way.”

EMSI quotes Tom Still, president of the Wisconsin Technology Council about the importance of startups: “Small businesses create most jobs in the United States so it follows that more startup companies translate to more jobs.”

California has the second highest unemployment rate in the United States at 12.0% in July. The state lost more than 1.2 million jobs from 2007 through 2010. Orange County lost more than 138,000 jobs in that period.

Gov. Jerry Brown recently proposed a jobs creation program for California that offers a tax break for new manufacturing equipment purchases, a tax change that Brown said encourages multi-state companies to create jobs in other states, and expands a tax credit for each new hire.

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