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California has piled every imaginable burden on businesses. Minimum-wage laws are among the highest in the country, and health and safety regulations are among

California has piled every imaginable burden on businesses. Minimum-wage laws are among the highest in the country, and health and safety regulations are among the strictest; cities like San Francisco and San Jose require businesses to offer employees health insurance; labor laws are extremely union-friendly; environmental policies drive up energy costs—and on and on. I have never heard anyone at justin.tv complain about the impact on our business of minimum-wage laws, health and safety regulations, mandatory health insurance, union-friendly labor laws or environmental policies. The article claims to be talking about things that hurt Silicon Valley startups, but I don't recognize anything that rings true in the above paragraph.

robryan 16y ago
I think he was talking about high tech manufacturing jobs, which can't be competitive with places like china given what must be offered to even employees undertaking basic manual labour.
- abstractbill 16y ago
  Later in the same paragraph, he says "...the cost of state regulations in 2007 reached an average of $134,122 per small business—the equivalent of one job lost per company." That doesn't seem to add-up if he's talking about minimum-wage manufacturing jobs.
  - mnemonicsloth 16y ago
    If you're going to question results published by a respected academic in a peer-reviewed journal, you really should mention that the results were published by a respected academic in a peer-reviewed journal. A recent study by Sanjay Varshney, dean of the College of Business Administration at California State University in Sacramento, estimates that the cost of state regulations in 2007 reached an average of $134,122 per small business—the equivalent of one job lost per company You could talk about their data or their survey methodology, but you sound like you're just scoffing because you don't like their conclusions.
    - abstractbill 16y ago
      No, I'm pointing out that the paragraph in the original article doesn't seem to add up. $134,122 is apparently the equivalent of one lost job. But that's not anywhere near the right figure for a minimum wage manufacturing job.
    - _delirium 16y ago
      It doesn't appear to have been published in a peer-reviewed journal, fwiw, and he carried it out not in his capacity as professor, but in his capacity as owner of the consulting firm Varshney and Associates, which was paid for doing the study. Doesn't make it wrong, but those two factors do make me give it somewhat less weight. Here's a copy: http://arc.asm.ca.gov/member/5/pdf/CostofRegulationStudyFinal.pdf http://arc.asm.ca.gov/member/5/pdf/CostofRegulationStudyFina...
Rod 16y ago
1) since when is justin.tv representative of the SV? 2) if you don't see how minimum-wage laws, health and safety regulations, mandatory health insurance, union-friendly labor laws or environmental policies can hurt businesses, then it's because you're not on the finance arm of such businesses.
- abstractbill 16y ago
  1) What company would you pick? Is justin.tv very atypical of current Silicon Valley startups in some obvious way I've missed? 2) I've been at justin.tv since long before we were big enough to have a finance arm. I may have little idea of how those policies can hurt really big companies, but the interesting thing about Silicon Valley isn't the big companies - it's the startups.
  - Rod 16y ago
    1) I would pick no company because the SV is not a homogeneous habitat. You have capital-intensive startups founded by PhD's trying to capitalize on 20 years of research... and you have startups bootstrapped out of lunchmoney by a couple of college dropouts who believe their new app will be a killer. Seriously, technology is more than the web. 2) generally speaking, imposing constraints can only decrease the maximum of the objective function one is trying to optimize; I did not say that such policies do hurt, I suggested it's not hard to see how they can hurt.
- cdavid 16y ago
  Most of those things could as well help business. Without data, it is rather difficult to say, especially since a lot of the points you raised are easy to see as cost, and their advantages less obvious to observe.
natrius 16y ago
Your office and your employees' homes are more expensive to rent because regulations make it expensive to build in California. The food you eat is more expensive in California because there is a high floor on the compensation required for the people who produce it. Your coworkers require higher salaries because it's more expensive to live in California. According to Salary.com's cost of living calculator[1], for every four $100,000 engineers in San Francisco, you can get five $80,000 engineers in Austin at the same salary percentile. Those five engineers would have a higher standard of living since it supposedly costs ~$60,000 in Austin to live like someone making $100,000 in SF. (I think that's probably a little low.) If no one is complaining about the impact of California's regulations on your business, then no one is thinking hard enough (or they've just resigned to the fact that things are unlikely to change). The benefits of being in Silicon Valley may outweigh the costs, but the costs of being in Silicon Valley could be far lower. [1] http://swz.salary.com/costoflivingwizard/layoutscripts/coll_start.asp http://swz.salary.com/costoflivingwizard/layoutscripts/coll_...
- _delirium 16y ago
  I'd suspect a larger portion of the cost-of-living difference is due to desirability of the areas, i.e. relative amounts of demand for each, more than it is due to state regulation impacting supply. People are willing to pay lots more to live in SF than they are willing to pay to live in Austin. It's a pretty easy trend to notice on the most/least affordable lists that seem to come out periodically. If you look at this list of top 5 and bottom 5 affordable cities to buy a house, the trend is that the most affordable cities are ones nobody wants to live in (Indianapolis, Dayton, etc.), while the least affordable cities are ones lots of people want to live in (NYC, SF, Honolulu, etc.): http://realestate.yahoo.com/promo/most-and-least-affordable-cities-to-buy-a-house-2010 http://realestate.yahoo.com/promo/most-and-least-affordable-.... Even true within CA: it's not particularly expensive to live somewhere like Bakersfield, despite all the same minimum-wage/environmental/etc. laws applying there too.
  - natrius 16y ago
    The Bay Area could have enough housing to accommodate far more people at lower prices without sacrificing desirability. It doesn't because of regulation. (Finding the water for those people is another story.) New York is similar.

robryan 16y ago

I think he was talking about high tech manufacturing jobs, which can't be competitive with places like china given what must be offered to even employees undertaking basic manual labour.

abstractbill 16y ago
Later in the same paragraph, he says "...the cost of state regulations in 2007 reached an average of $134,122 per small business—the equivalent of one job lost per company." That doesn't seem to add-up if he's talking about minimum-wage manufacturing jobs.
- mnemonicsloth 16y ago
  If you're going to question results published by a respected academic in a peer-reviewed journal, you really should mention that the results were published by a respected academic in a peer-reviewed journal. A recent study by Sanjay Varshney, dean of the College of Business Administration at California State University in Sacramento, estimates that the cost of state regulations in 2007 reached an average of $134,122 per small business—the equivalent of one job lost per company You could talk about their data or their survey methodology, but you sound like you're just scoffing because you don't like their conclusions.
  - abstractbill 16y ago
    No, I'm pointing out that the paragraph in the original article doesn't seem to add up. $134,122 is apparently the equivalent of one lost job. But that's not anywhere near the right figure for a minimum wage manufacturing job.
  - _delirium 16y ago
    It doesn't appear to have been published in a peer-reviewed journal, fwiw, and he carried it out not in his capacity as professor, but in his capacity as owner of the consulting firm Varshney and Associates, which was paid for doing the study. Doesn't make it wrong, but those two factors do make me give it somewhat less weight. Here's a copy: http://arc.asm.ca.gov/member/5/pdf/CostofRegulationStudyFinal.pdf http://arc.asm.ca.gov/member/5/pdf/CostofRegulationStudyFina...

Rod 16y ago

1) since when is justin.tv representative of the SV? 2) if you don't see how minimum-wage laws, health and safety regulations, mandatory health insurance, union-friendly labor laws or environmental policies can hurt businesses, then it's because you're not on the finance arm of such businesses.

abstractbill 16y ago
1) What company would you pick? Is justin.tv very atypical of current Silicon Valley startups in some obvious way I've missed? 2) I've been at justin.tv since long before we were big enough to have a finance arm. I may have little idea of how those policies can hurt really big companies, but the interesting thing about Silicon Valley isn't the big companies - it's the startups.
- Rod 16y ago
  1) I would pick no company because the SV is not a homogeneous habitat. You have capital-intensive startups founded by PhD's trying to capitalize on 20 years of research... and you have startups bootstrapped out of lunchmoney by a couple of college dropouts who believe their new app will be a killer. Seriously, technology is more than the web. 2) generally speaking, imposing constraints can only decrease the maximum of the objective function one is trying to optimize; I did not say that such policies do hurt, I suggested it's not hard to see how they can hurt.
cdavid 16y ago
Most of those things could as well help business. Without data, it is rather difficult to say, especially since a lot of the points you raised are easy to see as cost, and their advantages less obvious to observe.

natrius 16y ago

Your office and your employees' homes are more expensive to rent because regulations make it expensive to build in California. The food you eat is more expensive in California because there is a high floor on the compensation required for the people who produce it. Your coworkers require higher salaries because it's more expensive to live in California. According to Salary.com's cost of living calculator[1], for every four $100,000 engineers in San Francisco, you can get five $80,000 engineers in Austin at the same salary percentile. Those five engineers would have a higher standard of living since it supposedly costs ~$60,000 in Austin to live like someone making $100,000 in SF. (I think that's probably a little low.) If no one is complaining about the impact of California's regulations on your business, then no one is thinking hard enough (or they've just resigned to the fact that things are unlikely to change). The benefits of being in Silicon Valley may outweigh the costs, but the costs of being in Silicon Valley could be far lower. [1] http://swz.salary.com/costoflivingwizard/layoutscripts/coll_start.asp http://swz.salary.com/costoflivingwizard/layoutscripts/coll_...

_delirium 16y ago
I'd suspect a larger portion of the cost-of-living difference is due to desirability of the areas, i.e. relative amounts of demand for each, more than it is due to state regulation impacting supply. People are willing to pay lots more to live in SF than they are willing to pay to live in Austin. It's a pretty easy trend to notice on the most/least affordable lists that seem to come out periodically. If you look at this list of top 5 and bottom 5 affordable cities to buy a house, the trend is that the most affordable cities are ones nobody wants to live in (Indianapolis, Dayton, etc.), while the least affordable cities are ones lots of people want to live in (NYC, SF, Honolulu, etc.): http://realestate.yahoo.com/promo/most-and-least-affordable-cities-to-buy-a-house-2010 http://realestate.yahoo.com/promo/most-and-least-affordable-.... Even true within CA: it's not particularly expensive to live somewhere like Bakersfield, despite all the same minimum-wage/environmental/etc. laws applying there too.
- natrius 16y ago
  The Bay Area could have enough housing to accommodate far more people at lower prices without sacrificing desirability. It doesn't because of regulation. (Finding the water for those people is another story.) New York is similar.