Cities like Davis, West Sacramento, Citrus Heights and Vacaville rank low on a new list of the most business-friendly small markets in the United States.
The list is from WalletHub, a personal finance company.
Out of 1,261 U.S. cities, West Sacramento is close to the middle at 685. Rocklin is at number 821 and Davis at 997. Other places like Folsom, Citrus Heights and Vacaville are near the bottom. The highest-ranked California city is Twentynine Palms at 297.
WalletHub's Jill Gonzalez says California has the resources, "but it's also a very competitive place. We know that there's a lot of startups there to begin with," she said. "So I think that more and more people are venturing outside of California, particularly in places like Colorado and Oregon, where everything tends to be a lot cheaper."
She says California has a higher cost-of-living than most other states and high corporate taxes.
The low rankings don't surprise John Kabateck. He heads the California branch of the National Federation of Independent Business, a lobby group that represents about 22,000 small businesses in the state.
Kabateck says California's labor mandates, regulations and high corporate taxes make it hard for entrepreneurs.
"Some of the advantages in California — we have amazing weather, we have promising educational institutions and a rich and diverse melting pot of people with various backgrounds and gifts," says Kabateck. "But even those wonderful gems are just simply not enough to keep many here or at least in business on Main Street."
Researchers, however, point out that California's employment, wages and output continue to grow at or above the national average. Analysts with the Public Policy Institute of California say "a state’s weather, population density, and industry mix — demonstrate a stronger relationship with economic growth than the measures included even in the tax-and-cost-focused indexes. ... Still, our findings imply that a better business climate would promote faster economic growth in California."
Which cities topped WalletHub's list of Best Small Cities to Start a Business? The top three are: Holland, Michigan; Saint George, Utah; and Aberdeen, South Dakota.