The 840-employee Ashley Furniture factory in Colton, California is preparing to shut down over Labor Day weekend — thanks to the state’s new $15 minimum hourly wage — and join the over 9,000 companies that have left California in the last seven years.
The company told the San Bernardino Sun that giving employees the required 60 days’ notice to comply with federal regulations governing layoffs of factory and warehouse employees the week before Labor Day was an effort to consolidateproduction and create more efficiency at plants in other U.S. states. But the real culprit appears to be California passing a $15 minimum wage and Gov. Jerry Brown signing the SB 32 climate change legislation on August 25.
According to an Ashley Furniture press release about the closure: “We thank our employees for all their hard work, but closing these plants on Oct. 25 and rebalancing our manufacturing mix strengthens production capability and cost structure and will help ensure Ashley’s continued ability to compete effectively long-term in the global marketplace from a U.S. base.”
A majority of production from Colton will be relocated to U.S. plants in Wisconsin, Mississippi and North Carolina. The minimum wage rates in all three of the locations is 52 percent lower than California’s coming $15 legal minimum, which will ratchet up over the next several years.
Breitbart News recently reported that Joseph Vranich, president of site selection consultants Spectrum Location Solutions (VLS) in Irvine, published a 378-page study, titled California’s Forty Year Legacy of Hostility to Business, that documented at least 9,000 companies that had moved their headquarters or diverted projects to out-of-state locations in the last seven years.
VLS estimated many former California companies that moved to more business-friendly jurisdictions to escape the Golden State’s “hostile” tax and regulatory business environment have experienced “astonishing” operating cost savings of up to 35 percent.
According to the VLS job relocation data base, the exodus of companies from California has accelerated during the two most recent terms of Jerry Brown as governor. The top 10 states for snatching away California businesses and jobs have been, in order: (1) Texas; (2) Nevada; (3) Arizona; (4) Colorado; (5) Washington; (6) Oregon; (7) North Carolina; (8) Florida; (9) Georgia; and (10) Virginia.
Los Angeles was at the top of the list of the 10 California counties that suffered the highest number of dis-investment events. L.A. was followed by: (2) Orange, (3) Santa Clara, (4) San Francisco, (5) San Diego, (6) Alameda, (7) San Mateo, (8) Ventura, (9) Sacramento, and (10) Riverside counties.