Conference Presentation, Panel
Insights from the C-Suite: California's Business Climate
Milken InstituteKevin Klowden, Anne Hoskins, Jeff Maggioncalda, Mary O'Hara, Sandra Stern, Pete Vlastelica
- California's solar industry is projected to continue growing and serve as a critical job source, supported by forward-looking policies and a new 2020 mandate requiring solar installation on all new housing to reduce long-term energy costs.
- The California Public Utilities Commission is evaluating potential reductions in grid compensation for customers, while Sunrun is relocating its headquarters from San Francisco to Oakland in 2019 to secure better housing and transportation access.
- Entertainment production in Los Angeles is declining due to tax credit disparities, where states like Georgia offering 25% budget coverage, and New Mexico, have attracted the majority of scripted TV shows, leaving a small percentage filmed in California.
- High housing costs in the Bay Area, which are 360% above the national average, and rising administrative expenses are forcing companies like Blue Shield and Sunrun to compete with tech giants and necessitating daily housing allowances for production crews.
- Workforce challenges include a supply-demand imbalance in engineering talent causing wage inflation, a lack of affordable housing driving an exodus of middle-class and skilled residents, and a significant need to address shortages in the healthcare industry.
- Educational strategies aim to mitigate skill obsolescence and automation risks through online mechanisms, exemplified by Coursera's enrollment of 40,000 in Google IT certification and a University of Pennsylvania master's program with $23,000 tuition over two years.
- Esports is expected to capture a younger demographic, with an average fan age of 21 compared to 50 for NFL and 63 for baseball, though Activision Blizzard has reported selling franchises at two to three times previous year's values.
- Remote work capabilities are influencing corporate location decisions, with the esports industry maintaining a 25-person team in Columbus, Ohio, and delaying the establishment of a California global headquarters.
- Transportation infrastructure gaps, including the inability of automated driving to solve long-distance mass transit, are driving a preference for upgrading BART and express buses over highway expansion to reduce emissions.
- Talent acquisition is complicated by California's high tax burden and the deduction of state taxes, creating uncertainty regarding remote worker location requirements and increasing administrative costs for importing talent.
- Diversity and inclusion efforts remain largely self-policing with limited legislative teeth, though specific initiatives like Sunrun's 100% pay parity and the California prohibition on asking pay history during recruitment are in place.
- Global trends show hundreds of millions moving online for education, particularly in India and Latin America, while New Mexico's successful model of union-led crafts training with job guarantees is noted as a positive example.
- The average age of traditional sports fans indicates a need to attract younger audiences, a goal partly addressed by esports leagues operating without paywalls, while traditional sports content loses revenue to these digital platforms.
- A shift in demographic trends over the last few decades shows an increase in immigrants entering California while more educated individuals leave, contributing to the state's talent supply gaps.