Milken Institute - Manufacturing 2.0: A More Prosperous California


Manufacturing 2.0: A More Prosperous California

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The manufacturing sector contributed 12.8 percent to the state’s real GDP in 2007, most of it from high-tech manufacturing industries. California has the largest share of manufacturing employment in the nation with almost 1.5 million jobs. The state is a leader in high-tech manufacturing and innovation. It attracts millions of dollars in venture capital investments and has the largest share of industrial research and development expenditures.

The top ten manufacturing industries in terms of employment in California accounted for 44 percent of state manufacturing jobs in 2007. Six of the ten largest employers were in high-tech manufacturing. High-tech industries such as IT, aerospace, and biopharmaceuticals typically involve higher-paying occupations and value-added production and services. Because of the high number of workers in high-tech manufacturing in California, the average wage of manufacturing employees in the state was more than in most states. Technological advances coupled with a high-skilled work force make California one of the top states in productivity. The value added per production worker in the state was more than $268,000 in 2007, more than the U.S. average.

Manufacturing employment index (2000-2007)

State 2000 2001 2002 2003 2004 2005 2006 2007

California 100.00 96.01 88.08 83.25 82.11 81.10 80.31 78.98

United States 100.00 95.22 88.37 84.03 82.91 82.40 82.00 80.41

Sources: U.S. Bureau of Labor Statistics, Moody's Economy.com, Milken Institute.

Top five indicators

Indicator	United States Value	CA Value	% Change	Peer State Rank
Real gross state product (US$ billions)	$11,523.9	$1,549	20.3%	4
Per capita personal income (US$)	$38,615	$41,805	28.8%	3
Total exports of goods (US$ billions)	$1,162.5	$134.3	12.3%	8
Manufacturing's share of real GDP (%)	13.6%	12.8%	-9.8%	8
Real manufacturing output per worker (US$ thousands)	$113.6	$136.8	39.1%	4
Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, U.S. Census Bureau, Milken Institute. Note: Data are 2007 figures, unless stated otherwise. The rankings are among the eight peer states, 1 = best and 8 = worst, based on the growth rate between 2000 and 2007.

Economic climate indicators

Indicator	United States Value	CA Value	% Change	Peer State Rank
Real gross domestic product (US$ billions)	$11,523.9	$1,549	20.3%	4
Total nonfarm employment (thousands, SA)	$13,7604.3	$15,173.4	4.7%	5
Total exports of goods (US$ billions)	$1,162.5	$134.3	12.3%	8
Per capita personal income (US$)	$38,615	$41,805	28.8%	3
Median household income (US$)	$50,740	$59,928	26.2%	1
Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, U.S. Census Bureau, Milken Institute. Note: Data are 2007 figures, unless stated otherwise. The rankings are among the eight peer states, 1 = best and 8 = worst, based on the growth rate between 2000 and 2007.

Business climate indicators

Indicator	United States Value	CA Value	% Change	Peer State Rank
Corporate income tax rate	15.0% -35.0%	8.84%	0.0%	7
Individual income tax rate	10.0% -35.0%	1.0% -10.3%	0.0% - 10.8%	8
Property tax rate	13.8%	6.8%	--	1
Sales tax rate	0%	6.25%	4.2%	3
Employer unemployment insurance tax rate	0.66%	0.73%	37.7%	3
Total state-local tax burden rate	9.9%	10.8%	2.9%	8
Per capita total state-local taxes paid (US$)	$4,223	$4,993	32.4%	8
Government debt as % of GDP	65.5%	6.3%	43.2%	5
Per capita government spending (US$)	$14,327	$6,390	44.5%	8
Nonfarm establishments (latest 2006)	7,601,160	878,128	9.8%	4
Sources: Bureau of Economic Analysis, The Tax Foundation, U.S. Census Bureau, U.S. Office of Management and Budget, Milken Institute. Note: Data are 2007 figures, unless stated otherwise. The rankings are among the eight peer states, 1 = best and 8 = worst, based on the growth rate between 2000 and 2007.

Manufacturing indicators

Indicator	United States Value	CA Value	% Change	Peer State Rank
Manufacturing share of real GDP	13.6%	12.8%	-9.8%	8
High-tech manufacturing share of real GDP	4.8%	7.4%	6.5%	5
Manufacturing employment (thousands)	13,882.6	1463.3	-21.0%	8
High-tech manufacturing employment (thousands)	2,468.7	485.9	-22.8%	7
Share of U.S. high-tech manufacturing employment	2.0% (U.S. avg.)	19.68%	-4.2%	7
Manufacturing wage per employee (US$)	$53,804	$66,241	28.0%	2
Manufacturers' capital expenditures (US$ billions)	$135.8	$14.1	-16.8%	6
Industrial R&D expenditures (US$ billions, 2005)	$226.2	$50.7	10.7%	7
Real manufacturing output (US$ billions)	$1,571.7	$198.6	8.5%	6
Real manufacturing output per worker (US$ thousands)	113.6	136.8	39.1%	4
Value added per production worker (US$)	$249,139	$268,768	34.2%	7
Exports of manufactured goods (US$ billions)	$1,022.1	$118.9	6.6%	8
Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, The National Science Foundation, U.S. Census Bureau, Milken Institute. Note: Data are 2007 figures, unless stated otherwise. The rankings are among the eight peer states, 1 = best and 8 = worst, based on the growth rate between 2000 and 2007.

Leading business and economic indices

Indicator	Peer State Rank	National Rank
State Business Tax Climate Index (Tax Foundation)	8	47
Best & Worst States [to do business] Survey (Chief Executive Magazine)	8	51
Competitiveness Index (Beacon Hill Institute)	7	24
Economic Competitiveness Index (American Legislative Exchange Council)	4	27
2007 State and Local Tax Burden (Public Policy Institute of New York)	8	41
Economic Freedom Index (Pacific Research Institute)	8	49
Small Business Survival Index (Small Business & Entrepreneurship Council)	8	49
2007 Cost-of-Doing-Business Index (Milken Institute)	8	44
State New Economy Index (Kauffman Foundation)	2	8
State Technology & Science Index (Milken Institute)	4	4
Note: Indices cited were published in 2008, unless otherwise stated. Some index rankings results were reversed from published rank in order to make them consistent across the different indices as presented here. The rankings are among the eight peer states, 1 = best and 8 = worst.



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