Chef Andrew Gruel: Fixing Southern California’s Small Business Climate

The old saying, “As California goes, so goes the nation” has become an ominous warning for the rest of America. Progressive policies implemented by a supermajority in the Legislature and a sycophantic governor who believes he is destined to become president are destroying the California Dream, and will soon decimate the American Dream if implemented on a national scale. 

As the owner of popular small restaurants in Southern California, the hardest part of writing this article is knowing where to start, as the onslaught of anti-business and anti-family policies emanating from Sacramento never seems to stop. I recently announced I would never open another business in the state until things change, but the sad reality is that the current leadership in the state seems intent on continuing to push entrepreneurs away.

State officials refused to listen to small business owners as they jammed a $20 minimum wage through the legislature. Touted as a “victory” for workers by union bosses and other special interests that dominate Sacramento, economists warned that the increase would devastate small businesses and, ultimately, their workers, as hiring and pay raises would both decline. The result was the loss of 10,000 fast food and restaurant workers’ jobs, many of whom will be replaced by electronic kiosks. If that is a “victory,” I would hate to see what a loss would look like. 

The same goes for electricity. Thanks to punitive carbon emissions regulations, the once-Golden State has the second highest rates in the nation – behind only Hawaii – with ratepayers paying, on average, 80% more per kilowatt-hour than any other state.  With recent rate hikes of 63% in San Diego, 44% in San Francisco, and 39% in Los Angeles, the price to light up our homes and businesses only continues to rise. And, adding insult to injury, the geniuses in Sacramento just added a new electricity fee based on the ratepayers’ income level. 

Another pain point is the cost of gasoline, which is the highest in the nation. Not surprisingly, California has the nation’s highest gas taxes, and they are scheduled to go up by 50 cents a gallon over the next two years. Every good shipped, every mile driven, and every service provided costs more because we are paying artificially high gas prices. 

Health care is another area where Californians are being squeezed to death – unless you are an illegal alien. The state recently enacted a measure to provide health insurance to undocumented aliens. Our Attorney General is also demanding the federal government do the bidding of Big Pharma by eliminating or restricting Pharmacy Benefit Managers (PBMs), entities that negotiate for lower drug prices with prescription drug manufacturers, allowing small businesses to receive discounts typically only available to larger companies. Big Pharma has been lobbying Congress to destroy PBMs, and the fact that our elected officials proudly go along speaks volumes as to the influence special interests have in the state.

Small businesses are also being destroyed by fraudulent lawsuits under the Public Attorneys General Act (PAGA) signed into law by Grey Davis in 2003; this bill, intended to help workers, has become a runaway extortion program corrupted by trial attorneys for the state’s benefit. Davis expressed gratitude to unions and trial attorneys for their support during his two campaigns for governor and the recall election, and this was his payback. Attorneys coerce employees to file frivolous lawsuits against a business, knowing they must settle for hundreds of thousands of dollars even if the initial violation was made up. Trial attorneys have raked in over $5 billion in PAGA judgments over the past few years, with employees only getting a few pennies on the dollar. If we reform PAGA by having the workforce agencies that already exist within the state review the cases, give the business a chance to rectify minor violations, and give any monetary penalties directly to the employee, the corruption will go away, and the workers will win as opposed to the state shaking down businesses for money via corrupt attorneys.

The time has come for a reset. Thankfully, Californians are fighting back. 

Polling shows that leading pro-regulatory state officials are trailing in their re-election efforts. Even wannabe President Gavin Newsom is underwater in polling.

While there are signs of hope, we are still far from turning the ship of state around so families and small businesses can prosper. My only hope is that this will happen before it’s too late.