By Julian Schoen
Santa Cruz has a history of being anti-establishment, yet few would think this attitude would translate to the realm of business establishments.
In a recent survey aimed at finding the best metropolitan cities to start a business, Forbes magazine ranked Santa Cruz as number 195 out of 200. The list, published in this month’s issue, factored in job growth, the cost of doing business, and educational attainment as its means of ranking cities.
Helen Coster, a Forbes writer, published a scathing critique of Santa Cruz’s business environment in an April 23 editorial entitled “Booby Prize.”
Coster portrayed Santa Cruz as a desolate paradise. Although nestled between redwood forests and world-famous beaches, Coster illustrated how the community has made the business environment exceedingly arid in Santa Cruz.
According to Coster, high wages translate into a costly real estate market, which makes the rate of production increase.
Another discouraging factor is the city’s continued practice of shooting down measures that would welcome companies to start businesses. Plans for a convention center and marine research lab were scratched when citizens protested after their proposals.
In an e-mail sent to City on a Hill Press, Coster defended her work. She said the aspects she addressed have deterred businesses from establishing themselves in Santa Cruz and led to the city’s sad showing on the Forbes list.
After reading the Forbes article, Lori Kletzer, department chair of economics at UC Santa Cruz, found Coster’s points to be slightly misleading.
California, Kletzer explained, has a much higher standard of living in comparison to other U.S. states.
“The cost of living shouldn’t be compared to the U.S. average; it should be compared to cities in California,” Kletzer said.
Cities such as Raleigh, NC, Lincoln, NE, and Ogden, UT all scored well in the survey. These communities have the lowest cost of living, inviting new companies to flourish in an affordable locale.
California, however, did not have a city on the rankings until Santa Ana, which claimed 70th place.
High taxes and a large population separate California from other states in terms of living expenses. The scale used to judge Californian cities is different than the scale for other places, which explains why local cities scored so poorly when compared to the national average.
Bill Tysseling, executive director of the Santa Cruz Chamber of Commerce, also identified errors in Coster’s piece. Tysseling explained that there was no differentiation made between the economies of Santa Cruz and Watsonville, which have completely different financial standards.
“[Coster] described the population without discriminating between Santa Cruz City and County,” Tysseling said. “The county has a quarter million people, whereas the city has roughly 50,000.”
The time period in which the Forbes survey took place was also detrimental to Santa Cruz’s financial reputation, according to Tysseling.
“The data starting point was at the beginning of the recession in 2002,” he said.
The burst of the dot-com bubble affected the outlying communities. The survey chronicled Santa Cruz’s economy at the beginning of this low point, translating into weak statistics.
Ryan Coonerty, vice mayor of Santa Cruz, emphasized that the high costs of living and doing business here in turn lead to a supportive, intelligible community.
“[Santa Cruz] is a wonderful place to have a business,” proclaimed Coonerty, whose family has owned and run Bookshop Santa Cruz for 34 years. “The city has produced creative, well-educated citizens.”
