Despite red tape, high taxes and a burdensome cost of living, California is still deemed to be a good place to do business, and the San Jose region is the nation's best-performing major metro area, according to separate reports released Wednesday.
In one report, prepared by Beacon Economics for nonprofit group Next 10, a comprehensive look at California's business climate determined that the Golden State is considerably more hospitable to business than suggested by conventional wisdom that sometimes elevates less costly states such as Texas.
Another study, the Milken Institute's annual Best-Peforming Cities Index, found that the San Jose metro area, which includes most of Santa Clara County, is the top performer for 2015. The San Francisco-San Mateo region was ranked No. 2, according to Milken.
"Ultimately, people are coming to the Bay Area and California because of the great lifestyle," said Christopher Thornberg, principal economist with Beacon Economics.
"California has great climate, arts, entertainment, sun, skiing, beaches, mountains, it goes on and on. The Bay Area has the same advantages, but even more so than California."
A recent U.S. Bureau of Labor Statistics report underscores the strength of the job market in the Bay Area, and Santa Clara County in particular, compared with their peers around the country.
"More than ever, America's best-performing cities demonstrate what we call the innovation advantage," said Ross DeVol, chief research officer for the Milken Institute and one of the authors of the best-performing cities report.
Over the one-year period that ended in October, total payroll jobs grew at an annual pace of 5.2 percent in Santa Clara County, the federal government reported. That was the best gain among large metro areas in the country and means the South Bay has the nation's strongest job market. The San Francisco-San Mateo region was No. 2 with a gain of 4.6 percent.
Critics of the Bay Area and California have often claimed that both regions are no longer competitive with the rest of the country when it comes to attracting and retaining businesses. Yet the new studies contradict those sweeping assessments.
California's job market has grown by 2.9 percent over the past 12 months. The United States expanded its total jobs by 1.9 percent. Texas jobs have grown by 1.7 percent over the last year. All of these gains are far behind the job surge in Santa Clara County.
"Austin is not taking over Silicon Valley in any way," Thornberg said.
California is being called a good place to do business in large measure because of its ability to add new businesses as well as creation of small businesses, according to Beacon and Next 10.
"When you use a broad set of measures to compare California to other states, California comes off very favorably," said F. Noel Perry, founder of Next 10. "It's more than just a question of taxes and regulation."
Plus, global economic upheavals can undermine or bolster the economic performance of a region. Milken researchers noted that because oil prices have plummeted worldwide, states such as Texas, North Dakota and other regions dependent on energy related jobs have suffered.
Despite the favorable elements of the report, experts conceded that California and the Bay Area have plenty of challenges.
"Housing costs are a big challenge for California, and health care is a big challenge," Perry said. "There are many ways to improve the business climate of California. But it's more than a question of taxes and regulation."
California shouldn't recreate itself to emulate Texas and other states such as Florida that boast lower taxes and minimal regulation, Thornberg said.
"It's not so much that California and the Bay Area have to look like Texas," Thornberg said. "California can be California, and Texas can be Texas, and that's fine."