What's Hampering California Businesses

Key challenges

Below are the primary areas causing friction for businesses across the state. Click any item to expand for suggested actions.

1
Economic slowdown & job losses
Lower demand and payroll contractions constraining hiring and revenues.
2
Tariffs, trade & supply chain pressures
Rising input prices and longer lead times hitting manufacturing, retail, and hospitality.
3
Regulatory and tax burdens
Compliance complexity and high operating costs particularly impact small businesses.
4
Housing affordability & cost of living
Makes hiring and retention difficult — adds pressure to payroll budgets.
5
Insurance market stress & climate risk
Wildfires, floods and extreme weather raise premiums and disrupt operations.
6
Immigration enforcement & labor shortages
Targeted enforcement in agricultural regions has removed critical seasonal labor.
7
Crop pest outbreaks
Localized infestations (e.g., rodents) can wipe out harvests and infrastructure.
8
Sectoral layoffs and retrenchment
Biotech, retail and other sectors have announced reductions, lowering consumer demand.

Challenge area	Primary business impact
Economic slowdown & job losses	Constrained hiring, lower revenue
Tariffs & trade shocks	Higher input costs, supply disruptions
Regulation & taxes	Higher operating costs, slowed expansion
Housing & living costs	Talent attraction & retention problems
Insurance & climate risk	Rising premiums, business interruption
Immigration enforcement	Labor shortages in agriculture & services
Pest outbreaks (agriculture)	Crop losses and infrastructure damage
Layoffs	Reduced local demand, hiring freezes

Practical starting points for businesses navigating these headwinds.

Stress-test budgets and extend cash runway; prioritize recurring-revenue customers.
Diversify suppliers and build inventory buffers where cashflow allows.
Explore tax credits, local incentives, and streamlined compliance tools (trade associations often help).
Offer remote or hybrid roles and relocation/transport stipends to broaden candidate pools.
Review insurance policies yearly and engage a specialized broker for climate-exposed assets.
For farms: invest in mechanization and worker training programs to reduce dependence on unstable labor pools.