Kosmont-Rose Institute Annual Survey Finds Los Angeles-Area Cities Impose High Costs on Business

Claremont, CA – The 2024 Kosmont-Rose Institute Cost of Doing Business Survey finds that the cost of doing business remains higher in California than in other states in the western United States. Within Southern California, cities in Los Angeles County are the costliest places to do business.

Researchers from the Rose Institute of State and Local Government at Claremont McKenna College, in collaboration with El Segundo-based economic development consulting firm Kosmont Companies, have conducted business cost surveys since 2003. This year, the Survey collected data on 216 cities–primarily in Southern California–to rank the cost of doing business in these jurisdictions.

“Many businesses are leaving Southern California for other states,” said Ken Miller, director of the Rose Institute of State and Local Government and an author of the survey report. “This Survey helps show why, by highlighting cost differences between cities in the region and out-of-state.”

For the first time, the Survey presents data for all 174 incorporated cities in Los Angeles, Orange, Riverside, and San Bernardino Counties. This comprehensive approach allows for direct comparisons between these cities and shows that the cost of doing business is markedly higher in Los Angeles County than in other parts of the region. This difference can be attributed in part to market forces, such as office rents, as well as local policies, such as sales taxes and minimum wage requirements.  

Santa Monica ranked as the Survey’s highest cost city, followed by Culver City, Pasadena, Malibu, Arcadia, Huntington Park, and the City of Los Angeles.

“LA County is a significant center of commerce, yet doing business in the County comes at a high cost,” said Larry Kosmont, Chairman and CEO of the Kosmont Companies, co-sponsor of the Survey.  “While many LA County cities are strategically located and have strong family income and consumer demographics, rent levels and local taxes tend to fall into the Survey’s highest-cost categories. These are key decision factors for businesses looking to set up shop or relocate.”

At the state level, California continues to impose higher costs on businesses than neighboring states do. For example, California’s statewide minimum wage is currently $16.00 per hour, and the state recently mandated a $20 per hour minimum wage for fast food workers. These wages are far higher than the $7.25 per hour minimum wage in Texas, Idaho, and Utah. Several high-cost California cities, including five of the Survey’s top-ten, require minimum wages above the state baseline.  

Similarly, California has a higher base sales tax than several other states in the Survey, and most of the highest cost California cities in the Survey have raised their sales tax to 10.25%.

Some small California cities ranked among the least expensive cities for doing business, including Inland Empire cities such as Fontana, Adelanto, Hesperia, and Menifee. However, cities in Arizona, Idaho, New Mexico, Nevada, and Texas comprised most of the list of least costly cities. Two Texas cities and commercial hubs–Dallas and Houston–rank among the ten least expensive cities in the Survey.

Kosmont added: As to California overall, companies should check in with city hall before finalizing their location or expansion decision as many local cities have targeted business attraction and assistance programs. Over 40 cities and counties have approved or are considering special tax districts that can provide certain incentives for businesses.

The 2024 Kosmont-Rose Institute Cost of Doing Business Survey ranking is based on seven variables including, sales tax, utility tax, minimum wage, business license fee, average office rent, crime index, housing affordability index. The Survey presents a composite ranking for all cities. The Rose Institute and Kosmont Companies last published a survey in December 2022. The full survey report, list of the most and least expensive cities for doing business and full rankings of the 216 cities are available at roseinstitute.org/costofdoingbusiness.

About the Rose Institute of State and Local Government

The Rose Institute of State and Local Government was founded at Claremont McKenna College
in 1973. A leading resource for information on California state and local governments, the Rose Institute pursues research projects on elections, government institutions, public opinion, and policy. It also maintains extensive state and local demographic, economic, and political databases. For more than 50 years, the Institute has fulfilled its mission to enhance the education of students at CMC, produce high quality research, and promote public understanding on issues of state and local government, politics, and policy, with an emphasis on California. For more information, visit www.roseinstitute.org/.

About Kosmont Companies

Kosmont Companies (“Kosmont”), a certified Minority Business Enterprise (“MBE”) and certified Small Business Enterprise (“SBE”), is a real estate and economic development services firm offering a full range of real estate and financial advisory, economic development strategies/plans, retail/business strategies, project finance, transaction structuring, negotiations, market analysis, feasibility studies, special district analysis, community outreach/project implementation services for both the public and private sectors. Kosmont Companies was founded in 1986 by Larry J. Kosmont, Chairman and CEO, and is nationally recognized. With decades of advisory services, Kosmont has assisted hundreds of public agencies in their quest for services and successful public private projects. What sets Kosmont apart is our understanding of how economics relates to future project shaping, as well as our understanding of both the public and private sectors. www.kosmont.com.

About Claremont McKenna College:
Claremont McKenna College is a private, 1,300-student residential liberal arts college located east of Los Angeles in Southern California. Since 1946, the College’s mission has been to prepare students for thoughtful and productive lives and responsible leadership in business, government, and the professions. Renowned for its Open Academy commitments to freedom of expression, viewpoint diversity, and constructive dialogue, as well as expertise in economics and government, Claremont McKenna also features an accomplished faculty of scholars and committed teachers in the humanities, sciences, and social sciences. Students are drawn to the College’s unparalleled offerings, including: 11 research institutes and centers; the ability to conduct research one-on-one with faculty; and access to leaders, artists, and visionaries who engage with students at the Marian Miner Cook Athenaeum. Claremont McKenna is a member of The Claremont Colleges. For more information, visit https://www.cmc.edu/.