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Assessments of the California Enterprise Programs

Measurement of the performance of the enterprise zone program, and the other G-TEDA programs, has been central to the debate on whether to expand or limit it. Complicating the matter is that much of the discussion around the relative successes or failures of the G-TEDA programs and individual areas is anecdotal. The academic attempts to assess the state's G-TEDA programs have produced mixed results. Some of the variance among study findings can be attributed to the limited access to good data sets. Research generally requires the development of a set of assumptions in order to undertake the study. The assumptions made in the case of the G-TEDAs have, however, left most, if not all, of the methodological approaches open to debate. Moreover, the problems in assessing the G-TEDA programs have been further complicated by a lack of consensus on why the programs were established and the objectives being pursued.

Responding to the differing reports, HCD commissioned its own study in 2006, which looked at the impact of the program on neighborhood poverty, income, rents, and vacancy rates. The report showed that, on average, within enterprise zones between 1990 and 2000:

  • Poverty rates declined 7.35% more than the rest of the state
  • Unemployment rates declined 1.2% more than the rest of the state
  • Household incomes increased 7.1% more than the rest of the state
  • Wage and salary income increased 3.5% more than the rest of the state

Since HCD's 2006 report, two additional reports have been released. One report also found favorable impacts of the enterprise zone program and another found the program lacking in its ability to stimulate jobs.

In November 2008 and later revised and re-released in March 2009, economists from the University of Southern California (USC) released a report with findings consistent to the HCD report. The USC study found that federal empowerment zone, federal enterprise communities, and state enterprise zones have "positive, statistically significant impacts on local labor markets in terms of the unemployment rate, the poverty rate, the fraction with wage and salary income, and employment."

The Public Policy Institute of California (PPIC) released its study of the enterprise zone program in June 2009, looking at whether the EZ program had been successful in creating more jobs than would have otherwise been established without the zone. The main finding of the report was that, "Enterprise zones have no statistically significant effect on either business creation or employment growth rates."

The PPIC report also noted that the effects of the program differed between zones, appearing to have a greater effect on job creation in zones with lesser amounts of manufacturing and those where the administrators spent greater amount of time on marketing and outreach activities. The report further stated that PPIC encouraged a more critical evaluation of the program overall and on individual zones using both employment and other metrics such as poverty, unemployment, and property values.

It is important to note, however, that while the USC and PPIC reports discussed above were released in 2008 and 2009, the business development data used to form the statistical analyses were from 2004 and earlier. This date is significant, as both HCD and the Legislature approved significant reforms to the program in 2006 (discussed below), thus drawing into question whether either of the studies accurately reflect the impact of the enterprise zone program today. 

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