It’s no secret that the cost of living and inflation are now part of our daily lives. And while this impacts consumers, it also affects business owners. A recent study published by Claremont McKenna College’s Rose Institute of State and Local Government ranked 216 cities nationwide into five tiers based on business costs, where Santa Monica landed in the worst tier in every category.
Close behind were Culver City, Pasadena, Malibu, Arcadia, Huntington Park, Los Angeles, San Francisco, Burbank, and South Pasadena, rounding up the top 10.
Santa Monica has long been known as a tough place to do business, but where do the high costs come from? The variables the study took into account included business license fees, utility and sales taxes, minimum wage, average commercial rent, the crime index and housing affordability index.
Regarding housing, the study pointed out that the affordability crisis is a major contributor to the city’s high business costs. Like much of Southern California, Santa Monica faces a shortage of affordable housing, affecting both employers and employees.
For businesses, this means higher wage demands as workers struggle with the high cost of living. This often leads to higher employee turnover and difficulties in attracting and retaining talent, further driving up operational expenses.