Santa Monica has emerged as the most expensive city for businesses to operate in, according to the 2024 Kosmont-Rose Institute Cost of Doing Business Survey released by Claremont McKenna College’s Rose Institute of State and Local Government. The annual survey analyzed cost-related factors across 216 cities nationwide, placing Santa Monica above other high-cost areas in Southern California and across the U.S.
Key factors for this ranking include high business license fees, utility taxes, and local sales taxes, which are among the highest in the region. Commercial rents have also surged, with many business owners citing unsustainable leasing costs. Additionally, stringent wage requirements driven by state and local mandates further strain businesses financially.
The city’s housing affordability crisis significantly impacts operational costs, as the lack of affordable housing raises wage expectations for employees. This situation can lead to high turnover rates and difficulties in attracting talent, compounding the challenges for local businesses.
The Kosmont-Rose Institute report revealed that nearly half of the 88 cities in Los Angeles County rank among the highest for business costs, with Santa Monica at the forefront. Other neighboring cities, including Culver City, Malibu, and Pasadena, also ranked in the top five, highlighting broader economic challenges in Southern California.
In contrast, the study identified Boise, Idaho, as the least expensive city for businesses, underscoring the stark differences in operating costs across the nation.
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