Although California has a reputation as the place to strike it rich, the Golden State's business profile has lost some of its luster since speculators first rushed West. The slowdown has been blamed on burdensome tax rates — the Tax Foundation estimates the state's 2006 corporate income tax rate was 8.84 percent, the highest in the region — onerous environmental regulations, restrictive labor policies, high workers' compensation costs and unresponsive politicians.

However, Gov. Arnold Schwarzenegger, who was ushered into office with support from the retail, apparel and beauty industries, has made some headway, such as hammering out the 2004 workers' compensation reform package. During his tenure, the state's economy has chugged along. This year, the California State University Long Beach Office of Economic Research is projecting slow but respectable growth.

Seeking to assess the mood of the state's retail, apparel and beauty leaders, WWD asked them to discuss the top economic issues affecting their companies. The responses ranged from environmental concerns to the minimum wage

increase to construction costs to the housing market. If there was anything the executives agreed upon, it's that the state's diversity, strong labor pool and trendsetting consumer base make it a worthwhile place to do business.

Max Azria

Designer, chairman and chief executive officer, BCBG Max Azria Group

"Los Angeles is perceived globally as a world city as opposed to strictly an American city. In fact, the energy and influence of Hollywood on fashion has never been stronger. However, the main challenge to being a California-based company is the difficulty related to speed to market."

John Paul DeJoria

Ceo, John Paul Mitchell Systems

"The number-one issue we face as a California-based company that also affects our families, neighbors and customers is pollution — whether it be in the air, our waterways or natural resources. Gov. Schwarzenegger has done a good job in addressing the issue in California, but it is now critical to have all politicians follow through to remedy it."

Michael Ball

Founder, Rock & Republic

"A recent development I feel has made an impact on the economy is the increase in minimum wage. I strongly support the issue and feel it's the right thing to do."

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