Golden State-based businesses fled last year twice as fast as in 2020 and 2019, and three times as fast as in 2018, according to a new report from Stanford University’s Hoover Institution.
While moves by big companies like Tesla, Oracle and Hewlett Packard Enterprise to relocate their headquarters (if not their entire businesses) grabbed the headlines, the report found that smaller companies were also increasingly looking to exit.
“California … is risking its economic future as much smaller but rapidly growing unique businesses are leaving with their innovative ideas,” researchers Lee Ohanian and Joseph Vranich said in the report.
“Why are companies leaving? Economics, plain and simple,” Vranich and Oahnian wrote.
“California state and local economic policies have raised the cost of doing business to such high levels that businesses are choosing to forgo many of their economic interests in California and move to a better business environment, less regulation, lower taxes, and a lower standard of living State. Fees.”
Concerns about an accelerated exodus have been brewing since at least 2020, but finances aren’t the only consideration for companies looking to leave the famously liberal Golden State.Some also have to deal with America’s increasingly divisive political climate
Critics say controversial bills and laws in Texas and Florida that discriminate against LGBTQ people — and a growing number of anti-abortion statutes in some states — underscore the cultural divide between different parts of the country.
The report looks at the number of headquarters moving out of the state, though that doesn’t always mean a company leaves entirely or stops expanding in California. Tesla has significantly expanded its Fremont manufacturing plant, which still employs about 10,000 workers.
The state has lost the headquarters of 11 Fortune 1000 companies in the past three years, including McKesson Corp. and Charles Schwab, the researchers found. From 2018 to 2021, only Los Angeles County took off more than 80 companies, while San Francisco lost 52 headquarters.
The report “underscores the growing risks to our state’s economic recovery, our future ability to compete, and the resulting decline in government revenue,” according to a statement from the Bay Area Council, a business think tank. Lobbying group with many well-known companies among its members.
Perhaps unsurprisingly, the researchers found that Texas has been the most common destination for California companies to relocate, but noted that it has been “for at least a decade.”
Texas attracts companies with a lack of corporate income tax, while California’s rate is 8.84%. California has also tightened regulations on worker safety during the COVID-19 pandemic, requiring companies to pay workers infected or exposed to the virus to stay home.
In addition to burdensome regulations, California regulates the economic and social aspects of companies, passing laws that require more representation of women and people of diverse backgrounds on company boards. Both efforts were declared unconstitutional by state judges.
Chase DiFeliciantonio is a staff writer for the San Francisco Chronicle. Email: chas.difeliciantonio@sfchronicle.com
Recent Comments