SAN FRANCISCO (KRON) – This year, California companies will move faster and faster from the state, according to a report from the Hoover Institution at Stanford University.
The report, released in August 2021, said California has already lost a total of 74 headquarters in the first six months of the year alone.
Compare that to the 62 companies that were known to have relocated from California throughout 2020, and it’s no wonder the Hoover Institution calls this a “serious loss.”
Florida is grappling with the deadliest phase of COVID-19 to date
Oracle and Hewlett-Packard, among the Fortune 500 technology companies relocating their respective headquarters from California, both choose Texas.
Losses in Silicon Valley
Researchers used data not just from the start of the pandemic, but data dating back to 2018 to illustrate the three-year exodus.
From January 2018 to June 2021, the San Francisco Bay Area accounted for five of the 10 California counties that had the highest number of corporate departures.
The startup hotspot San Francisco topped the list – second only to Los Angeles – with a total of 47 companies lost in that three-year period.
This city is becoming the most expensive place to own a home outside of California
Other Bay Area counties that fell heavily included: Santa Clara County, 4th, losing 28 companies; Alameda County, # 5, with 20 companies lost; San Mateo County, # 7, loses 13 companies; and Contra Costa County ranked 9th with a loss of six companies.
According to the Hoover Institution, these migrations in the Bay Area reflect “high tech companies” […] Choosing less expensive locations not only to control business costs, but also to attract workers who want to avoid living in the ultra-expensive Silicon Valley or San Francisco. “
Where are you moving?
The state of Lone Star has won 114 of the 265 well-known California companies that relocated their headquarters between January 2018 and June 2021. But Texas has been a prime relocation option for at least a decade, the report said.
According to the Hoover Institution, Tennessee was the most attractive location after Texas. However, the state only gained 25 companies, compared with 114 that found a home in Texas.
Some of the companies that left California for Texas in 2021 can be found in the California Policy Center’s Book of Exoduses.
The nearby western states round out the top five moving destinations: Arizona, Nevada, and Colorado. Researchers attribute their ranking in part to comfortable, short flights from California.
San Francisco lifts apartment smoking bans
Why California is viewed as “bad for business”
The report cited a 2021 survey by Chief Executive Magazine in which US CEOs revealed what they value most when choosing a location for their headquarters:
- Tax policy
- Regulatory climate
- Availability of talent
In this CEO survey, Texas was rated by all 50 states as the absolute best business location and California as the absolute worst business location.
The high taxes in California are much to blame. The Hoover Institution cites the Tax Foundation to explain:
“When taxes make up a larger portion of profits, those costs are passed on to consumers (through higher prices), workers (through lower wages or fewer jobs) or shareholders (through lower dividends or stock value), or a combination of the above.” Hence, a country with lower tax costs will be more attractive to business investment and more likely to experience economic growth. ”
Jared Walczak and Janelle Cammenga from the Tax Foundation
The report also states that California is the most regulated state in the country. This makes it difficult for companies to comply with all of the rules enforced by their 518 government agencies, boards, and commissions.
Read the Hoover Institution’s full report for more reasons for California’s corporate churn.