Businesses are leaving California at a higher rate than in recent years, according to a new report studying business headquarter migration.
The number of companies that either announced or filed that they were leaving the Golden State for another state has risen sharply in the first six months of 2021 compared to previous years, the Hoover Institution at Stanford University said this week.
The report said 74 known California businesses had relocated their headquarters to another state in the first six months of 2021 -- double the rate for each of the three previous years.
"Our findings indicate 265 companies moved their headquarters to other states just in the period from January 1, 2018, through June 30, 2021, based on the date of the announcement or date of documentation with the state, whichever came first," the report said.
The report, "Why Company Headquarters are Leaving California in Unprecedented Numbers," relied on several different sources to track business migration out of the state and found that although corporate exits have been occurring across virtually all industries — i.e. manufacturing, aerospace, financial services, real estate, chemicals, and health care -- perhaps the most disturbing is the large number of high-technology businesses that are leaving.
"After all, the tech hubs of Silicon Valley (Apple, Google, Facebook) and San Francisco (Salesforce, Uber, Airbnb) are among the most productive locations on the planet, filled with creative inventors and with venture capital ripe and ready to fund those inventors," the authors said.
"California policy makers have always thought tech would stay, no matter what. But even tech firms are leaving the Golden State at an accelerating rate. These headquarters exits range from big-tech legacy firms including Hewlett-Packard Enterprises and Oracle to smaller, rapidly growing firms such as Darvis, the AI business that is helping hospitals manage room utilization and complex protection protocols."
The numbers are likely understated since smaller companies aren’t required to disclose a move, the Washington Examiner reported.
"The primary reason why California businesses are leaving is economics, plain and simple," they said. "California is too expensive, too regulated, and too heavily taxed, both for companies and for the workers they hire. These businesses are predictably moving to states with lower costs, fewer regulations, lower taxes, and a higher quality of life for their workers, in which families pay far less for a home."
Some business owners told the report's authors that they didn’t move their companies in 2020 due to the COVID-19 pandemic, including fearing the possibility of infections when traveling and working with site selectors on a new location, the Examiner reported.
Texas, Arizona and Nevada were the most popular landing spots for California businesses on the move.
HomeLight CEO Drew Uher told the San Francisco Business Times that his company moved its base of operations to Scottsdale, Ariz., from the Bay Area.
Uher, who said the majority of his employees were in Scottsdale, cited cost-of-living, saying the environment there is “just more conducive to growing business.”
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