California has seen a number of high-profile businesses leave the state in recent years, including Chevron and SpaceX. Chevron announced plans to move its headquarters to Houston, while Elon Musk said he will move SpaceX and the social media platform X to Texas. Critics say California’s environmental regulations, high taxes, and liberal policies are driving businesses away.
More than 350 businesses moved their headquarters out of state from 2018 to 2021, including 11 Fortune 1000 companies. However, California still ranks at the top in several economic metrics, such as gross domestic product, agricultural production, and manufacturing. The state has also seen more than 7,600 tech startups in the last five years, outweighing the number leaving.
California is home to the most Fortune 500 companies with 57.
Business exodus driven by high costs
Loren Kaye, president of the California Foundation for Commerce and Education, says, “You pay a price for being here.
But you also get something for it.”
The state’s population growth has slowed in recent decades, trailing the national growth rate from 2010 to 2020. This led to California losing a congressional seat after the 2020 census and over $100 billion in lost revenue from personal income tax from 2020 to 2022. Companies are moving mostly to Texas, Tennessee, and Nevada for lower corporate taxes and cheaper labor.
Kenneth Miller, director of the Rose Institute of State and Local Government at Claremont McKenna College, says, “They’re leaving because they think it’s more affordable and they can make more profit in Texas than in California.”
Despite the challenges, California continues to focus on growing its own businesses through innovation in technology and entertainment. Lenny Mendonca, former chief economic and business adviser to Governor Gavin Newsom, says, “California spends no time trying to get other companies from other states to move here. We grow our own.”
- CSMonitor.”California is bad for business? Don’t tell Californians.”.
- Alec.”Chevron Leaving for Better Business Opportunities: Jonathan Williams on 790KABC”.
- MarinIJ.”California Voice: My business won’t flee like SpaceX or Chevron. But we do want some changes”.