California Business Departure Study

Business companies are leaving California for better opportunities in other states, with the number of departing companies nearly doubling from 2012 to 2019.

A study commissioned by the Los Angeles Area Chamber of Commerce follows reports that California’s population has been shrinking since 2020.

“The Golden State’s luster appears tarnished in recent years,” said the study authored by economists and academics with the Inland Empire Economic Center. “A seemingly endless stream of firms is leaving the state, citing high taxation, heavy regulation, other business costs, and anything but a business-friendly environment.”

Among the main reasons that tech companies are leaving California include high taxes, high rent prices, overcrowding, environmental conditions, and the impact of government restrictions during the pandemic.

California’s unemployment rate fell to 3.9 percent in September, tying for the lowest rate recorded in a data series from 1976.

But Michael Bernick, a former EDD director, says California’s unemployment rate fell because the number of Californians in the labor force also declined.

“Interest rate hikes drive layoffs in finance and related business service positions. The unusual job dichotomy in the state continues: hiring freezes and layoffs in white collar positions and continued worker shortages in direct care and direct service positions,” Bernick told Cal Matters.

State officials disagree with the study’s conclusions, saying the state’s economy is thriving, citing rising employment data to soaring business license applications.

Economic consultant Christopher Thornberg, a former UCLA professor of economics, called the study’s assertions the “same old nonsense” he’s been hearing from business for years.

“The data tells us that the California economy is alive and well,” Thornberg told the OC Register. “The pressures to be in California are still greater than the pressures to leave California.”

California has experienced a huge net loss since 1990. According to the data, 37,313 business establishments moved to California from 1990 through 2019, while 54,630 moved out, for a net loss of 17,317 business establishments during that 30-year period.

California Mexican-based company Cacique announced last month that it will be moving its headquarters from the golden state to Texas and has opened a new dairy processing facility in Amarillo.

The popular ethnic company is the leading maker of authentic Mexican-style cheeses, cremas, chorizos, and salsas in the U.S. The company is celebrating its 50th anniversary, focusing on innovation and increased production capacity.

“We’re proud of Cacique’s success over the past 50 years. The company started with my mother perfecting cheesemaking, while my father sold Queso Fresco door-to-door, one pound at a time, out of coolers in our family car,” Cacique CEO Gil de Cardenas said in a statement.

“As we’ve grown from our humble roots, one employee at a time, Cacique Foods remains a family-owned company, and we’ve remained true to the core values my parents founded this business upon: Family. Quality, Integrity and Authenticity.”

In recent years, companies that have moved their U.S. headquarters out of the state include Hewlett Packard Enterprise (HPE), Oracle, Charles Schwab, CBRE, Toyota, and Tesla.

The top destinations for many companies relocating are Nevada, Texas, Arizona, Oregon, Washington, and Florida.

HPE CEO Antonio Nari said in a statement that the pandemic had a decisive impact on the company’s decision to move its headquarters from California to Houston.

“Most of our customers, partners, and team members won’t experience any changes associated with this move. We will provide the option to most executives and non-technical team members at the San Jose campus to relocate to the Houston area. Relocation will be entirely voluntary, and there are no layoffs associated with this move,” the statement reads.

Many states are also working to attract businesses to move and continue their success in their state’s economy, even in industries that have seen much success in California.

Atlanta is a new hot spot for film production and competes with Hollywood. At the same time, Austin is gaining more info tech companies from Silicon Valley.

And biomedical research firms are moving to North Carolina’s Research Triangle Park.

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Despite the uncertainty of California’s economic growth with companies taking their businesses to other states, Gov. Gavin Newsom remains optimistic that California is still one of the top national economies in the nation and the world.

“While critics often say California’s best days are behind us, reality proves otherwise—our economic growth and job gains continue to fuel the nation’s economy,” Newsom said in a statement.

“California’s values and entrepreneurial spirit have powered this ascent to becoming the 4th biggest economy in the world, and we’ll continue doubling down on industries of the future, like renewables and clean energy. I feel tremendous pride in California’s resilience, leadership, and our formula for success.”