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(CALIFORNIA GLOBE) –
According to a new Stanford University Hoover Institution report released on Thursday, the rate at which companies have been leaving California has risen dramatically since 2018, with the 153 company headquarters relocations in 2021, more than doubling the 75 that left in 2020.
Since the late 2010’s, California’s high tax rates and cost of living, in addition to others factors, have slowly increased the number of companies leaving California. While some were located in Southern and Central California, the vast majority of companies that moved their headquarters were located in the Bay Area.
The drug distribution company McKesson left in 2018 for Texas, one of the first Fortune 500 companies to bail. However, the COVID-19 pandemic, which had businesses place a larger focus on remote work and cost cutting measures, opened the floodgates. In 2020, more Fortune 500 companies left, including HP Enterprise moving their HQ from Silicon Valley to Houston, and Oracle going from Redwood City to Austin. The next year, Tesla left, vacating Palo Alto also for Texas. This year, while not having an official total count yet, has also seen departures, such as Lucas Oil for Indianapolis.
Outside of the Bay Area, while headquarters weren’t moved, many employees were shifted elsewhere. Last year, Disney refused to move from Burbank, but did set up more employees moving from SoCal to Orlando. Chevron did the same thing this year, staying in San Rafael when they switched HQ buildings, but also moving part of their workforce to Houston.
The Hoover Institute put out the raw numbers of just how many large companies have moved their headquarters in their report, and the numbers were higher than many people expected. In 2018, only 46 had left. In 2020, 75 had left. And in 2021, a whopping 153 companies left California.
153 companies move their HQ out of California in 2021
While many notable companies have given commitments to stay, such as Apple and Disney, with others retaining large presences in California despite the HQ moving such as Oracle, the damage to California is still very noticeable. Many younger companies, which are more likely to grow and establish roots, have in particular been leaving because of the business climate and high business costs, as well as other factors mentioned by Hoover such as “reducing productivity, and reducing profitability, including tax policies, regulatory policies, labor costs, litigation costs, energy and utility costs, and concerns about a declining quality of life within the state.”
The report notes that many younger people have been leaving the Bay Area in particular because they cannot afford homes in the area, and that as a result, they are also locked out of the better school systems for their children. As a result, Silicon Valley, which in the 2010’s was one of the most attractive places in the country to live in following the Great Recession, quickly fell from grace.
