Economics

Companies Are Leaving California in Record Numbers, and It Might Get Worse

The state of California is becoming legendary for creating the most anti-business climate in the country because of its high taxes, excessive regulations, forced unionism, and bloated public sector. For the second year in a row, a large group of America’s CEOs recently rated California as the worst state in the country to do business in an annual survey conducted by Chief Executive Magazine. California currently ranks No. 49 among U.S. states for “business tax climate” according to the Tax Foundation’s 2011 State Business Tax Climate Index, and it ranks No. 48 for “economic freedom” according to a recent study by the Mercatus Center.

It shouldn’t be any surprise then that companies are leaving the “Golden State” in record numbers this year (see chart below) for “golder pastures” and more business-friendly climates in other states. In just the last two years, the number of companies leaving California has accelerated more than five-fold, from one per week in 2009 to 5.4 per week this year, according to California relocation expert Joe Vranich.

And now because of new online sales taxes signed into law this week by Governor Jerry Brown, California’s business climate has become even chillier. According to the L.A. Times, “Amazon.com dropped about 10,000 California-based associate sales partners late Wednesday so that it would not be forced to collect California state sales tax on purchases made through them.” Many of Amazon’s sales partners in California are small business like book stores that rely heavily on online sales to stay in business, and might now be forced out of business, or out of state.

With another new tax in place on business activity, California will likely remain at the bottom of the state rankings for business and tax climate, and it’s a good bet that the rate of “disinvestment events” (companies leaving California) will accelerate ever more.

40 thoughts on “Companies Are Leaving California in Record Numbers, and It Might Get Worse

  1. Great article. This clearly quantifies exactly what we’ve been seeing day-to-day for the past few years. Our “leaders” in Sacramento spent a decade pushing the Aerospace industry out of So. Cal., and Jerry Brown has just launched their opening salvo against tech companies.

    It’s their game plan I think – leave an industry alone until you think it’s dependent upon its relationship with CA, then start the extortion… umm, I mean taxation.

    What Jerry doesn’t get, or doesn’t care, is that tech companies are much more nimble than hard-asset manufacturers (like aerospace). Tech companies won’t spend a decade planning their relocation. They can leave quickly, very quickly. There won’t be a “decade of exodus” during which Jerry can tax them.

    So, yeah, thanks Jerry, you’ve really done it this time. We’ve grown accustomed to you guys constantly making it more expensive for companies to hire Californians – for some reason you’ve been doing that for 20 years, and we’re all aware of it. But now you’re making it more expensive for companies to simply do business with Californians.

    Jerry Brown, you, sir, do not know enough about what you’re doing, to be doing anything at all.

    Sheesh… no wonder 4 out of every 10 jobs created in the US right now are in Texas!

    • What? This article doesn’t clearly quantify anything. It lacks a break down of the sectors, the size of the companies, actual economic loss per sector/company.

      • Don’t be lazy.

        Do some easy research yourself.

        I know of one company locally in California which was a wholesaler / retailer in fossil fuels for commercial and residential use.

        The local government ordered them to implement such costly environmental standards that the company simply packed up and left along with their jobs and relocated outside of our county.

        Just like the idiots in Los Angeles who have billions of dollars in unfunded public pensions taking the time to order condoms in porn movie actors. So, what do you think the porn industry is doing ? They are preparing to leave as all other businesses plot to do when criminal government sticks its nose in the affairs of our lives.

    • Announced today, June 11th, on KCAL9 news. The Gov. of Texas is trying to woo Tesla (battery mfg) and thousands of jobs, out of Ca. and into Texas. Gov. Brown’s retort to this was to say it was a cheap dig at California. This is his response to everything while companies are leaving. We are loosing Toyota and those jobs in 2016. They (Toyota) are starting the exodus now. Paul, if you wish to quantify results, just do what I did and Google that question. You will get your answer.

  2. I think a more interesting chart would track the number of jobs leaving with those companies. Are these 25 person companies, or 1000 person companies. Also, how does the number of businesses leaving the state compare to the number of start ups each week?

    • Also revealing, look to see population increase (or democrat voter signups) vs. number of drivers’ licenses increase/decrease. Although living very green lifestyles, those without cars are not big spenders.

  3. I own a small tech company and I initiated my move to Nevada after Jerry Brown passed the latest budget. I’ll be entirely out of the state by the end the year.

  4. This is a direct result of Socialism and Liberalism that runs amok in Sacramento. Add in massive amounts of undocumented people and you have KAOS in Kalifornia. Much of the country has recognized this huge failure in policies and have adopted ways to take advantage of Kalifornia’s stupidity. Incentives galore with lower taxes and freer markets have boosted other states into thriving lands in which to live and work.

  5. It would be intewresting to see comparative data on Illinois, New York,and before this year on NJ,Wisconsin, Indiana and Ohio.
    Will the fail out of mismanaged states be next?

    • Elections affect very little of modern local, state, or federal government.

      Once in office, those elected people merely attempt to keep everything cozy for
      government employees at our expense.

      Both political parties have gone criminally corrupt and seek only to enrich and empower themselves.

      Why else does the government have money to waste on multiple foreign wars but not enough to protect our own borders ?

  6. This has nothing to do with liberalism and socialism run amok. It is actually due to right wing conservatives who mucked up California with proposition 13. Prior to prop 13 California had the best education system in the country, and was one of the best states to live in. Corporate interests backed prop 13 to reduce their tax liabilities (under the guise of helping out grandma and grandpa – a much more targeted law could have helped them out though) and now California is in the toilet. Education system is crap, and so is the infrastructure.

    As for taxes, you get what you pay for. If no one pays tax, there is no infrastructure, no educated population, no regulation and no law and order.

    The anti-tax obsession America has will turn the country into a third world banana republic (we are already almost there).

    • How many people would have been taxed right out their homes during the most recent housing bubble because owners suddenly found their houses worth double and even more than triple what they had been just a few years earlier had it not been for Proposition 13?

    • Tim, do you really believe the drivel that you’re spitting out. According to Wikipedia, California hs been in the control of the Democrats for the past 40+ years expect for 2-2 year periods. A ording to Wikipedia, 70% of registered voters voted in the election and 65% voted for it. Democratic voters make up most of the registered voters population in CA.

    • You don’t have to wait to be taxed, Tim. You and your lib friends can give more of your your money NOW. Pleaase be generous:

      Gifts to the United States
      U.S. Department of the Treasury
      Credit Accounting Branch
      3700 East-West Highway, Room 622D
      Hyattsville, MD 20782

      • Only fools donate money to the criminal government any longer.

        Once upon a time and maybe 100 years ago, it was a good thing to do.

        Today, your donated money is used for foreign wars and for further expanding the police state. A cop on every corner and a law for every breath you take.

        In California, the public pensions have been studied by a dozen different actuaries. Their conclusion is always that California public pensions are UNDER-funded, that public employees are allowed to skate and not contribute enough to their own cozy retirement at age 50. $500 BILLION dollars in underfunding is the actual worst case study.

        Why donate to the criminals who steal our money, retire themselves 17 years before the rest of us, and then demand WE pay that $500 billion of underfunded public pensions that they created for themselves ?

        NEVER DONATE CASH TO GOVERNMENT. NEVER.

    • oh please California has been dominated by liberalism wanna be fascist buerocrates for the last 2 decades the only difference between those in our prison system and those in our government is the complete and shear lack of any legitimate accountability the fact is California is a failed state do the corporate prostitution of our government they have sold us all out to the special interest that fund them , why do you think there is so many bullshit regulation , its all about turning our state in a fascist police state

    • So, tell me Tim. When has a conservative ever been able to get things done in CA? I am fourth generation and the Dems have gone from left of center to downright commie here. I do know conservatives even in San Francisco but we’ve been district-ed out of our votes meaning anything. Talk about disenfranchisement. The worst cities in the country are ALL Democrat run. Get your head out of your ass. Seriously.

      • Californians continue to vote with their feelings (which is really just mental masturbation) rather than common sense. Common sense has left the building.

    • Tim it has EVERYTHING to do with liberalism. This state is so stupid it wont even get rid of the illegals that are sucking this state dry and that is just the tip of the ice berg. Its people like you that are making this state the joke of the US. Its time to get rid of Feinstein, Boxer and Pelosi…………..three of the biggest idiots out there.

    • California does not have an income problem-we have a spending problem. Yes, all of those things you pointed out are necessary. However I notice you fail to mention the waste, fraud, and abuse that are now rampant in the system, constituted by public service sector unions and advocated by legisilature. The City of Los Angeles currently allows employees to retire at age 50-with 100% of thier benefits. Public education in California accounts for 76% of the budget. New taxes, intended to be “for the children” go nowhere except to fund the retirement benefits and bloated pension obligations of future retirees. Go ask the City of Stockton, San Bernardino and other recent BK-11′s how well thier tax spend policies have worked. The path California is on is un-sustainable. We simply cannot keep raising taxes because our legislature and thier hoodlum cronies refuse to get thier fiscal house in order. When the last business in the state finally closes shop because profits are no longer justifiable just to keep people employed, where will the public sector draw thier entitlements from?

    • Their will be no tax payers in California soon, due to Illegal Aliens taking over the state. I see so many illegals and you know they are not paying taxes. I am leaving the first chance I get!

  7. I moved my company to Texas from CA in 2001. The writing was on the wall at that time. Since moving, we’ve expanded to 35 employees from 15. Small potatoes, to be sure. However, we’d be out of business now if we had stayed. CA is simply hostile to entrepreneurs.

  8. According to http://www.manta.com/mb_41_ALL_05/california , there are 3,314,246 companies in CA.

    A little simple math can help put this into perspective:

    5.4*52=280 businesses left this year.

    280/3314246=0.00008448377097 or .008448377097% of California companies left for “greener” pastures this year.

    Or…

    8.4 out of every 100,000 companies.

    A little basic math and common sense show that this is a pretty skewed article… As Chad brought up, I’d be more interested in seeing the sizes of these companies and comparing the companies leaving to the companies being started…

    • Face it, everyone.

      The only people who support the criminal local, state, and federal government any more are the parasites who derive their government welfare-paychecks from the system through either public employee status or some lame consultant to government types.

      When the average wage in California is $64,000 and the retirement age is 67 through social security, the government parasites have the audacity to claim they deserve to retire 17 years earlier at age 50.

      And in the case of the public employee public safety parasites, they retire at $100,000 a year. And thats only the street cops. The cops and firemen with rank retire with twice that amount.

      Oh, the usual sniveling from those public sector workers is that cops need to be young to do their jobs so they get to retire early. Well, tell that to all the steel workers, the carpenters, the welders, the mechanics… all who labor hard well beyond age 50.

      What about the public safety danger ? Tell it to the cab drivers who face higher risk statistically than any cop in California.

      Government is criminal people. And the public employees are the ones who rob us and rape us through their never ending demands for more of our money.

      The solution?

      Social security for all government workers. No public pensions.

      AND…

      A part time legislature so that the professional public parasites are forced to find work in the private sector rather than sitting round pretending we need them.

  9. Yep. Good ol’ California. Has to tax the ever-living SHIT out of everybody and everything in order to pay for 100K lifeguards and cops, most of whom themselves are greedy under-educated losers who just want their fat pension so they can continue leeching off the state until they die off.

  10. What do you call a criminal government ?

    A government that thumbs its nose at the voters.

    Most recent poll on the State of California Bullet Train ? Voters say they want another vote and hope to kill it off.

    Gov Jerry Browns response ?? So what !! HE WANTS IT !! Voters matter not.

  11. If all of you would go to a city,state and gov. meeting and demand our consutitutional rights and stop them from making up there own rules and laws our country wouldnt be in this BIG mess…….We all keep thinking that we vote someone into office is going to fix this BIG mess……..well it hasnt work in years……The dirty lie….is at the meeting were they make up the rules and laws have a vote on them and the two or three people that may show up take a vote on what ever they make up and pass it…….This has been going on so long we have no idea what the &*&%$# is going on anymore.
    The only way to fix this is to DEMAND our consutitutional rights and have the PEOPLE vote on each item and NOT the two people that show up!!!!!!!!!!!!!!!!!!!!!

  12. The overtime and breaks attorneys who claim employees dont understand what they sign or agree to are a big problem– Government labor departments never crack down on laziness, its always the employers fault. Government civil servants are like welfare losers, they failed in the real world.

  13. Mandatory hiring quotas, political correctness, arrogant attitudes toward the taxpayer…..
    It needs to be taught that politicians, and public servants are there to SERVE THE TAXPAYER.

    But, somehow it’s gotten totally screwed up.
    The taxpayer is treated with contempt, rudeness etc and the public servant and politicians think they’re there to serve themselves!

    California leads the nation in this new arrogant attitude.
    The taxpayer is their $itch.

  14. I knew it was finally over for dear old California in 2006, and consolidated both of my offices in British Columbia. By leaving the US I was able to avoid the US recession and found myself in a location where the real estate was still appreciating. I, sadly, took good jobs with me, my top engineer was making $250K/yr working for me back in Cali

  15. I have lived long enough to see history repeat itself in California.
    Jerry Brown was Governor from 1975 to 1983.

  16. One must certainly cynically admire the cluelessness & denial capacities of California’s big government tax the rich more marxists handout seeking cretins for denial. California is dying If the mentally limited leftist cretins of the coast believe business, employment & affluent taxpayers are not fleeing California how do they explain the state’s tens of thousands of empty or near empty commercial, industrial, & offices complexes statewide & the near complete absence of new business construction the entire length & breadth of California.
    After 65 years of lifelong California residence and our retirement we too fled the state and now pay our total housing costs from what we save on California’s state confiscatory enterpriser punishing income tax, higher sales, & property taxes (now less than $3,000 rather than $11,000+ for the same size home).
    I do hope the excuse making prevaricators such as Paul & Tim will enjoy California’s weather after the last non-parasitic business enterprise & net taxpaying resident has left the state and left them with no one present other than tax consuming over compensated unionized government employees,non-productive illiterate paleta cart pushing illegal aliens & welfare benefit sucking parasites.
    Oh yeah the three newly built custom houses in my neighborhood have just been purchased by fleeing recently retired California public employee retirees in a no state income tax state. Locals here most California tax refugees say that it took 54 years of democrat control of the legislature in California to turn our state’s burning hot deserts into an affordable low tax paradise.

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