California losing population in big numbers

A new study by Spectrum Location Solutions finds that companies are leaving California because of its difficult business climate, which has worsened this year as politicians in Sacramento have approved harsh new policies.

PopulationFor once, government agencies agree on something – the Census Bureau, Internal Revenue Service and California’s Legislative Affairs Office have a common message – California is indeed losing population in big numbers. In short, within the last decade more than 1 million people left the state.

However, no agency calculates the number of companies exiting California. To fill in the information void, a consulting firm, Spectrum Location Solutions, today issued new research estimating that about 660 California companies moved 765 facilities out of state in 2018 and thus far into 2019. Overall losses involve corporate headquarters, manufacturing facilities, data centers, research hubs, software and engineering centers and a few warehouses.

“California companies leave because the state’s business climate continues to worsen, particularly with the harsh employment, immigration and spending measures that Gov. Gavin Newsom has approved,” said the study’s author, Joseph Vranich. “I foresee more exits because California politicians have a level of contempt for business that has reached epic lows.”

The jobs relocated directly or lost as an opportunity cost total at least 145,000, a good number of which are high-paying positions because headquarters moves accounted for 34 percent of actual moves. Also, manufacturing plant relocations, which totaled 44 percent of events, take decent middle-class wages with them.

“Company departures are understandable when CEOs nationwide surveyed by Chief Executive Magazine have for 15 consecutive years declared California the worst state in which to do business,” said Vranich.

Texas held the No. 1 rank for attracting California companies – which has been the case every year for 12 years – followed by Arizona, Tennessee, Colorado and Nevada.

Foreign nations that gained from California companies outsourcing were Mexico, India, China, Costa Rica and the Philippines, which aren’t ranked because of the small sample available.

At least 22 California counties suffered losses with Los Angeles losing the most followed by San Francisco. Their bottom-of-the-barrel rankings are due not only to their business-unfriendly municipal policies but increasingly unpleasant neighborhoods as squalor continues to spread.

“The decline in livability is reflected in surveys that show about half of all Californians are thinking about leaving the state, a number that grows to 63 percent of Millennials,” said Vranich.

Companies often keep their headquarters in the Silicon Valley counties of Santa Clara, San Mateo and Alameda. But these very places are experiencing high levels of expansions in out-of-state locations, likely due to the workforce demanding high wages to meet exorbitant housing costs.

A report issued earlier in 2019, entitled, “Why Companies Leave California,” addresses in depth the state’s hostility toward businesses. Examples include regulations requiring steep fines for minor infractions, a ruthless legal climate, escalating taxes and utility rates, high labor costs, and signs that more workers plan to depart California.

That study, which focused on the 2008-2016 period, estimated that about 13,000 companies disinvested in the state and nearly $77 billion in capital was diverted to other states and nations. The report has been cited by The Wall Street Journal, Investor’s Business Daily, Forbes and many local Business Journals around the nation.

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