California: ‘Closed Until Further Notice’

California Governor Gavin Newsom imposed another statewide lockdown on the state’s residents. For many, this is the death blow to their businesses. Signs in businesses everywhere say “Closed until further notice.”

Tesla founder Elon Musk announced he has had enough of the irrational and unlawful lockdowns. Musk is leaving California for Austin Texas, and he’s taking more than 10,000 jobs with him.

Hewlett Packard Enterprise announced it is moving its global headquarters to the Houston, Texas from California.

Oracle just announced they already moved their headquarters from Redwood City to Austin, Texas.

Other big businesses already left California: Toyota Motor North America, Kubota Tractor Corp., Hardee’s/Carl’s Jr., Charles Schwab, Jamba Juice.

We know why California companies leave for other states: Chief Executive Magazine reports year after year that when CEOs across the country are surveyed, they name California as the worst state in the country in which to have to do business. California has the highest-in-the-nation taxes, one of the highest business tax climates, with the Tax Foundation ranking California at No. 49 – the second worst in the nation, ahead only of New Jersey.

This outbound migration is not just the fault of Gov. Gavin Newsom, but it has ramped up significantly. And while Musk has been building and expanding his business in Texas, Gov. Gavin Newsom has been silent about it – and about all businesses and residents abandoning the state.

Chief Executive Magazine’s  annual “Best & Worst States for Business” survey found once again, “for the 16th year out of the 16 years we have conducted our poll, Texas ranks No. 1. Despite the shutdown of much of its oil industry by the coronavirus recession, the state retains extremely business-friendly characteristics and policies. The rest of the top 10 states also remained essentially unchanged from the 2019 rankings. Similarly, the bottom 10 in the rankings were relatively frozen, with California once again in last place.” (See the full list.)

Chief Executive says:

“California at the Bottom—Again: Business owners—especially companies that make things— continue to abandon the state as fast as they can.”

“Our GDP growth outperforms every damn one of those other states they highlight,” he said at a conference in San Francisco in late June, bashing Texas and Tennessee along the way. “I get it. We’re not going to be the cheapest place to do business. But you knew that 50 years ago. Come on. Stop.”

“The problem is, owners of businesses in California aren’t stopping. Many are still running away as fast as they can, especially those who make things. Newsom’s comment summed up why, implicitly saying this to CEOs: As long as California can count on spectacular growth from tech companies in Silicon Valley and movie studios in Hollywood, don’t expect the state to reverse any of its attitudes and policies that chase many companies away.”

California continually ranks as the worst state in the country in which to have to do business. California has the highest-in-the-nation taxes, one of the highest business tax climates, with the Tax Foundation ranking California either at No. 49 or 50.

According to data from the American Community Survey, from 2007 to 2016, about 5 million people moved to California from other states, while about 6 million left California. On net, the state lost 1 million residents to domestic migration—about 2.5 percent of its total population.

More than 691,145 Californians left the state in 2018. Texas nabbed 86,164 former Californians that year, according to an Orange County Register report. “Census Bureau migration data for 2018 shows in raw terms of people moving, the top spot for Californians is Texas, which got 86,164 Californians in 2018. Next came Arizona (68,516), Washington (55,467), Nevada (50,707), and Oregon (43,058). All told, California had the most exits among the state and that wave grew by 4% in a year.”

Top 10 States for Business

Bottom 10 States for Business

“Consider California’s ‘net domestic migration’ (migration between states). From 1992 through mid-2019, California lost a NET 4.4 million people to other states, California Tax fighter Richard Rider reports. Net departures slowed in 2008 only because people couldn’t sell their homes. But since 2011, more people still leave each year. In FY 2018-19, we lost 203,000, over 30% higher than the year before. Again, note that these are NET losses. Sadly, our policies are splitting up more and more CA families.”