SAN FRANCISCO (KRON) – The Golden State has long been an epicenter for entrepreneurship — but that reputation has been threatened since the COVID-19 pandemic, when a multitude of economic and social forces came to a head and led companies to make the decision to pack up and leave.
A 2021 report by the Hoover Institution at Stanford University in August 2021 found that 74 corporate headquarters left California in just the first six months of the year, in addition to 64 companies that moved out in 2020.
Bay Area counties accounted for five of the top 10 counties that saw headquarter migration — with San Francisco leading the way.
Tesla Motors: Palo Alto to Austin, Texas — No discussion of companies leaving California would be complete without discussing Tesla, of course. The company officially relocated to the Lone Star State in December 2021, after a conflict between CEO Elon Musk and Alameda County health authorities over COVID-19 rules during the initial lockdown.
“California has been winning for a long time, and I think they’re taking it for granted,” Musk said when announcing the change.
Musk also moved his personal residence to Texas, which lacks a state income tax.
However it appears Musk isn’t done with California as the magnate is seeking to buy San Francisco-based Twitter.
Oracle: Redwood City to Austin, Texas — Oracle, namesake of the San Francisco Giants ballpark and the former namesake of the arena that the Golden State Warriors called home, announced its move in December 2020.
Executive Chairman Larry Ellison and Chief Executive Officer Safra Catz were major supporters of former President Donald Trump, Bloomberg reported, and company leaders felt increasingly out of sync with modern Silicon Valley. The world’s third-largest software company’s leaders had also moved its annual conference, OpenWorld, from San Francisco to Las Vegas, and the company was trying to build a younger and cheaper workforce.
Hewlett Packard Enterprise: San Jose to Spring, Texas — Hewlett Packard Enterprise moved to the Lone Star State the same month, with its moved announced by Gov. Gregg Abbot (R), as KRON4 reported at the time.
“As we look to the future, our business needs, opportunities for cost savings, and team members’ preferences about the future of work, we are excited to relocate HPE’s headquarters to the Houston region,” CEO Antonio Neri stated at that time. “Houston is an attractive market to recruit and retain future diverse talent and where we are currently constructing a state-of-the-art new campus. We look forward to continuing to expand our strong presence in the market.”
Charles Schwab Corp.: San Francisco to Westlake, Texas — The financial services company merged with TD Ameritrade in 2020, which resulted in a corporate HQ move to Westlake, a suburb of Fort Worth. The move was official on January 1, 2021.
Palantir Technologies: Palo Alto to Denver, Colorado — They’re not all moving to Texas! Palantir Technologies decided to move a mile high to Denver. The analytics firm, whose original clients were in the U.S. intelligence community, was co-founded by Peter Thiel of PayPal fame. Chief Executive Officer Alex Karp had stated he was opposed to the “increasing intolerance and monoculture of Silicon Valley,” according to Axios.
The Stanford researchers found that the regulatory climate and taxes were big reasons companies chose to make the leap east. Of all U.S. states, CEOs rated California’s tax and regulation policies the worst, including a total of 518 state agencies, boards and commissions.
“Lawmakers in Sacramento continually enact laws that expand civil liability on businesses and
property owners,” the report stated, adding that another factor is that California workers also need more money than workers in other states.
“California employees often have (or demand) elevated wages to meet the high cost of living, excessive housing prices, burdensome income tax rates, expensive utilities, and in some cases payments for private schools to avoid the failing public school systems.,” the researchers stated. “For an employer, labor costs are higher than elsewhere when comparisons are made of charges that include not only wages and salaries but employer-paid statutory benefits and fringe benefits.”
Texas is considered the most entrepreneur-friendly state, and California ranks No. 49 of 50, according to the study.