National Review: Why Businesses Leave California

Great article from National Review:  Why Businesses Leave California

For most of the 20th century, California was a place that people and companies moved to in search of opportunity. The Golden State still has its beautiful climate and technically skilled workforce, but today these things are not enough to prevent companies from leaving the state. A new study seeks to quantify the trend of companies fleeing California and determine how, and to what extent, it is caused by California’s hostile business environment.

The study was conducted by Joseph Vranich, the president of Spectrum Locations Solutions, a site-selection consultancy based in Irvine, Calif. Using publicly available records, mostly media and government reports, Vranich searched for what he calls “California divestment events” — business decisions to shun the state. These come in three types: companies that left the state entirely; companies that expanded in other states rather than in California; and a few companies that had planned to grow in the Golden State but changed their minds. Vranich found records of 1,510 divestment events occurring in California between 2008 and 2014, but that number is an incomplete accounting of the situation. “Experts in site selection generally agree that at least five events fail to become public knowledge for every one that does,” he writes, concluding that the real total is probably more than 9,000 divestment events for this period.

Even that estimate may not tell the full story. Small businesses are less likely to get media coverage when they relocate, but they are the biggest category of divestment events. Moreover, the cost and compliance burdens of California’s taxes and regulations fall disproportionately on smaller companies, which are less able to afford the teams of attorneys and accountants that mega-corporations can employ.

Brown has a long history of making excuses when businesses reject his state. When Toyota announced it was uprooting three California plants and consolidating its headquarters in Plano, Texas, the Wall Street Journal quoted Brown as saying, “We’ve got a few problems, we have lots of little burdens and regulations and taxes. But smart people figure out how to make it.” The Journal’s retort: “California’s problem is that smart people have figured out they can make it better elsewhere.”