California businesses are leaving the state at double the rate of previous years

The rate of California businesses leaving the state more than doubled in 2021, leading a new analysis to posit that the state may be “risking its economic future.” 

There were 153 companies that relocated headquarters in 2021, more than double the 75 that left in 2020 and more than triple the 46 that exited in 2018, according to a recent report from the Hoover Institution at Stanford University. The conservative think tank said economics was the primary cause of relocation, citing other states’ lower regulation, lower taxes, and lower cost of living. 

Eleven Fortune 1000 companies were among those that exited California in the past three years. McKesson, the biggest U.S. drug distributor and number nine on Fortune’s list, left the state in 2018 for Texas. The Lone Star State is the most popular for relocations — Tesla, Oracle, Hewlett Packard Enterprise and Charles Schwab all left for Texas in the past three years. 

There were 125 migrations of company headquarters from Bay Area counties since 2018, and if businesses continue to flee, it could have ripple effects on the region’s economy beyond just loss of tax revenue and job opportunities. “Another consequence will be the negative impact on the housing market,” said Suparna Chakraborty, USF Professor of Economics. “We have seen this before during the dot com bust. If businesses leave our region, this will lead to a downward trend in the housing prices. Given that currently, average Bay Area homeowners have most of their equity tied to their house, this is going to have far-reaching consequences on household finances, which in turn, could further depress the economy.”

The report’s authors analyzed “governmental reports, media stories, and other sources” to compile the list, noting that ​​their numbers are “almost certainly far too low.”

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