by Mitch Kokai
Senior Political Analyst, John Locke Foundation
As California’s awful public policies prompt business after business to leave the state, North Carolina is one of the beneficiaries.
A recent Hoover Institution working paper attempts to explain “Why Company Headquarters Are Leaving California in Unprecedented Numbers.” Joseph Vranich and Lee Obanian highlight multiple factors that have hurt California by “raising business costs, reducing productivity, and reducing profitability, including tax policies, regulatory policies, labor costs, litigation costs, energy and utility costs, and concerns about a declining quality of life within the state.”
Among the consequences of those bad policies:
California lost a total of 265 headquarters in the period January 1, 2018, through June 30, 2021, and the departures are accelerating as more relocation plans move to implementation. The breakdown by year and monthly averages, … indicates that the 2021 half-year total of 74 – which average 12.3 per month – is more than double the 2020 full-year loss and significantly above the 2018 and 2019 monthly averages. … [O]ur count is almost certainly biased downwards enormously, because relatively small businesses – those that do not attract media coverage or that are required to file compliance reports – fly under the relocation radar and thus are extremely difficult to detect. …
… A community landing a headquarters gains more than bragging rights. As the Nashville Business Journal pointed out, “Headquarters are especially prized economic development wins because such jobs typically feature higher pay, and they inject a company’s decision-makers into the market, which can impact everything from real estate purchases to philanthropy to support for public schools.”
Who wins because of California politicians’ folly?
Texas has been the most popular destination for California company relocations, a distinction it has held for at least a decade. Arizona and Nevada often ranked second/third, which we believe partially reflects convenient air schedules connecting with the largest cities. For example, Los Angeles is only a one-hour flight to Phoenix and Las Vegas, and San Francisco also has a brief flight time to Reno. Those convenient travel times influence corporate executives and business owners to relocate to those communities. Despite those short flying times, far-flung states also are gaining California companies.
Among the “far-flung,” across-the-continent states reaping the most benefits: North Carolina.