California Lost Hundreds of Businesses Since 2020; Job Market Continues to Grow

California Lost Hundreds of Businesses Since 2020; Job Market Continues to Grow

The employee parking lot at Tesla Inc.'s U.S. vehicle factory in Fremont, Calif., on March 18, 2020. (Shannon Stapleton/Reuters)

Summer Lane
Summer Lane

7/9/2024

Updated: 7/9/2024

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Hundreds of businesses have left California for other states since 2020, and while hundreds of thousands of people have joined the outflow, California’s labor market has continued to show signs of strength.
According to data from Build Remote, as of June 2024, over 90 companies with more than 100 employees have left California in the last four years, including Tesla, Neutrogena, Chevron, and Ruiz Foods.
At least 68 more companies with under 100 employees have also left the state, including businesses like Public Square, Hart Inc., and The Joe Rogan Experience.
Some companies, like Tesla, began making moves to leave California after COVID-related policies prevented businesses from opening. Tesla CEO Elon Musk brought a lawsuit in 2020 against Alameda County—one of the company’s biggest manufacturing locations—after health regulations kept the electric car factory closed.
Tesla’s corporate headquarters officially moved from Palo Alto, California, to Austin, Texas, in 2021.
Protective eyewear manufacturer Wiley X said it would be moving its headquarters from Livermore, California, to Frisco, Texas, in April 2021. This year, the company announced that its manufacturing would be done in-house in Frisco for all 2024 products, according to a February press release.
A Hoover Institution study  found that California lost 352 business headquarters from 2018 to 2021, resulting in the loss of thousands of jobs.
But job loss is not the only negative side effect of a business leaving California. “There is also the loss of corporate income tax revenues, business property taxes, rents to property owners, payments to contractors, and fees to companies in the travel industry such as hotels and rental car companies,” the study said.
The institute identified high tax rates as one of the largest drivers of out-migration for businesses. According to the Tax Foundation’s 2022 State Business Tax Climate Index, California ranked 48th in the nation. In 2023, financial software company Intuit identified California’s top income tax rate as the highest in America, at 13.3 percent for those earning over $1 million annually.
Despite the out-migration trend, California’s employers added 43,700 nonfarm payroll jobs in May 2024, marking the 49th month of job-market expansion, according to the Employment Development Department.
“California is creating good jobs all throughout the state to support Californians and their families,” Gov. Gavin Newsom said in a June statement.
According to the governor’s office, California still has more Fortune 500 companies than any other state in the nation, with 57 compared with Texas and New York, which have 52 each.
But the job numbers are mixed. The unemployment rate fell to 5.2 percent in May from 5.3 percent in April, but the number of Californians employed was down by 113,500 from May 2023.
California’s jobs gain from April to May represents 16.1 percent of the nation’s overall gain of 272,000 jobs.
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Summer Lane is the bestselling author of 30 adventure books, including the hit "Collapse Series." She is a reporter and writer with years of experience in journalism and political analysis. Summer is a wife and mother and lives in the Central Valley of California.

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