SACRAMENTO, Calif. — The cost of doing business in California is too high, and businesses are leaving, according to a new survey from Claremont Mckenna College, which has been tracking the migration of business for decades.
“California continues to be an expensive place to do business, things like the minimum wage is more than twice as high in california than in a competitive state like texas," Director of the Rose Institute of State and Local Government at Claremont Mckenna College Ken Miller said. "Taxes are higher in California, regulations and utility costs, and license fees, all those kinds of things tend to be high in California.”
And there’s the cost of housing.
“That's the main reason why employers are choosing to move out of state because their employees, many of them can't find an affordable house close to where they're working,” Miller said.
Businesses do migrate to California, 45,000 businesses since 1990 to be more precise.
“There's still reasons why businesses might want to do business here and continue to choose to do so, including a well educated workforce, especially in the high tech sector," Miller said. "Some other reasons why this continues to be a place where businesses want to do business or need to do business here, because that's where their customers are, and so they're not going to move."
Overall however, more are leaving. About 65,000 businesses have left since 1990.
"The numbers have been relatively stable over that three decade period, although there's been a noticeable increase over the last few years," Miller said. "I think one of the reasons for that with respect to the Covid pandemic and what transpired from that, so more and more businesses found that they could have their employees working remotely outside of the state."
So where are these business going?
Of the businesses leaving, 64% are going to cities in Nevada, Arizona, Texas, and Oregon. The number one state is Texas. The number one city is Las Vegas.
“We're seeing that many businesses in California that are choosing to leave, don't want to go all the way to the east coast or even the Midwest," Miller said. "They're looking at other neighboring states where the cost of business is less.”
Businesses leaving, means people leaving.
The S.S. Census Bureau came out with it’s population report Thursday and found that California had the largest drop in population to other domestic states, like Texas.
California is a progressive state, and Miller said there’s good reasons behind putting certain environmental or labor regulations in place, but he said government needs to start thinking more collectively about how these laws impact more communities.
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