CA Business Exodus Accelerates

APRIL 14, 2011


As fast as was the business exodus from California last year, it’s even faster in 2011. The new Pharaoh, Jerry Brown, also is not relenting in his oppressions of business.

According to the latest update from Business Relocation Coach Joseph Vranich:

California is experiencing the fastest rate of of companies relocating to out-of-state or out-of-country locations since a specialized tracking system was put into place two years ago. The disturbing trend is reflected in a review of activity from Jan. 1 through April 12 of this year when 69 California company disinvestment events occurred, an average of 4.7 per week — greater than the 3.9 average per week last year….

Unfortunately, the stage is set for California to lose additional companies, capital and jobs in the future. That’s because the business environment worsened yesterday when Gov. Jerry Brown signed into law a requirement that utilities obtain one-third of the state’s electricity from renewable sources. California companies, which already pay 50% more for electricity than companies in other states, can expect costs to increase by another 20% or so.

Another factor is the continuing imposition of AB 32, the Global Warming Solutions Act of 2006. Backers, such as then-Gov. Arnold Schwarzenegger, said it would rejuvenate the state by creating new high-tech jobs. Critics said it would kill a million jobs. Looks like the critics are being proven right — assuming the critics haven’t left the state.

Vranich writes:

Such new burdens along with upcoming regulations stemming from the “California Global Warming Solutions Act” set potentially overwhelming obstacles to companies here as they try to meet competition based in other states and in foreign nations.

Top Ten Reasons for Leaving

Vranich also has updated his “Top Ten Reasons Why California Companies Are Calling the Moving Companies©.” Click on the link to see the full list. Here are a some of them:

The #10 Reason (New!) – Unprecedented Energy Costs: The California Manufacturers and Technology Association states that commercial electrical rates here already are 50% higher than in the rest of the country. However, a law enacted in April 12, 2011 requires utilities to get one-third of their power from renewable sources (e.g., solar panels, windmills) within nine years. Look for costs to increase by another 19% in many places to a whopping 74% in Los Angeles….

#9 – Severe Tax Treatment: The Tax Foundation in their 2011 State Business Tax Climate Index lists California at No. 49 for tax fairness. CFO Magazine ranked California the worst state for tax treatment. The Council on State Taxation ranks California as the only state to receive a D- grade (the lowest grade)….

#8 – Worst Regulatory Burden: The consulting firm Bain & Co. constructed a “regulatory hassle index” that found “California is far worse than any other state by a very significant margin.” The finding was echoed by Development Counselors International that found that 72% of surveyed corporate executives listed California as having the “worst business climate” in the entire United States. The newest survey, released in March 2011, found that 87.7% of California executives who also operate in several states say California is a harder place to do business than anywhere else….

#7 – Dreadful Legal Treatment: The Civil Justice Association of California said the state ranks 44th in legal fairness to business. Los Angeles was again named the least fair and reasonable litigation environment in the entire country.

#6 – Most Expensive Business Locations: The Rose Institute of State and Local Government reported in its 2010 survey that California cities continue to be some of the most expensive locations to do business in the United States….

#1 – The ‘Outpouring’ of Poor Rankings Continues: California ranked dead last in the latest Pollina Corporate Top 10 Pro-Business States for 2010 study. The finding was based on a composite of labor-related factors, business and personal taxes, the litigation environment, demographics, crime rates, school dropout rates, lifestyle and a multitude of other issues. There is little evidence that California’s business environment will improve considering that that the legislature in 2011 has voted down litigation reform, tax-increase plans are underway, and a host of new regulations are to be implemented that will increase costs for literally every business.

Unhappy California Campers

Vranich concluded:

When I speak with business clients I see that the cumulative impact of all this results in unhappiness. I wasn’t surprised when I saw in 2010 report that California ranks 46th on a national “Happiness” list. The political culture — impacted by a radicalized, powerful, anti-business interest groups — causes many problems for those in California who attempt to attract and retain businesses.

And writing today on Fox & Hounds, Vranich explained how employees are begging their companies to exit the California Egypt:

Some time ago a decision-maker told me he had evaluated the benefits of moving his department out of Los Angeles. He said: “When I discovered how substantial the savings would be, I quipped in front of my staff, ‘We should move to Texas.’ I was surprised by what happened next – people approached me one by one, came in my office, closed the door, and asked that we move to Texas. Once I saw the employee reactions, I’d like for the relocation to occur.”

Last business left in California, please turn out the windmill-powered lights.


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  1. Wayne Lusvardi
    Wayne Lusvardi 14 April, 2011, 14:22

    This is purely anecdotal. I know two California households that are moving to Texas.

    One is an 82-year old woman who foresees nothing but future social disaster in California. Property taxes are three times higher in Texas but overall tax burden is lower. It’s a better system – property taxes go to schools and basic fire and police services and property values are half of California’s. What taxes pay for in Texas is closer to the voting decisions of homeowners. In other words, Texas doesn’t over-invest in real estate to the detriment of business and industry. This 82 year old told me her deceased husband appeared in a dream and told her to move out of California. Call it what you want, irrational or rational, but at 82-years old she’s moving back to her childhood home after 50 years in California. An 82-years old reverse pioneer. That takes spunk!

    The other is a family of three. The breadwinner works for a large Japanese auto manufacturer with a big corporate office in Southern California. He is moving to the San Antonio area. His merit scholar daughter was also accepted at Trinity University in San Antonio. He has taken the bar exam in Texas and is awaiting results. He earns a considerable salary in California but wants out. He sees no future here for his daughter or himself.

    The above is not anything from which to extrapolate a trend. But is the middle class poised for a mass exodus of historic proportions like the Dust Bowl migrations of the 1930’s? We will see.

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  2. Wayne Lusvardi
    Wayne Lusvardi 14 April, 2011, 16:06

    Oh, I forgot to say that the unnamed Japanese auto manufacturer with headquarters in So Cal has already informed its employees of a possible move to the Dallas area pending what happens with the state deficit and taxes here in California.

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  3. larry 62
    larry 62 14 April, 2011, 16:31

    It has happened in my family as well. One of my sons has moved to Montana and at least one of his close friends has also left, looking for opportunity elsewhere. Life in Montana isn’t easy or perfect, but overall he loves it. No sales tax, lower income tax, property taxes probably comparable to Ca. and lots of open space with very few people.

    Reply this comment
  4. Debbie
    Debbie 14 April, 2011, 18:42

    We moved our small business out of California. Although we still own our home in Cali, our homestead is Texas. It is as different as day and night. We shipped a couple of cars from Cali. The trailer was loaded with Cali cars all headed for Texas. The line for new licenses at the motor vehicle dept comprised mostly of Californians…..Although property taxes may be a bit higher, the sales tax is lower, no state income tax, gas is about .80 less a gallon….The roads and highways are incredible!!!! Need I say more? Now, we have to sell our Cali home….

    Reply this comment
  5. EastBayLarry
    EastBayLarry 15 April, 2011, 06:45

    None of this is news; we’ve discussed this issue repeatedly here and at other venues. What I still don’t understand is why the LibDems running this train wreck can’t see the disaster they are causing.

    Is it blindness? Is it deliberate? I can’t believe it’s stupidity. Even an idiot would accidently get a decision right occasionally.

    Reply this comment
  6. ExExZonie
    ExExZonie 17 April, 2011, 23:06

    @Wayne did you even visit Joe Vranich’s site? Everything he writes is thoroughly documented, and if anything, he understates the case as he only captures a fraction of businesses that move or expand elsewhere. All you have to do is read his April 15 entry and find the segment that pertains to Carl Karcher Enterprises (i.e., Carl’s Jr/Hardees). This story alone is enough to give one pause about how California treats long-standing businesses.

    “CEO Andrew Puzder said that it’s ‘easier to open a restaurant in Shanghai than in California,’ Puzder said he is drawn to Texas’ ‘business-friendly’ atmosphere and the prospect of a 10 percent pay raise, thanks to the state’s no-income-tax policy …. Founded in Southern California by Carl Karcher in 1941, Carl’s Jr. has strong roots in the Golden State …. ‘We’re going to look at whatever is a good business reason to move,’ said Puzder, who also said that Perry called him about a year ago to ‘thank me for opening restaurants in Texas.’”

    Reply this comment
  7. Vince Perez
    Vince Perez 18 April, 2011, 23:57


    I don’t mean to undermine your position that longstanding California businesses are leaving the state – they are. They have been for a decade or more; but the Carl’s Jr. of today is not the old line California company of Carl Karcher’s day. These punks running the company now are as different from Carl Karcher, much as Carl’s recent TV ads promoting sex over burgers are from the days of “Happy” the star and Carl Karcher promoting a friendly family-oriented fast food establishment (and that was fast food with one of the first salad bars! -you go Carl!) The California businessman is now an anachronism, replaced by charlatans and boys barely resembling men. But, I still agree with you that Carl Karcher Enterprises leaving for Texas should give us all pause…

    Reply this comment
  8. Shelley Evans
    Shelley Evans 17 June, 2011, 11:44

    My three children have moved out of state; Two are now home owns in Texas and they love the state and its people; One lives in Europe when she moves back to the States it will be to Texas or Florida. The three of them will not move back to California, a state with 16% of the US population and 30% of the US Welfare-Recipients

    Reply this comment

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