The working title for the Ayn Rand classic “Atlas Shrugged” was “The Strike.” Rand wanted to show what the world would be like if the competent, the rational, the men and women of excellence walked away from their work. It was a “rebellion of the unrecognized and often persecuted creative heroes who bear the rest of the world on their shoulders.” It was “the mind on strike.”
Are we seeing something similar happening in California? Business owners and company executives aren’t disappearing while the world around them collapses. But they are leaving the state, fed up with a legislative process always hungry for tax dollars, a regulatory regime that’s far beyond reason and a palpable truculence toward business in general.
Since late 2023, we’ve seen headlines such as:
“California business exodus continues in 2023”
“California’s loss is Dallas-Fort Worth’s gain in 2023 business exodus”
“Google quits on huge, longtime San Francisco office in premium location”
Data from a survey of 80,000 small business owners nationwide found a mere “13% of small businesses in California are happy with their location,” a figure “nearly 40% lower than the national average.” At the same time, “67% are either planning a move (10%), considering a move (30%) or they are feeling trapped, wanting to move but can’t afford it (27%).”
People can feign surprise, but it would be an act. There has been a steady departure of businesses – small, medium and large – for more than a decade.
Joe Vranich, president of Spectrum Location Solutions, formerly in Irvine but now in Pennsylvania’s Cranberry Township, says that from 2008 through 2016, as many as 13,000 companies have left California. They might not have wanted to leave, but bottom-line reality forced their decisions. By simply putting California behind them, they are saving 20% to 35% a year in operating costs.
Many of the relocations, whether address changes for headquarters or operations, or both, include name brand companies such as: Toyota Motors North America, Nissan North America, Nestle, Jamba Juice, Occidental Petroleum, Oracle, Hewlett- Packard, Tesla, SpaceX and Charles Schwab.
Vranich, who eventually began to actively recommend that companies leave California, built on his research with another report, which found “that 352 companies moved their headquarters to other states just in the period from Jan. 1, 2018, through Dec. 31, 2021.”
Residents have been leaving as well, and there’s more to this than in the three years, 2020 through 2022, when California’s population shrank for the first time in its history. The state began losing more of its people to other states than it was gaining from them since at least 2012, based on Internal Revenue Service data. The losses were hidden by the fact that the overall population was growing due to migrants arriving from other countries and births.
While the numbers should be alarming enough, the “who” is even more disturbing. The state has been losing the talented and the industrious, or as Rand would say, ”the men of the mind” and the “world’s prime movers.”
The numbers tell the story. Taxpayers earning between $75,000 and $200,000 a year, the upper-middle cohort, and those earning more than $200,000, the upper-income quartile, increased from 20.7% of the outflow from California of all groups in 2012 to 31.5% in 2018. The inflow of those in the same income ranges has risen, as well, but not as sharply. The corresponding numbers are 20.2% in 2012 and 27.7% in 2018.
By 2020, the first year that California had a net loss of population, the percentage of refugees earning $75,000 or more a year hit 36.7%.
Jennifer Grossman, CEO of the Atlas Society, has “seen dozens” of donors from California “flee the state” for “Texas, to Florida, to Nashville – even to Colorado and Mexico.” To stay in California is to be victimized by “the massive violation of property rights, civil rights, and free speech that we saw in 2020 and 2021,” and “strangled by all manner of regulations and laws curtailing their freedom.”
Apparently many who had become frustrated by the results in local elections for state offices learned they can actually vote against the entire state. It’s their way of shrugging off the weight dropped on their shoulders by California policymakers, who need to learn that if the burden were ever lifted, their state would stand tall again.
