Four-fold increase in CA business departures

Richard Rider, Chairman, San Diego Tax FightersRichard Rider, Chairman, San Diego Tax Fighters 13 Comments

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The numbers are in. Our departure rate for California businesses QUADRUPLED in 2010, compared to 2009. And there’s little sign of this trend reversing.

Below is a brief summation from the Carpe Diem website. I strongly recommend you get their free daily email update.

In the short Carpe Diem article below is a link to the more detailed story.


204 Businesses Left California in 2010, That’s Four Times the Number in 2009, and Sets A New Record

According to relocation expert Joe Vranich, a record-setting number of business – 204 in total – left California in 2010, or re-directed substantial capital to build facilities in other states that would have expanded in California in earlier, more business-friendly years (see chart above). That number of businesses leaving California is four times the number of businesses that left in 2009 (51).

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Comments 13

  1. The article (and this post) suggests that business are leaving California due to regulation and taxation.

    Here’s a sample of the actual reasons provided in the business summaries:

    Comcast – also cites high cost-of-living and energy costs before citing regulation.
    Insituform provides no explanation for their move.
    Smuckers – the article doesn’t cite the number of jobs lost in Chico, if any, but does cite the closure of a previous plant in Salinas. Those layoffs were part of the nation-wide restructuring effort of the failing food company.
    Accruent expanded, not relocated. Representing expansion by a locally-based company as equivalent to departure is dishonest.
    Boeing couldn’t find enough buyers for the C-17 and ended the production program, ending the jobs associated with the program.
    Cinsay, Inc. expanded, not relocated.

    In San Diego:

    Adio Footwear moved its HQ back to its parent company because it didn’t want to sponsor athletes anymore.
    The Biogen restructuring story goes as far as saying “Our decision to do this is unrelated to the fact that this site was in San Diego. We would have made the same decision if it had been in San Francisco or Massachusetts.” The “decision” in question was to shift responsibility for a drug to a partner company in order to focus on more core products. The article doesn’t cite regulation or taxation.
    Petco expanded, not relocated. It chose San Antonio after being offered $4.75 million from the City, County, and various commissions and funds.

    And those were just a handful of the full list.

    Point being, representing the expansion of business or even relocation of business due to other factors as “relocation due to regulation and/or taxation”, and then using that falsehood as a pretense for political arguments on regulation and taxation is intellectually dishonest. People cite articles like this in real policy discussions. We should be willing to take 5 minutes on Google and look up the facts.

  2. It isn’t a surprise that Rider accepted Vranich’s point on face. In his description of the article he assumes:

    a) that Vranich is an expert because he says he is.
    b) the number of business departures is “record-setting” with no evidence to support that conclusion.
    c) 204 is the actual number of business departures, given that the primary data source appears to be loosely collected google searches and magazine info. It could be more.
    d) same for the 51 number.
    e) that business departures is the most appropriate measure for whatever he’s trying to prove, instead of net business departures/entries.

    The most gross assumption is:
    f) that, in more “business-friendly years,” each and every company on the list would have stayed.

    A simple reading of the descriptions in the Vranich article proves this assumption false.

  3. Post
    Author

    Jason may be right. We had a four-fold increase in lost CA companies for a variety of reasons, but few if any had anything to do with the tax and regulatory climate of California. Just a bunch of coincidences, you see.

    Indeed, it’s likely that all 50 states had a four-fold increase in companies lost to other states.

    Uh huh. Whistling past the graveyard.

  4. Jason – One of the reasons for the high cost of living and electricity in California is because of the massive amount of red tape and rules that drive up the cost, i.e AB32.

    The Boeing jobs the article talked about might be in the support and servicing of the C-17, not the assembly line production. The support adn services jobs are being transfered to lower cost states, as was said in the press release at the time of the announcement.

    Another thing, a lot of companies give bogus reasons for moving that a 10 year old can spot as a lie.

  5. One more. Carl’s Jr is looking at moving their HQ to Texas. The reason. A lack of income tax, as opposed to California’s nation’s highest. But that’s right, no one leaves the state because of high taxes.

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    MarshallPlan makes a point that needs emphasis. Most businesses don’t want to make enemies. They are afraid to say negative things about states, their politicians and their unions. Making Democrats in one state the villains makes enemies of the Democrats in the NEW state.

    Any PR person would advise against such controversary. Instead they want to talk about noncontroversial or positive reasons for fleeing a state. And the bigger the business, the less they welcome controversy — as the CEO is not the business owner.

    Smart for the departing businesses, perhaps — but sad for the remaining companies that the departees don’t tell the full story.

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    One of the funniest aspects of liberal thinking is this:

    1. Business people are greedy. These heartless fiends will do whatever it takes to maximize profits.

    2. High taxes and costs, onerous regulations and pro-litigation madness will have little or no effect on business people when deciding where to do business.

    They simply are incapable of connecting the dots.

  9. You are clinging to non-scientific numbers and assumptions as evidence of a conclusion that you have already come to. One superier variable related to business expansion/relocation is home-price affordability. Businesses will not expand in a city where their employees cannot afford to buy a home. Access to research institutions and universities is another good one, especially given the San Diego focus on biotech.

    Here are some articles to check out.

    http://www.ccsce.com/PDF/Numbers-July09-Fleeing-Calif.pdf

    “During the past 20 years, migration to California has been positive except for four consecutive years in the early 1990s when California’s recession was deeper and longer than the national downturn. More people are coming to California than are leaving the state.”

    http://www.ppic.org/main/publication.asp?i=710

    “The authors find that the small number of California jobs moving to other states due to business relocation is relatively inconsequential—–about 11,000 jobs per year out of more than 18 million (.06 percent). Business births, deaths, contractions, and expansions have a much greater effect on employment.”

    http://www.redding.com/news/2009/jul/07/california-exodus-is-mainly-a-myth/

    Elias points out a sad truth that high-income individual and business exodus as created by taxation and regulation is a myth created for political purposes, often used by Republican legislators and the business lobby.

    http://articles.latimes.com/2009/feb/25/local/me-lopez25

    “We found that very few businesses either leave or enter the state,” said Kolko. “California’s job growth is pretty consistently at, or a little above, the U.S. average.”

  10. Mr. Rider, why do you constantly get questioned and out-argued on a conservative message board when your ultimate point is always “less government and lower taxes is better”? Because of the massive chasm between logic and your arguments.

    I don’t know who “Jason” is or what side of the political spectrum he calls home, but the guy is right on your habit of distorting facts to fit your pre-conceived conclusions. For the most part, Jason wasn’t even arguing if you were right or wrong about business leaving California due to regulations, etc. He was pointing out that the way you came to your conclusion has a number of holes in it. After Jason pointed this out you predictably started to argue with him as if he was suggesting more business regulation is a good thing.

    It weakens the case of everyone who ultimately agrees with you when you post the way you do. It detracts from the topic and only prompts arguments about your methods rather than the subject. My evidence supporting this? The fact that Jason just clobbered you in this “discussion”. He absolutely made it look as if you were arguing what you want reality to be rather than what reality is. God for Three Card Monty…bad for political debate. And I say all this as someone who totally agrees with you.

  11. Post
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    No one’s leaving California? We’ve had only four negative domestic migration years — they were in the 1990’s?? Jason, you just TOTALLY discredited yourself!

    Your biased sources are two very liberal activist California organizations, plus two liberal papers. Steve Levy?? Tom Elias?? Steve Lopez???? PLEASE!!

    Try using a neutral source, as I have below in my fact sheet — in this case, a Maryland state bureaucracy-prepared table comparing states, using U.S. census figures.

    Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed in 2008 only because people couldn’t sell their homes. In 2010 we lost “only” 72,000 net people to domestic migration.
    http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf and
    http://tinyurl.com/2010-CA-lost-72000

    Jason, I doubt these are welfare kings and queens departing. They are surely the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods), and retirees seeking to make their pensions provide more bang for the buck.

    The irony is that a disproportionate number of these seniors likely are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions. And once they move out of California, our state can no longer tax their California-paid pensions.

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    Oh, wait. Jason, the state has indeed had positive TOTAL immigration after all — ILLEGAL and legal immigration from other countries. So according to you liberals, that’s a GOOD thing for our economy. Okaaayyyyyyyy.

    But I’m more interested in DOMESTIC migration — movement between states. Seems your liberal sources don’t much want to talk about that.

    Here’s an interesting benchmark — a couple years ago, it cost FOUR times more to rent a U-Haul from SD to Texas than to rent the exact same vehicle from Houston to SD. That’s because the traffic is too much in one direction — they’re delighted to have someone drive U-Hauls back to CA. Similar differences in U-Haul prices were to be found between CA and Idaho — and other lower tax, lower regulation states west of the Mississippi — though not as big a disparity.

  13. I’ll be here, Huckleberry, when you come back with some real evidence instead of ad hominem attacks against news outlets and think tanks, followed by a big wrap up with U-Haul rates.

    None of the articles you cite make conclusions about the cause for domestic migration rates. I could easily say that housing prices rose at too great a rate, making it harder for businesses to move here or for many young Californians to stay. That’s just as reasonable a conclusion. If you looked at in-state migration, you’d see that Riverside County exploded. I’d argue because of more housing costs. Riverside is still in California, with the same regulation and taxation. How do you explain this?

    Anecdotal descriptions of U-Haul rates do not prove your point, nor should they serve as evidence for serious policymaking. U-Haul rates are set by the state of origin’s demand for trucks vs the destination state’s demand for truck. Is it surprising that San Francisco needs more trucks than Houston? Or Dallas? Not really. I imagine that SF has higher in-state and in-city demand.

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