Why Companies Are Leaving California For Texas
for as long as anybody can remember
california has ranked among the most
desirable places to live on earth
its majestic redwood forests world-class
education system
sandy beaches beautiful people and
global food scene have cemented its
status as a proven mecca for big money
and talent
but all that seems to be changing an
exodus of tech firms has recently
decided to up sticks from the golden
state
and make their homes in a very different
corner of the united states
so today we're looking into the burning
question why are companies moving from
california to texas
last year according to data from the u.s
census bureau
653 000 people decided they'd had enough
of california's glossy charms and opted
to set up home elsewhere
the most popular destination for these
relocators texas
internal migration trends like these are
always complicated
but it's worth noting that this texan
exodus has really picked up pace this
year with some very high profile people
and companies making their way out to
the lone star state
let's look at a few in july elon musk
announced that the biggest u.s tesla car
plant to date would be built on the
outskirts of austin texas
and that's no small thing representing a
1.1 billion investment in the region
not to mention the creation of around 5
000 high-skilled jobs
musk's personal residence is now
reportedly also in texas
as well as a new base for his drilling
operation the boring company
just established in flugerville part of
musk's reason to move there is no doubt
so he can be closer to his beloved
spacex base in boca chica south texas
that's where musk's starship rockets are
currently being developed and tweet
ready for a future mission to mars but
there's also significant push factors
actively driving musk away from
california back in may
musk had a very public bust up with
californian official lorena s gonzalez
after his fremont california tesla
factory was forced to close as part of
the state's efforts to tackle the spread
of coronavirus
musk was furious at the order to close
and issued a tweet saying his company
would be
filing a lawsuit against alameda county
immediately
the unelected and ignorant interim
health officer of alameda
is acting contrary to the governor the
president our constitutional freedoms
and just plain common sense
frankly this is the final straw tesla
will now move its hq
and future programs to texas nevada
immediately if we even retain fremont
manufacturing activity at all
it will be dependent on how tesla is
treated in the future tesla is the last
car maker left in ca
lorena gonzalez stated her position
succinctly
elon musk to which musk cooley replied
message received
but it isn't just hot-headed upstarts
ragequitting california lately
hewlett-packard enterprise the 21st
century iteration of the firm founded an
apollo alto garage by bill hewlett and
david peckhard in 1939
is also making tracks toward texas the
firm considered by many as the great
granddaddy of silicon valley tech giants
is building a state-of-the-art campus on
the outskirts of houston
a statement by hewlett-packard
enterprise hinted at the reasoning for
the move
saying houston is an attractive market
to recruit and retain future diverse
talent
similarly database software giant oracle
just announced it was moving its
headquarters to austin because
as a spokesperson put it we believe
these moves best position oracle for
growth
and provide our personnel with more
flexibility about where and how they
work
so what makes texas more attractive from
a staffing point of view
if you're currently yelling taxes at
your screen well you're halfway right
the corporate tax situation actually
isn't so different between the two
states
although president donald trump's
controversial slashing of the federal
corporate tax rate from 35 percent to 21
in 2017 definitely made state taxes more
of a priority for company bean counters
seeking to cut costs
experts believe that's not enough in
itself to encourage a wholesale move
however the tax situation for individual
workers is very different indeed
californian income taxes for high
earners work out at 13.3 percent
tax and income rates are rather more
let's say competitive at zero percent
that means an executive moving from
california to texas will enjoy a
substantial instant pay rise
and they can do a lot more with that
money california and especially the big
tech hub cities like san francisco and
palo alto
suffer from exorbitant property prices
in houston
a well-paid tech worker can afford a
much larger house and a better overall
quality of life with it even culturally
texas isn't so different from california
although texas is famously conservative
and defiantly red state in its outlook
places like austin with its healthy 47
rate of degree educated workers
and hip cultural happenings like the
annual south by south west festival
increasingly give groovy kelly a run for
its money podcast host joe rogan who
famously smoked weed on screen with elon
musk is also making the move
rogan reportedly just bought a 14
million mansion on lake austin with
eight bedrooms and 10 bathrooms
hot on the heels of his unprecedented
100 million deal with spotify
more important than taxes and culture
however the biggest driving force behind
the current exodus has been the
coronavirus pandemic
a study from leading corporate
consultants gartner found that around
three quarters of chief financial
officers anticipate ever more employees
would work from home permanently
after this year proved that this was not
only feasible but even desirable in many
cases
if that's true of companies in general
it's especially true for tech firms
and naturally if you're working from
home why would you go to the expense and
hassle of living in a big city
when you could enjoy a much larger
property somewhere out in the
countryside
california's regulatory framework is
also cited as a factor in companies
seeking to shift operations to more
lasse fair texas
deep blue cali critics argue abuse it as
legal and legislative muscle to bully
corporate decision makers
whether or not you think elon musk was
right to keep his factory open during a
pandemic
it's easy to see why corporate bosses
look at plans to for instance
cap executive pay relative to frontline
workers with a fair dollop of skepticism
musk has isilly suggested californian
leaders have much in common with an
arrogant sports team
after decades unchallenged at the
leading edge of the tech sector
if a team has been winning for too long
they do tend to get a little complacent
said musk
they're a little entitled and then they
don't win the championship anymore
musk also spoke scathingly of
california's oppressive regulatory
regime in language designed to cut to
the very heart of what makes the state
so special
you have a forest of redwoods and the
little trees can't grow
however it's plain to see that the big
well-established california star wars
like google
facebook and apple with its shiny new
four billion dollar headquarters
aren't going anywhere for now and so
however many fresh-faced upstarts like
vape manufacturer joule drag their
operations out to texas
it seems the cali tech dream won't be
going up in smoke anytime soon
[Music]
