More businesses left California in the first half of 2021 than in all of 2020, and an all-time high of Bay Area residents plan on moving.
Sobering new data shows that the “California exodus” is real: both individuals and businesses are leaving California in droves, and the rate of departure is accelerating.
According to a poll released by Joint Venture Silicon Valley, 56% of San Francisco Bay Area residents plan to move out of the area permanently within the next few years, a number that stands at an all-time high compared to previous polls. In addition, 52% of residents said that the Bay Area is headed in the wrong direction, and 71% said that quality of life has gotten worse in recent years.
Bay Area residents who were planning to move frequently cited factors such as poor quality of life and high cost of living (in particular of housing) as reasons for their decision. California has the third-highest cost of living in the country, behind only Hawaii and the District of Columbia. The cost is even higher in the state’s major metropolitan areas.
But it is not just people who are fleeing. While Elon Musk’s decision to move Tesla headquarters out of the state made headlines, new evidence reveals that his decision was no anomaly. The Hoover Institution at Stanford University released a working paper in August showing that the rate of businesses leaving California has more than doubled in 2021.
From the beginning of 2018 through the middle of 2021, the Hoover Institution authors found, 265 companies left the state – and the number of businesses that left in the first six months of 2021 exceeds the rate for the entire year of 2020.
Businesses leaving California gave a variety of reasons for their departure. As with the Joint Venture poll, quality of life and cost of living were major concerns, along with high taxes and strict regulations that make for an unfriendly environment to businesses.
Texas, Arizona, and Nevada were cited as the most popular destinations for businesses that chose to leave California.