A Trickle, Then a Stream

(WSJ graphic)

In 2018 we noted the litany of problems afflicting San Francisco--crime, homelessness, drug use, filth, high taxes and regulations--and predicted:

The warning signs are widespread. I don't know what may trigger the fall; perhaps it will be rising interest rates, dropping tech stock prices, or fed-up tourists, but it would not be surprising to see a collapse, and an exodus of individual and business taxpayers, in San Francisco's near future.

San Francisco's maladies have spread throughout California, and the future exodus is now: Business exodus from California is accelerating quickly, according to report [bold added]

Businesses headquartered in the Golden State fled at twice the rate last year than they did in 2020 and 2019, and at three times the rate of 2018, according to a new report from Stanford University ’s Hoover Institution.

While moves by marquee companies such as Tesla, Oracle and Hewlett Packard Enterprise, which have relocated their headquarters (if not their entire operations) grab headlines, the report found smaller companies are increasingly looking for the exit as well.

“California... is risking its economic future as much smaller but rapidly growing unique businesses are leaving, taking their innovative ideas with them,” researchers Lee Ohanian and Joseph Vranich said in the report.

“Why are companies leaving? Economics, plain and simple,” Ohanian and Vranich wrote.

“California state and local economic policies have raised business costs to levels that are so high businesses are choosing to leave behind the many economic benefits of being in California and move to states with better business climates featuring much less regulation, much lower taxes, and lower living costs.”

The COVID lockdowns were a precipitating factor in the hollowing out of San Francisco. Many middle- and upper-income workers discovered that a fulfilling life could be theirs away from the coastal cities.

Whatever the reasons, the golden geese are leaving and they're not coming back.