Several prominent companies, including Oracle, Tesla, and Chevron, are set to leave California by 2025 in response to the state’s high living costs and stringent regulations. This trend is an alarming indicator of the increasing unrest among businesses about the state’s economic climate that too many top executives say is not sustainable.
Oracle, the second largest software firm in the world, relocated its corporate headquarters to Austin, Texas in 2020. The company did desire more employee flexibility and operational efficiency. Even with this move, Oracle still has almost 6,900 employees left in California, almost three times as many as it has in Texas.
Elon Musk, the CEO of Tesla and SpaceX, cited a bill signed by Governor Gavin Newsom in 2024 as a significant factor prompting the companies’ departures. Musk stated that “there’s a limit to how big you can scale in the Bay Area,” indicating that spatial constraints and rising housing costs have affected his companies’ ability to operate effectively in California.
Impact of Corporate Exits
As the Bay Area Council rightly pointed out, California has seen its fair share of global companies flee the state thanks to shortsighted policies. In August, a report from the corporate-leaning Hoover Institution exposed the exodus, with 74 corporate headquarters leaving the state in the first half of 2021. Affordability ultimately led dozens of organizations to take this bold step. This trend has been compounded by the state’s high cost of living and oppressive tax burdens.
Chevron, which has been headquartered in California for 145 years, announced that it would move its headquarters to Texas. In response, the oil giant’s spokesman directly blamed California policymakers for introducing policies that increase costs and consumer costs. This has caused tremendous burden to the local community. Chevron CEO Mike Wirth remarked that “California’s policies have become pretty restrictive on a lot of business fronts.” The corporation hopes to recoup £150 million ($201 million) per year in operating costs by taking this step.
In sum, Chevron now has about 2,000 employees in California versus 7,000 in Texas. The company expects to finish its transition by 2029.
The Broader Trend of Departures
California has experienced significant population shifts, with around 700,000 residents leaving between 2022 and 2023. Millions more are pushed out by the desire for a certain lifestyle or the high cost of housing. The Public Policy Institute of California found a surprising trend. In fact, only 1.9% of the state’s approximately 47,000 corporate headquarters changed geographic locations between 2011 and 2021. That included a net loss of 77,600 jobs, most notably in the manufacturing and business services sectors.
The increasingly publicized departures of major corporations are in part due to the environmental regulations and environmental legislative policies considered burdensome. Many of these same businesses claim that these very rules are killing their growth and profitability. In response, these firms are looking for pro-business environments out of state.
Tesla’s move exemplifies these challenges. Housing costs and other operational constraints have driven the electric vehicle manufacturer to look at options outside of California.
