Both small and large companies are fleeing California in search of friendlier opportunities.
From 2018 to 2021, 352 companies relocated its headquarters from California to other states. The departure rate more than doubled between 2020 and 2021 and was highest in Los Angeles County, according to an analysis by Stanford University's Hoover Institution.
The wave of departures has continued into 2024: last month Elon Musk announced that it will move SpaceX from Hawthorne to Texasand this month Chevron announced plans to move Its headquarters are also in the Lone Star State.
It's part of a broader pattern. Headquarters and manufacturing plants are closing and relocating operations to cities in Texas, Snowfall and FloridaThe Farmer John meatpacking plant, a fixture of the Los Angeles meat industry for nearly a century, ceased operations and abandoned the city to continue business elsewhere last year.
Although the exodus has been led by a few big names, I often hear of medium- and small-sized companies quietly leaving town, unburdened by public disclosure requirements and individually too small to register in media reports.
The explanations are varied, but the ultimate reason is clear: Los Angeles is an increasingly difficult place to operate a business. Affordability issues, including high taxes and increase in work, Utility and energy costs, in addition to onerous liability and punitive regulations, top the daily challenges. California is permanently in the last place in the state ranking of Business Favorability.
These factors are compounded by the attractiveness of Recruitment efforts by Other citiesincluding the promise of government association —especially appealing to Golden State business owners who complain of treatment ranging from apathy to outright animosity from local officials.
The rational business mind, seduced by the prospects of greater opportunities, profitability and incentives outside the state, makes a compelling case for leaving. It practically screams it.
This may sound crazy: Despite the growing challenges in Los Angeles, my family business isn't going anywhere.
We care deeply about cost savings, efficiency, and growth opportunities, and we recognize that profitability is imperative for survival. But, like many other small businesses in Los Angeles, we measure success and derive value beyond profits and losses.
I am the proud owner of a four-generation beef jerky company that has called Los Angeles home for nearly 100 years. It brings me immeasurable joy to work in the same brick building built by my great-grandfather, to greet customers who knew my grandfather, and to share an office with my father. You can't put a price on a legacy. This legacy, of course, extends to our employees, many of whom have dedicated more than 25 years to our company or have gone on to successful careers elsewhere and even started their own businesses.
Rather than seeking cheaper labor, our company would rather invest in our employees through health benefits and professional development, as well as cultivating a sense of family. Other states have tried to get our company to leave California, but one of the reasons we have refused is that we do not want to abandon these connections.
We also value our role as part of the communities of Los Angeles. This year we launched a program that targets causes that align with our mission (supporting youth, families, and active lifestyles) through monetary and product donations, as well as through volunteering our time and expertise.
That’s the difference between big corporations and small businesses. The former employ thousands of local residents and bring in robust tax revenues to the city on a scale we can’t match. But larger companies — whether publicly traded, private equity-backed, or international holding companies, and sometimes run by celebrity billionaires — are moving targets. They will pursue shareholder value at all costs, regardless of regional ties or other considerations.
Meanwhile, there is 4.1 million small businesses in California which generate 7.5 million jobs, representing 47% of private sector employment. More importantly, two out of every three net new jobs come from small businesses.
While corporations are important to the financial ecosystem in Los Angeles and should continue to be recruited, small businesses should not be discounted. Just because my company and others have decided to stay here doesn't mean we should be taken for granted.
In good news, the United States Chamber of Commerce reported a 7.8% increase in new business applications in California from 2022 to 2023. Los Angeles County may be the state leader in departures, but it also had the most business applications during that year: 160,925. The challenge is getting them to stay.
To that end, we are rallying our peers around a common goal: improving the business landscape. These efforts have coalesced into the Made in LA Coalition, which works to raise consumer awareness about products made in Los Angeles.
Some of the key initiatives we would like to see include financial incentives for local industry that encourage job creation and advancement, protections against harmful lawsuits by bad actors seeking personal gain rather than the public good, and a commitment from local government officials to use their platform and reach to celebrate businesses – and the people behind the businesses – that are committed to the city.
That kind of investment will help make Los Angeles a place where both businesses and the community can thrive in the long term.
Brian Bianchetti is the fourth generation CEO of Beef jerky chosen by the public.
