The Business Exodus
California has long been home to some of the biggest names in business, from tech giants to food processors. However, the state's high taxes, strict regulations and soaring operating costs are driving companies away at an alarming rate.
The California Policy Institute has tracked more than 363 corporations that have left the state. The pace of departures has accelerated in recent years, reaching a record 153 company headquarters relocations in 2021 alone — more than double the number in 2020 and triple that of 2018. Between 2018 and 2021, eleven Fortune 1000 companies left California, including McKesson, number eight on the Fortune list and the nation’s largest pharmaceutical distributor. McKesson left the state in 2018 for Texas. This would turn out to be a popular trend - the Lone Star State has become the most popular destination for California-based firms seeking a more business-friendly environment. Major corporations like X (formerly Twitter), Tesla, Oracle, Hewlett Packard Enterprise, Chevron and Charles Schwab have all moved their headquarters to Texas since 2021. The appeal is clear: Texas offers a significantly lower tax burden, with no state income or corporate tax, a less restrictive regulatory climate and a much lower cost of living. These factors make it easier for businesses to expand and attract talent, particularly as California struggles with rising costs.
However, the full scope of business migration is even larger than relocation figures suggest. Companies, including Wells Fargo, Disney and Apple, continue to keep their headquarters in California but are making major facility and employment investments in other states. According to fDi Markets, a quarter of the 680 corporate relocations in the U.S. since 2019 have come from California alone. Meanwhile, the Tax Foundation ranked California 48th in their 2024 State Business Tax Climate Index, ahead of only New Jersey and New York.
It’s not just giant tech companies fleeing the state—California’s high costs are hitting other industries hard, especially in the state’s rural regions. In the San Joaquin Valley, three major food processing plants recently announced closures. Foster Farms will shut down its Turlock turkey processing plant in May 2025, eliminating over 500 jobs. Leprino Foods will close its East Lemoore plant in early 2026 to shift investments to a new facility in Texas, ending a century of operations and cutting over 300 local jobs. The company cited the high operating costs in the state as one of their main reasons for the departure. Del Monte Foods is selling its Hanford tomato processing facility, which employs 400 workers, following the shuttering of two other California tomato plants. These closures highlight the growing economic consequences of California’s unfriendly business climate, particularly in the rural San Joaquin Valley that already suffers from high unemployment and double-digit rates of poverty.
The Business Exodus Signals a Troubling Trend
As operating costs continue to rise, even long-established industries are finding it increasingly difficult to justify staying in California. If the state does not take steps to address its affordability crisis, more businesses will be forced to follow suit, taking jobs and economic opportunities with them.