As corporate tech titans exit California, there’s worry the exodus will pick up speed - San Francisco Chronicle

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Business leaders fear tech giant Oracle’s recent announcement that it is leaving the Bay Area for Austin, Texas, will lead to more exits unless some fundamental political and economic changes are made to keep the region attractive and competitive.

“This is something that we have been warning people about for several years. California is not business friendly, we should be honest about it,” said Kenneth Rosen, chairman of the UC Berkeley Fisher Center for Real Estate and Urban Economics.

Bay Area Council President Jim Wunderman said the talk on the street is that other exits are already in the works.

“From consulting companies to tax lawyers to bankers and commercial real estate firms, every person I talk with who provides services to big Bay Area corporations are telling me that their clients are strategizing about leaving the Bay Area,” Wunderman said.

Charles Schwab, McKesson and Hewlett Packard Enterprises have all exited the high-cost, high-tax, high-regulation Bay Area for a less-expensive, less-regulated and business-friendlier political climate. All of them rode off to Texas.

Other companies, including Apple and Dropbox, are keeping their headquarters in the Bay Area, but expanding their workforce elsewhere.

But as the exodus unfolds no one seems to be batting an eye. Especially those in power. Especially in San Francisco.

“We have some people saying ‘goodbye and good riddance’ but it’s going to have real impact,” Wunderman said.

If anything, the pace of the departures appears to be increasing.

“We have doubled the real estate transfer tax and we have a tax for when the CEO of companies makes too much money,” Rosen said in citing two San Francisco examples of what he sees as the anti-business attitude. The CEO tax kicks in when a top executive makes 100 times or more than the company’s employees’ median salary.

San Francisco Supervisor Matt Haney, who authored the CEO tax that passed at the ballot last month, said most see the taxes as fair and beneficial.

“Most businesses don’t pay their CEOs 100 times what they pay their median workers, and most businesses want to see our city invest more in solving drug addiction and mental illness,” Haney said. “Painting this as an anti-business measure is totally inaccurate, and that’s why it had widespread support across the entire city, garnering nearly two-thirds of the vote. The overpaid executive tax isn’t anti-business. It’s pro-worker, pro-investment in our health system, and anti rampant, spiraling inequity.”

And it’s not as if there is much political fallout when significant businesses like Oracle or Schwab pull up stakes.

“There is a portion of San Francisco residents — maybe even a majority — who are happy to see this happen, but in the end they could wind up killing the goose that lays the golden egg,” Rosen said.

And it’s not just taxes and regulation. The 10-month shutdown of downtown San Francisco has shown business leaders that workers can plug in from anywhere and still get the job done.

“Those ‘second-tier cities’ — as we call them — like Austin, Denver or places in South Florida, are looking a lot more attractive these days,” Wunderman said. “The cost of housing is a huge factor in determining where talent chooses to live and in an era where remote work is becoming an alternative. This is really affecting the Bay Area’s competitiveness.

“But the will to clear the path for major housing construction has yet to become present in state law or local decision processes, quite the contrary,” Wunderman said of the slow pace of housing production in California.

And it’s not just tech giants like Oracle and HP that see California losing its luster. Regular people feeling the pain are looking elsewhere as well.

A recent online survey of 2,325 California residents, taken between Nov. 4 and Nov. 23 by the Public Policy Institute of California, found 26% of residents have seriously considered moving out of state and that 58% say that the American Dream is harder to achieve in California than elsewhere in the United States.

“It cuts across all demographic and regional lines. People are really worried,” Public Policy Institute of California CEO Mark Baldassare said.