Is California in decline or an engine of growth? Depends who you ask

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It is the story of two narratives, written through competing political perspectives.

On the one hand, there’s the economy that would be the fifth largest in the world if it were a nation, and which is arguably on its way to overtaking Germany for fourth place.

This is the story Governor Gavin Newsom and his fellow California Democrats like to talk about.

Los Angeles-based, Nasdaq-listed EVgo, which operates a national fast-charging network for electric vehicles, is one of California’s newest ventures in the electric vehicle industry.

Bloomberg News

On the other hand, there’s a story of manufacturing jobs and corporate headquarters leaving the state for places like Texas amid a stagnant to declining population, told by Republicans and outlets like Fox News. .

Reality, as usual, is not as clearly defined as the stories proponents want to tell of it, although both accounts contain both truth and exaggeration.

California’s budget showed a $97 billion surplus for the 2021-22 fiscal year. The state also contains huge encampments of homeless people, as the prosperous side of the economy pushes housing prices so high that many middle-class Californians move to cheaper places while less fortunate people are forced to go out.

And the state recorded a population loss of more than 117,000 in 2021, according to its finance ministry. Relatively small population gains in the 2010s cost California one of its 53 seats in the U.S. House of Representatives.

But the losses haven’t seemed to dampen the state’s economic growth: California still has 379 companies with a market value of at least $1 billion, according to Bloomberg data cited by the governor; even with last year’s population loss, it has nearly 39.2 billion people, more than Canada or Australia.

“While critics often say California’s best days are behind us, reality proves otherwise — our economic growth and job gains continue to fuel the country’s economy,” Newsom said in a statement. .

“California’s values ​​and entrepreneurial spirit have fueled this rise,” he said. “We will continue to double our efforts in the industries of the future, such as renewable energy and clean energy.”

Information fueling reports that the Golden State has lost its luster is information that Wells Fargo – the San Francisco-based bank that traces its history back to 1852 amid the California Gold Rush – has moved some banking operations to Austin, Texas, and Raleigh, North Carolina.

Wells Fargo announced it was building a huge campus in Irving, a northern suburb of Dallas, sparking rumors that the bank, which has a national footprint after a long list of mergers and acquisitions over the years, may move its operations there. the head office.

“We have no plans to move our headquarters,” a spokeswoman said.

She did not respond to questions about how many workers remain in San Francisco or why the bank feels it is important to maintain a presence in the city.

And Elon Musk, whose rise to status as the world’s richest man fueled by Tesla stock was charged by cars built in Fremont, Calif., opened factories in China, Germany and Austin, TXwhere the factory now houses Tesla’s headquarters.

He also hinted that he could move Twitter’s headquarters to San Francisco out of state after his deal to buy the social media company is finalized, which is expected this week.

“Based on what I’m hearing, Northern Nevada has a good chance of moving on Twitter,” said John Boyd, Jr., director of The Boyd Company, Inc., a company that researches the relocation.

That headquarters might not be a big prize if Musk fires most of Twitter’s employees, as he’s also suggested.

A site-selection study Boyd published in October named top US cities for corporate headquarters in the post-pandemic world — none of them in California. The study considered corporate relocation trends for remote work, state tax structures, and the cost of operating a corporate office in each location.

Musk’s controversial relationship with California over the past few years, which included the billionaire’s complaints about high taxes and a difficult regulatory environment, was a factor in Boyd’s report. Other companies, including Charles Schwab, McKesson, Oracle and CBRE, have moved their headquarters away from San Francisco in recent years, according to Boyd’s report. Business leaders cited high operating costs, rising taxes, homelessness and crime for their moves, the report said.

Many businesses have moved to the Austin or Dallas areas of Texas, but Boyd’s report highlights Minden, Nevada, 17 miles from the California border at South Lake Tahoe.

“Minden has land — and it’s close to Reno and Lake Tahoe, hospitality infrastructure,” Boyd said.

Twitter’s San Francisco headquarters could leave the state after its acquisition by Elon Musk closes.

Bloomberg News

The Reno-Sparks area has seen exponential growth with companies like Amazon and Tesla moving there, but Boyd said in the recent push to move headquarters, Minden is a more likely choice because offices administrative do not require the same kind of infrastructure that manufacturing does. They just need access to airports.

“Minden is less than an hour from the Reno airport,” Boyd said. “Northern Nevada is one of the fastest growing markets in the western United States, attracting businesses from northern Nevada. Not just Tesla, but Panasonic.”

Nevada and other states that have no corporate or personal taxes will be big draws for businesses looking to relocate, not just from California but from other high-tax states, Boyd said. .

Boyd said his company receives many “data requests” from people watching Raleigh, North Carolina and Florida on the east coast, and central and eastern Washington state as well as around Reno.

“There are still record deals going in Austin and Dallas, but not everyone is ready for the HR challenges there,” Boyd said. “Tech and media companies are sensitive to the issue of abortion. Before engaging in Texas, they want to consider Nevada where abortion rights have been codified.”

Like California, Nevada is ESG-friendly, Boyd said.

“Northern Nevada is a leader, they’re green, thermal, wind, solar,” Boyd said. “And, Minden is 23% cheaper than San Francisco. There are thousands of businesses in San Francisco and the Bay Area metro looking at the true opportunity cost and potential HR benefit to leave high-tax, anti-corporate California.”

The CEO of ProLogis also recently stated that “crime is more of a motivator than the endless cycle of taxes, expenses and anti-corporate regulations”, according to Boyd’s report. This may be another case where perception trumps reality; the murder rate is higher in Texas and Florida, another recent magnet for corporate headquarters, than it is in California.

Boyd said his company produced the study because once COVID-19 concerns began to fade earlier in the year, requests for land information north of Reno ” have been off the charts”.

“We’re anticipating a lot of growth in this region,” Boyd said.

What doesn’t get as much press is that SpaceX, a Musk company, employs more than 1,000 people at its headquarters in Hawthorne, Calif., which also serves as its main manufacturing facility.

Powered in part by Newsom’s programs, renewable energy has become California’s fastest growing business, according to a Newsom statement. The state’s clean economy goals are seen by its administration as a driver of economic development and innovation.

California, the top U.S. market for electric vehicles under regulatory efforts to phase out internal combustion cars and trucks, is home to 43 manufacturers of ZEVs and related equipment, including batteries and power products. infrastructure, according to the California Energy Commission.

Newsom has doubled down on its clean energy and zero-emission vehicle efforts, implementing a A $10 billion package to make it more affordable for Californians to purchase ZEVs while expanding the state’s charging infrastructure.

California now has six times as many clean energy jobs as fossil fuel jobs, the administration said.


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