Are Businesses Really Fleeing California?

This story is part of our April 2026 issue. To read the print version, click here.

In the story of California as a state losing corporate
headquarters, Ronald Mittelstaedt fits the narrative almost too
well.

In 2010, Waste Connections, where he’s president and CEO, started
weighing the idea of uprooting its headquarters from Sacramento
to Texas. Many of the reasons had to do with wanting happier
workers. Homes, gasoline, electricity and more are cheaper in
Texas, making the overall cost of living about 15 percent less.
Unlike California, Texas has no capital gains or state income
tax, meaning the company’s workers would have more take-home pay.

When the company loaded up its trucks to move to The Woodlands,
outside Houston, in 2012, more than 90 percent of employees, most
of them native Northern Californians, went too. Since then, Waste
Connections has surged from $1.5 billion to $10 billion in
revenue and from about 6,000 to 26,000 employees. The company
couldn’t have achieved the same success in California, says
Mittelstaedt. “The talent we needed wouldn’t have come to
Sacramento,” he says.

But there’s another side of California too: A place that
continues to draw and retain companies that need specialized
science and tech talent.

Pam Marrone is the face of that. In 2006, she started Marrone Bio
Innovations, which made biological products for crop protection
and plant health, headquartered in Davis. In 2022, she sold the
business to Bioceres Crop Solutions. The new CEO wanted to move
it to Research Triangle Park in North Carolina to cut costs and
eventually relocated the administrative and finance functions
there. Marrone, who’d stayed on the company’s board, understood
the reasoning — Research Triangle has an “incredible ag biotech
system,” says Marrone.

But it wasn’t long till Bioceres brought everything back to
Davis. The cost savings weren’t enough to justify relocating. And
employees preferred Davis. In the Raleigh-Durham area, “you have
to get everywhere by car. It’s very spread out, very big. There’s
no public transportation. So it’s a different lifestyle,” says
Marrone.

In 2023, she launched a new Davis-based company, Invasive Species
Corporation, which creates products to control non-native pests.
Davis fits the lifestyle of her talent pool: UC Davis graduates
who like the city’s easy biking and transit. Farmers, her
customers, are close by, making it easy to do field trials.
Biological products are regulated by the state, but the
regulation is reasonable and predictable — her biggest problems
of late have been with tariffs and products sitting in customs,
she says.

“This region is a gem that doesn’t get the publicity that St.
Louis and Research Triangle Park get in terms of agtech
startups,” she says. The state, she says, “bends over backwards”
to help businesses launching in that sector.

Pam Marrone, co-founder of Invasive Species Corporation in Davis,
is a biotech entrepreneur specializing in organic pest control.
(Photo by Katy Karns)

The cases of big companies abandoning California have attracted
lots of media attention for a reason: Federal data show an
acceleration in the number of firms leaving. The state’s tax and
regulatory climate ranks among the toughest in the country. But
that may not be the full picture. The state and Sacramento still
host plenty of startups and lure companies from abroad.

Taxes, regulations and companies on the move

Nationally, more firms are migrating at a faster pace than
before. About 6,500 moved in 2021, up from about 4,000 in 2002.

But that trend has winners and losers, and California is the
second. A 2022 report by the Hoover Institution noted that the
state lost 352 company headquarters from January 2018 to December
2021 and that the number of departures accelerated: More
companies relocated in 2021 than any other year in that period.
The authors blamed high taxes, punitive regulations, high labor
costs, high utility and energy costs and high costs of living,
especially housing. Indeed, on the Fraser Institute’s latest
“economic freedom” index, which ranks states according to
government spending, tax and minimum wage levels, union density
and more — California was 47th.

On another metric, manufacturing jobs, the state is sliding
backwards, too. Since September 2022, it’s shed about 83,000
manufacturing jobs. One industry group, the California
Manufacturers & Technology Association, argues those losses stem
from state regulations and high equipment costs. Still,
economists don’t agree on the causes of manufacturing job cuts,
which are happening nationally.

Some of those explanations fit the stories of two other
Sacramento businesses that left for Texas. Titans of CNC sells
machine tools and offers online education on machining and
manufacturing. In October 2020, the company, which won a 2017
Sacramento Region Innovation Award, said it was moving from
Rocklin to Flower Mound, 10 minutes from the Dallas-Fort Worth
airport.

In October 2020, Titans of CNC moved from Rocklin to Flower
Mound, Texas, 10 minutes from the Dallas-Fort Worth airport.
(Shutterstock photo)

In a 2020 social media video that drew more than 100,000 views,
owner Titan Gilroy highlighted lower taxes and cost of living. He
told his employees that moving would give them a raise as their
taxes fell. “Get out of these apartments — you’re going to buy a
house,” he told them. Employee gym memberships, a company perk,
dropped from $140 per individual in Rocklin to $64 per family in
Flower Mound, he added.

For another owner, the reasons were more Sacramento-specific.
Mark Snyder co-owned the kitchen and gift store William Glen and
a sister store in downtown Sacramento. In 2021, the company
shuttered both and moved to a fulfillment center outside Fort
Worth.

Snyder told news outlets they left because of the number of
unhoused people camping outside the stores and rising
shoplifting, which cost the company $15,000 a month. “Do I stay
and fight? How long do I put off my dreams and what matters?”
Snyder told a reporter. “I’d pay higher taxes if we got more for
our high taxes — like good schools and highways. But not in
Sacramento or California.”

Both owners declined requests for comment on how they view those
moves today.

Corporate headquarters relocations don’t always mean abandoning
the state. Many companies shift the front office and keep
employees in California. But headquarters transfers matter
because they suppress in-state hiring, according to an August
2024 analysis by the Bay Area Council Economic Institute, an
economic and policy think tank. It compared hiring by four
corporations — Tesla, Hewlett-Packard, Snowflake, and Charles
Schwab — whose headquarters left the state. In three of the four
cases, the share of their hiring in California dropped by double
digits. It rose for one of the four, but the increase was less
than 3 percent.

Exacerbating matters is the state’s population loss. After the
1848 discovery of gold on the South Fork of the American River
between Auburn and Placerville, 300,000 people poured into the
state within the next six years, bringing more demand and more
businesses. Today, the same is happening in reverse: From 2018 to
2025, there was a net outflow to other states — movers-in versus
movers-out — of about 2 million people, most often driven by high
housing costs, according to an analysis by the Public Policy
Institute of California.

Those housing costs may also impede hiring for in-state
companies. Before the pandemic, 33 percent of the job postings of
California-based Fortune 1000 companies were in-state, a number
that’s dropped to 25 percent, according to the Bay Area Council
analysis.

All of that may understate the magnitude of company flight.
Before 2019, net out-migration of California companies — incoming
firms minus outgoing firms — had never hit more than 200 in any
year except 1994. But in 2019 it topped 209 and then ballooned to
741 in 2022, according to a Comstock’s analysis of federal Bureau
of Labor Statistics data. Altogether, in the five years from 2019
to 2023, the state lost almost 2,100 companies on net. New York
State came second at about 1,800. No other state’s number
surpassed 1,000.

But companies leave for lots of reasons

The state’s business climate also isn’t everything. Some
companies that closed operations in the Sacramento region say
their reasons had nothing to do with taxes or regulations.

In 2021, the Educational Media Foundation, a faith-based
broadcaster, announced it was moving from Rocklin to Tennessee’s
Nashville area. “California was good to us,” says CEO Tom Stultz
by email. But they needed to be closer to the artist and music
community in Nashville.

Educational Media Foundation, a faith-based broadcaster, moved
from Rocklin to Tennessee’s Nashville area. (Shutterstock photo)

In February, Anheuser-Busch shut down its Fairfield brewery,
which employed 240 people. A spokesperson said by email it closed
two other plants in New Jersey and New Hampshire to channel money
to a $2 billion modernization of its 100 other facilities.

And a Sacramento fuel manufacturer that didn’t wish to be named
opened a new production facility in Texas in 2024 and will launch
another by 2027. A representative says they put those in Texas
instead of California because of Texas’ lower electricity prices
and cluster of energy industries. But the company retains its
Sacramento headquarters because it can tap corporate talent here
and has access to high-quality labs in West Sacramento.

Business numbers are still growing

As bleak as much of this appears, the bigger picture isn’t so
grim. The biggest driver of the California corporate numbers
isn’t companies leaving the state but the number of new corporate
headquarters launching and folding within the state. In 2021, for
example, about 200 moved out of state. But that year, about 800
opened in-state while 750 shut down, according to an analysis by
the Public Policy Institute of California.

Overall, the number of California businesses keeps growing: About
245,000 opened and about 183,000 closed from March 2023 to March
2024, a net gain of about 62,000 companies and 87,000 jobs,
according to the latest federal data. That’s part of a longer
trend. From 2015 to 2024, the number of state businesses grew
from about 1.5 million to 1.9 million.

In Sacramento, firms are coming in from abroad. Last year, the
Greater Sacramento Economic Council reported attracting a dozen
foreign-owned companies to the region between 2021 and 2024,
creating almost 3,000 jobs.

Bottom line? The effect on employment of company headquarters
leaving California “is not negligible, but it also does not
reflect a major change in the state’s employment picture,”
concludes the Public Policy Institute.

And for those who can afford it, the state’s climate and land
will always be a draw. Even Mittelstaedt sounds wistful
discussing the tradeoffs of Waste Connections’ move. There are
those Texas summers — “105 during the day and 102 at night,” he
says.

And California has its ocean, mountains and valleys. “There’s
just one Santa Barbara, one Carmel, one Napa, one San Diego, one
Pismo Beach. You don’t have that anywhere else, right?” he says.
He still has a home in Sacramento and misses family who live
here.

“I hate to say it, but all the things that the state government
doesn’t have anything to do with are great in California,” he
adds.

–

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