California Businesses Flee Taxes, Crime

Leaving California sign
Leaving California sign | Image by MCCAIG/Getty Images

Texans have seen many big-name businesses come to the Lone Star State in recent years, many of which left California.

A recent report by RedBalloon and PublicSquare shed light on the issues driving businesses out of the Golden State, with the Freedom Economy Index logging data on small businesses across the nation and the striking differences between business owners’ opinions in places like California.

“Nearly a third of small businesses feel they’re stuck in Hotel California, where they can check out anytime they like, but they can never leave,” Andrew Crapuchettes, CEO of RedBalloon said to Fox Business. “California used to be the engine of small businesses in America, but those still California dreaming are finding it’s become a nightmare — 67% want to escape.”

Business owners who spoke with RedBalloon said that crime, taxes, and left-leaning policies were the driving factors behind their desire to leave the state. According to the report, 86.4% of small businesses want to leave the state due to high taxes.

The rising costs from minimum wage hikes are also pushing some businesses out of the state. California Gov. Gavin Newsom recently signed legislation increasing the minimum wage for certain fast-food workers to $20 per hour. Healthcare workers will also get an increase of up to $23 per hour, depending on the type of facility. The statewide minimum wage increased to $16 per hour on January 1, according to CalMatters.

The wage increases are likely to have a ripple effect on other industries as employees might expect similar treatment. Some experts believe that employees in sectors such as retail may switch to fast food for the opportunity to make more money.

“We would love to move our home and our business to Nevada,” Bulletproof Pet Products CEO and CFO Cherie Falwell said. “We have considered other states like Texas, Florida and Tennessee. The reason for those states, especially Nevada, is because the taxes and cost of living are cheaper. [The] minimum wage here is horrible.”

Falwell said rising crime, particularly property crime, has been another factor.

“It used to be this very nice town, now it is just horrible,” Falwell said. “We have been in our home for 17 years, we have had mail theft. The crime has impacted my desire to even leave my house or business.”

Just 13% of small businesses surveyed by RedBalloon were happy in California. The report shows that while many businesses want to leave, the financial difficulty of making a move has left them trapped in the state.

Crapachuttes warned that the exodus of small businesses from the state is only just beginning, and the damage to the economy isn’t obvious yet.

“That’s what I think is the interesting story, is that a lot of this activity hasn’t happened yet, isn’t caught in the economic data, but it’s coming and it will have huge impacts,” he said.

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