Oracle Latest Company to Dump California; Golden State Corporate Exodus Explained

Oracle Corporation said on Friday it will move its corporate headquarters out of California, joining a host of high-profile businesses that have left the Golden State. Oracle Corp. is moving its headquarters to Austin, Texas.

Countless companies have left Silicon Valley in recent years but the recent exit of electric car-maker Tesla Inc highlighted the pace of the corporate exodus from the state. Other heavy weights to leave the state in recent times include Hewlett Packard Enterprise, ComCast and Palantir Technologies. Millionaire podcaster Joe Rogan also said he was moving from Los Angeles to Austin.

Most of the corporates are moving to Texas, which is seen as more business-friendly. Other states that attract corporate stars are Arkansas, Missouri and Colorado.

It is not just Los Angeles that sees a high rate of corporate exodus. Counties like Orange, Santa Clara, San Francisco, San Diego, Sacramento and San Bernardino are also seeing businesses leaving for good.

Oracle YouTube grab

Too Much Regulation, Too High Taxes

Tesla's Elon Musk said he was moving out because of factors including high taxes, heavy regulatory climate and declining support to start-ups. He said California has been like a sports team that has been winning for too long but started the race downhill. "There used to be over a dozen car plants in California. And California used to be the center of aerospace manufacturing. My companies are the last two left," he said. Businesses have long been complaining that California's tax regime is complex and prohibitive.

Elon Musk
Elon Musk YouTube Grab

Too Long Under Democratic Control

Bill Maher brought another perspective to the debate when he blamed the Democrats, who have controlled California for too long, for the corporate exodus: "Look, I came out here in 1983. I found paradise. I love California. I do. I don't want to leave, but I feel like I'm living in Italy in the 70s or something. Super high taxes, potholes in the road, fires. I don't know what I'm getting for my super-high taxes," he said.

Wages and Trade Unions

California has set $15 as minimum wage, a rule that will come into effect a few years down the line. However, overall wages in all segments are already too high in the state, adding pressure on corporates to offer compensation more attractive than those of state workers who get retirement payments far higher than their average base salaries. Besides, the trade unions of California have grown in power in recent years, establishing employee benefits that are prohibitively expensive for employers.

A student walks past Royce Hall on the University of California Los Angeles (UCLA) campus
A student walks past Royce Hall on the University of California Los Angeles (UCLA) campus. Reuters

Toxic Business Climate

In a report published last year, Joe Vranich, a relocation specialist, termed the business climate in California toxic. "It's time for Companies to Leave California's Toxic Business Climate," he said in the report. The report highlighted that there were more than 13,000 "disinvestment events" between 2008 and 2016 in California.

Tough Environmental Laws and Litigations

Businesses point out that it takes as many as two years in some cases to get a company registered in California. Added to this, highly stringent environmental laws impede businesses further. Companies are frequently sued by various stakeholders, pushing companies into long and painful litigation.