Hat tip to Richard for sending in this article about California workers encouraging their employer to leave the state in order to achieve the American dream – affordable home ownership:
http://www.bizjournals.com/dallas/blog/2015/12/heres-the-main-reason-toyota-is-moving-from.html
An excerpt:
Sure, the low taxes, relaxed regulatory environment and Central Time Zone are nice. But none of those factors tops the list of reasons Toyota decided to plant its North American headquarters in Plano, bringing in more than 3,000 jobs, mostly from California.
The main driver of Toyota’s move from Torrance, California, was housing costs, according to Albert Niemi Jr., dean of the Cox School of Business at Southern Methodist University, who has inside knowledge about the move. Niemi shared the anecdote at an SMU Cox Economic Outlook Panel on Friday morning.
“It wasn’t so much that we don’t tax income,” he said. “It was really about affordable housing. That’s what started the conversation. They had focus groups with their employees. Their people said, ‘We’re willing to move. We just want to live the American Dream.’”
Toyota did the math and found that housing costs in Los Angeles County, where Torrance is located, are three times per square foot the cost of a house in Dallas-Fort Worth.
“They’re paying the same salary,” Niemi said. “So in real terms, they’re going to triple the affordability of housing they can buy if they move to Texas.”
Sad, but true. Good, well paying jobs left our state because housing/shelter is too expensive for these workers.
Even more sadly is that I doubt this will change anything, due to the many factors that are causing these out of control housing price increases. Things like lack of inventory, prop 13, investors buying to rent out long term or short term as AirBnb, foreigners flush with cash, low interest rates forcing people to put their money somewhere that gives them a return better than .01%, etc.
On the bright side, those of us that are sticking it out here in CA and waiting for the right house and right time to buy, have less competition from those folks moving out of state.
These two articles point to the trend of middle-class being supplanted by rich folks. But yes, the flight out is probably larger!
In smaller numbers, the high income earners/business owners started leaving for texas awhile ago. With CA state tax rate at 13%+ vs TX at zero, they could buy a nice spread in Texas and keep a vacation place here all on the tax savings alone.
Taxes is what influenced Greinke to sign with the D-Backs. He will pay 4.5% in Az vs 13.5% in CA.
Probably a wife thing. You haven’t heard another peep from Phil Mickelson about paying CA taxes….
D-backs are smart to make their moves in the winter too. A family visit during the summer could squash a trade as fast as anything.
Torrance is everything people don’t think of when they think California.
The computer industry has been dealing with this for a while. California is simply an expensive place to live. Fortunately people out here are better at their jobs than other places. I don’t know why, maybe its the water but innovation tends to happen in California first then radiate out.
However I can completely understand why an assembly plant in Texas would make sense.
California is home to a massive birth scamming industry, as well as money laundering via buying rental properties, and homes that remain vacant, and I suspect that carries some punch in the cost of living results.
Go to South Coast Plaza, and you’ll notice asians as the shopping majority by a long shot, and the shops are very high-end. Like a mall you’d find in Shanghi, oddly enough. They don’t like Sears.
Consider the “high cost of living” our “immigration tax.” Rich people from other countries, and their “parachute kids” need a place to live, you know.
“Torrance is everything people don’t think of when they think California.”
What DO people think of when they think of California?
I think of shady, aggressive rich people, celebratory poor people, and an angry middle-class getting hit on the butt by a redwood door on their way out. I also think of California as the greatest rape of a state since Sherman marched on Atlanta.
But I was here in the sixties, I consequently got stuck with a front row seat, so I’m maybe a little bitter. Other’s perceptions may vary.
I recruit for companies who work intimately with Toyota; these companies will have to open offices in Plano as a result. In my experience, NO ONE wants to move to Plano (these are people who live all over the country but predominantly in LA, less so in SF). I have heard many times “no amount of money” will convince some to go to Plano. Frankly, those who are willing tend to be lower quality candidates, professionally speaking.
When Nissan moved to Nashville (which is better than Plano!) SOME people (who work for vendors of Nissan) took the 2- year package out there, and guess what! They came right back to California at the 2-year mark. Now the vendor’s Nashville office is a quasi-satellite office. Which was not the original vision.
And Torrance is 10 minutes from Manhattan Beach, which we know is gorgeous.
I know this exodus gets talked about, and I have heard of one friend of a friend (who doesn’t even have a job — he “manages” his family’s estate/wealth) move to TX, he says for cost of living reasons. But I honestly do not experience it from my professional vantage point. People will do a lot to stay in California.
Last, the professor in the article from SMU (a homer!) who said Toyota is moving to CA to help their employees’ housing costs??? No way. They did it for the massive corporate tax benefit that Governor Perry loves to give away. We all know companies don’t care about employees, they care about profits, and vis a vis tax benefits. Period.
The question mark at the end of the title was deliberate – I’m not sure if it is an exodus or trickle.
Filed under “It’s always more complicated than you think” Inc has a good read about the move of Buck Knives from San Diego to Idaho in 2004, why the company moved, who wanted to move and who didn’t, and how it turned out:
http://www.inc.com/magazine/20060501/buck-stopped-here.html
CA still suffers from high workers comp costs relative to other states, and I imagine manufacturing businesses would be hit hardest:
http://www.sgvtribune.com/business/20141022/california-ranks-highest-for-workers-compensation-costs
So in the Idaho article, the owner of the Buck knife business says, “If you live in Idaho, you’ve got to have a Buck knife,” he chuckles.”
The Somalians will love that: https://www.facebook.com/somalicommunityinidaho
As well as refugees from Syria, Iraq, and the Democratic Republic of Congo. On a percentage basis, it appears Idaho’s overall immigrant population is booming, with the police equivalent of Andy Taylor and Barney Fife keeping them all in line. The times they are a-changing. I’d stay in Cali if at all possible. Many flyover states are experiencing an immigrant renaissance chock full of vibrancy.
“Stick with the devil you know.”