California businesses are heading to Arizona

Arizona is open for business, a fact becoming more apparent with each new company setting up shop in the state. 

According to Arizona Governor Doug Ducey, “burdensome regulations and crippling costs” are driving both large and small businesses to move to Arizona and take advantage of the state’s innovative-friendly regulation, low taxes, qualified workers and high quality of life. 

“With a booming economy, budget surplus, talented workforce, low regulation and tax environment, and unbeatable quality of life, it’s no wonder business leaders increasingly want to come to Arizona,” Ducey said in a statement. “The word is out on Arizona. We are open for opportunity. And we will continue to implement smart policies that grow jobs and allow us to continue investing in the things that matter.” 

For the last four years, Chief Executive Magazine has ranked Arizona in the top ten best states for business. California has continuously ranked last.

“Business is booming in Arizona,” said the report overview. “Amazon, Acronis, Valor Global and TEKsystems have announced expansions here in the past year, and Infosys will soon create an innovation hub in Phoenix that will hire 1,000 workers by 2023.” 

Since 2015, 49 California companies have chosen to set up shop in Arizona, including ZipRecruiter, Stitch Fix, Apple and Google. 

“There’s definitely a trend of California businesses leaving the state of California,” Thiel Capital managing director Jack Selby said. “Unlike other states that are attracting the California transplants, I think Arizona has the unique advantage that they are still approximate to California… So, unless you’re completely divorced from California altogether, which I think is difficult to do, setting up shop in Arizona still gives you the ability to connect with California relatively easily.” 

Capitalizing on California’s “burdensome laws” and increased cost of living, the Greater Phoenix Economic Council (GPEC) launched the #CAStruggles campaign to attract high-tech companies. 

The campaign has 24 vehicles with “visit TimeToGetOut.io” mobile billboards that will “flood major Silicon Valley corridors.” 

The website promotes the Greater Phoenix area as a location of choice for both businesses and individuals, touting a variety of benefits like a lower median home cost, lower corporate income tax and lower top individual income tax rate.

“Today, California technology, corporate services, and manufacturing enterprises now comprise one-third of the 300+ companies evaluating Greater Phoenix,” GPEC reports.  

According to GPEC, the spiraling cost of living is one key factor driving people away from California.

“California’s become a very expensive place to live, so the housing issue is the most pressing for the state,” Selby added. “Until California sorts out its housing issues…I don’t think the trend is going to reverse, it may slow down but it very well could speed up.”

The migration of California businesses to Arizona has brought more than 18,000 jobs and more than $9 billion in capital, the governor’s office reports. But companies aren’t the only ones moving to Arizona. In 2017, more than 59,000 Californians moved to Arizona.

“Arizona offers many competitive advantages over California, and the state remains a top target market for the ACA’s business attraction efforts,” according to an Arizona Commerce Authority representative. “Arizona also offers an unmatched quality of life. The state boasts 300+ sunny days a year – the most in the country – four seasons, 22 national parks, 7 pro sports teams, and over 400 golf courses.”

I don’t think California has a monopoly on innovation or entrepreneurship,” Selby said. “Phoenix is kind of an untapped resourceAs companies are coming here more and more, they realize that there’s world-class talent that’s being grown here that’s ready to be harvested.” 

Emily Richardson

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