Another major publicly-traded company is packing its bags and leaving California.
This time, it’s KB Home, a multibillion-dollar homebuilding giant that has called Los Angeles home for decades, since 1960.
Now it’s heading to Tempe, Ariz., citing a more business-friendly environment and lower long-term costs.
Let that sink in. A company whose entire business is building homes in California no longer believes it makes sense to be headquartered there –– even with tens of thousands of homes to rebuild after last year’s fires.
If that doesn’t tell you everything you need to know about the state’s business climate, nothing will.
And this isn’t an outlier. It’s the latest in a steady drumbeat of corporate departures that should be setting off alarm bells in Sacramento.
KB Home is heading to Arizona. Getty Images Tesla left. Chevron left. Oracle left. Hewlett Packard Enterprise left. Charles Schwab left. Now KB Home joins the list.
At what point do California’s leaders stop pretending this is coincidence?
Billion dollar companies don’t relocate headquarters on a whim. These are complex, expensive decisions that involve moving people, operations, and long-term strategy. When they leave, it’s because staying no longer makes financial sense.
KB Home said the quiet part out loud: They are leaving for a better business environment.
Translation: California has become too expensive and too hostile to operate in.
High taxes. Endless regulations. Crushing energy costs. Sky-high housing prices that make it harder to recruit and retain talent. And a political climate that increasingly treats businesses like villains instead of partners.
It adds up. And eventually, it becomes unsustainable.
Those who defend California’s current policies love to point out that the state still has one of the largest economies in the world. That’s true. But past success is not a guarantee of future strength.
The real question isn’t whether California has big companies. It’s whether it can keep them.
Hundreds of companies have left California in recent years, more than any other state. They’re not all leaving for the same place, but they are leaving for the same reasons: lower taxes, fewer regulations, and a more predictable environment.
When companies leave, they don’t just move offices. They take jobs with them. They take tax revenue with them. They take investment and opportunity with them.
They hollow out the very communities politicians claim to protect.
The steady drumbeat of corporate departures should be setting off alarms in Sacramento. REUTERS Meanwhile, states like Arizona, Texas, and Florida are rolling out the red carpet. Lower costs. Streamlined regulations. A message that businesses are welcome, not resented.
Arizona didn’t steal KB Home. California’s progressive policies handed it over on a silver platter.
None of this means California is collapsing tomorrow. It’s still a powerhouse with incredible advantages. But trends matter. And the trend is undeniable.
People are leaving because they can’t afford to stay. Businesses are leaving because they can’t afford to operate. And every departure makes it just a little bit easier for the next company to follow.
That’s how decline happens. Not all at once, but step by step.
The departure of KB Home should be a wake-up call.
But if the past few years are any indication, it won’t be.
Because acknowledging the problem would require admitting that the policies driving businesses out are the same ones being doubled down on.
At the end of the day, companies don’t care about political talking points. They care about the bottom line.
And right now, California is failing that test. The exodus isn’t coming. It’s already here. And it’s picking up speed.
Blue states like California will continue to suffer while red states grow.
Tom Carter is the president and co-founder of The American Conservative Values, an actively managed, diversified large-cap ETF that is dual listed on the NYSE and NYSE Texas. Learn more at www.investconservative.com.
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