Chevron Leaving for Better Business Opportunities: Jonathan Williams on 790KABC
This is just one additional example, and a high-profile one, of a company realizing that, to become a better and more profitable company for its shareholders, employees, and customers, they needed to move.
ALEC Executive Vice President of Policy and Chief Economist Jonathan Williams joined the John Phillips show on 790 KABC to discuss the recent Chevron announcement on the relocation of its headquarters from California to Texas, highlighting California’s high costs and unfavorable business environment. He noted that many companies, including Morton Salt, are leaving high-tax states like California and New York for more business-friendly environments.
Why Chevron is Relocating to Texas
The recent announcement by Chevron to move its corporate headquarters from California to Texas has made waves, particularly in light of growing challenges businesses face in California. Andy Walls, Chevron’s President of America’s Products, pointed out the difficulty in recruiting talent to California, citing high costs, difficulty in employee relocation, and other factors like the state’s business climate. Williams explained:
This is just one additional example, and a high-profile one, of a company realizing that, to become a better and more profitable company for its shareholders, employees, and customers, they needed to move—in this case, to Texas, one of America’s booming states with low taxes and very different policy choices compared to California over the past several decades.
The Growing Trend of Business Relocations
Chevron is far from the only company moving to a state with more business-friendly policies. Other high-profile departures, such as Morton’s Salt moving from Chicago to Kansas, also highlight this trend. Chevron’s transparency in explaining their decision is a rare example of corporate honesty, and Williams commended them for it.
There’s often a hesitancy to be frank about the real root causes of the move, due to fear of retribution, either immediately or over time. Even if a company moves its headquarters, many don’t relocate all their employees and operations right away. As we know, many of these companies benefit from special tax preferences, credits, or deals that could potentially be withdrawn if they publicly say the wrong thing. So, it’s truly refreshing to see a CEO, like in Chevron’s case, honestly talk about the reasons behind the move.
California’s Challenges: Crime and Cost of Living
In addition to the tax burden, Williams noted other significant factors that contribute to businesses leaving California, such as crime and the high cost of living. He highlighted the closure of an In-N-Out Burger location in Oakland due to rising crime rates as a striking example of how safety concerns can force profitable businesses to shutter.
I believe it’s due to factors such as crime, cost of living, and housing, but also the fundamental kitchen table issues—how much the government will take, what my take-home pay will be, and my overall quality of life after taxes in one state versus another.
The Future of AI and Tech in California
Williams also addressed the future of AI development in California, referencing comments by tech entrepreneur Peter Thiel, who predicted that the Bay Area would remain the center of AI innovation. While Williams acknowledged Thiel’s points, he also pointed to emerging tech hubs in Utah and Texas that may challenge California’s dominance, thanks to their more favorable business environments.
I do think there’s a risk that as AI continues to grow—and as he points out, we’re seeing many parallels to the 1990s with the internet—California’s high-cost environment could become a problem. There are new supply chain opportunities emerging, and concentrations are developing in places like Utah and Texas, which have much better policy environments. In these areas, we know the government is less likely to intervene and stifle this new technology before it fully takes off.