EDC Releases Business Migration Report That Challenges California’s “Business Exodus” Theory
Dear Clients and Stakeholders,
The EDC has released a report in partnership with Xopolis: Urban Analytics that studies business migration in Ventura, Santa Barbara and San Luis Obispo Counties. The data challenges the commonly held understanding of “business exodus” from California. While we recognize that business relocations are only a small part of the larger economic dynamic of business start-up, growth and decline, given the lack of published data on the topic, we thought it prudent and useful to acquire and analyze the actual data for our tri-county region. For more on the data and research model, please take a look at the Report.
What Are the Findings?
· Ventura County is a net winner from business migration, with more firms moving into the County than out in all but one of the last 20 years. San Luis Obispo County is also a net gainer, while Santa Barbara County is at a near zero net change.
· Resulting from the net of inflows and outflows we have higher sales and more employment in Ventura and SLO Counties. Santa Barbara is again at a near zero net change.
· While the average employment and sales of firms moving out is larger than the firms moving in, the firms moving in show a marginally higher level of productivity.
· Though we are encouraged by the net movement, the “movers” represent only some 2% of the economy, a small measure compared to the larger dynamics of local firm creation, growth and decline. In other words, while business migration contributes a net positive to the region, it is a very small contributor to overall change in the economy.
What Are the Implications for Economic Development?
· The conventional story on business flight is misinformed; it is neither a primary cause nor a relevant symptom of our economic condition. Knowing this clears ground for a better focus on our real issues: slow growth of existing firms; overall decline in higher paying sectors, replaced by lower; shortages of housing and labor force.
· As a matter of setting economic development priorities, the data:
- Affirms our strategy for allocating our primary economic development resources on business retention, growth and entrepreneurship;
- Informs our opportunity for strategically targeted business attraction, aligned with regional strengths; and
- Ratifies our penchant for telling a positive story about our region’s business climate, and validates our emphasis on the real strengths of the California and regional economy.
What’s Next: We are still working the data and will have more to report and share, particularly on industry sector movement, sources and destinations of movers. We will also be reaching out to the cities to coordinate on the practical uses of the information. We will be publishing the full data sets complete so far in the next few days, with additional postings as we move forward.
Finally, we’d be happy to present the report and its findings to your governing boards and civic associations, just let us know. And please feel free to share the report with your colleagues.
In summary, please be assured that we wholly recognize this study does not capture the entire “churn” of our economy, that is, the larger processes and influences on business creation, growth, decline & failure. In the end, we find this information interesting and useful, one more input driving our passion and curiosity for developing the most effective resources for growing the region’s economy.
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