Bay Area Residents Cite Significant Concerns About the Burdens, Obstacles Facing Businesses
Even as the Bay Area economy begins to reopen and recover from a year-long COVID shutdown, a strong majority of residents harbor serious concerns about how astronomical housing costs, high taxes and onerous regulations make the region an inhospitable place to do business, according to the 2021 Bay Area Council Poll.
The findings highlight a growing debate about the Bay Area’s economic climate, the extent to which companies, investors and workers are fleeing for lower-cost destinations both within California and outside the state and what it all means for the region’s ability to compete economically in the years ahead, particularly as the rise in remote work diminishes the importance of geography in deciding where to invest in new jobs.
High housing costs are viewed as a serious threat to the Bay Area’s economic future, with a whopping 92% of residents saying they are concerned about their impact on the future of the Bay Area’s economy, according to the poll. Despite a mild, COVID-induced respite in some places from skyrocketing housing costs, home prices and rents are again beginning to climb as permits for new housing stagnate and little substantive action is being taken in Sacramento to accelerate production.
Concerns about local companies not growing are shared by 81% of respondents to the Bay Area Council Poll, while a substantial 74% say they are concerned about state taxes on businesses when it comes to the region’s economy and a slightly higher 76% worry about the level of local taxes. California’s notorious regulatory burdens also figured prominently, with 71% expressing concern that the amount of red tape on local businesses is detrimental to the region’s future economic health.
Following high-profile headquarter departures in recent years by the likes of HPE, Oracle, McKesson and Charles Schwab, the Bay Area Council Poll found that 68% of respondents are concerned about companies leaving the Bay Area. And with many states working to seize on what they see as California’s economic vulnerability, a significant 63% of poll respondents expressed concern about other states recruiting local companies to move.
“It’s quite alarming to see the high level of concern for the many challenges facing Bay Area employers,” said Jim Wunderman, President and CEO of the Bay Area Council. “The Bay Area has always proven itself resilient against economic downturns and headwinds, but we need to get our house in order if we hope to come back strong following COVID and maintain and expand our dominance. Whether it’s big employers or small- and medium-sized local businesses, the highly connected nature of our regional economy means the negative impacts on one have negative impacts on many.”
Still, the immediate outlook for the region’s post-COVID economic recovery is generally favorable as vaccinations accelerate, infections decline, restrictions lift and businesses reopen. While 40% of Bay Area Council Poll respondents believe the economy is doing worse than it was six months ago, 52% expect the economy will be doing somewhat better (35%) or much better (17%) six months from now.
There were some variations depending on geography. San Francisco residents were the most sanguine about the region’s recovery, according to the poll, with 64% expecting the economy to be doing better six months from now, while residents in Contra Costa County (44%), San Mateo County (41%) and Santa Clara County (48%) are less optimistic. Results were fairly consistent across ethnicities and income levels.
Exiting the Bay Area continues to remain on the minds of many residents, with 47% saying they are thinking about bolting sometime in the next few years, according to the poll. Most notable in the findings are significant increases in the reasons residents are considering leaving. While the region’s high cost of living and high housing costs remain among the top reasons for pulling up stakes, high taxes, concerns about government spending and crime all jumped from single to double digits.
Among the 47% of respondents who said they are thinking about leaving the Bay Area, the number who said they would remain in California dropped from 24% in 2018 to 12% in 2021. And among those indicating they would consider seeking greener pastures outside California, Texas and Florida were mentioned among the top destinations.
Whether residents would actually make the move to Texas is unclear, with the Bay Area Council Poll finding 73% saying the Golden State is a better place to live than the Lone Star state. When it comes to operating a business, however, the results are more divided, with 51% giving California the nod and 46% calling Texas a better place to have a business.
This survey was completed by EMC Research on behalf of the Bay Area Council among a random sample of registered voters who responded to an email or text invitation to complete the survey. Demographics including age, gender, and ethnicity are representative of registered voters in the 9-County Bay Area. The survey was conducted March 10 – 16, 2021, and had 1,000 respondents, which carries a margin of error of plus or minus 3.1 percentage points. Previous polls were conducted in 2014, 2015, 2016 (residents of the Bay Area), 2017, 2018, 2019 and 2020 (registered voters).