U.S. markets close in 5 hours 9 minutes
  • S&P 500

    4,149.81
    +8.22 (+0.20%)
     
  • Dow 30

    33,892.31
    +215.04 (+0.64%)
     
  • Nasdaq

    14,008.83
    +12.73 (+0.09%)
     
  • Russell 2000

    2,265.25
    +36.33 (+1.63%)
     
  • Crude Oil

    62.73
    +2.55 (+4.24%)
     
  • Gold

    1,738.80
    -8.80 (-0.50%)
     
  • Silver

    25.45
    +0.02 (+0.09%)
     
  • EUR/USD

    1.1970
    +0.0016 (+0.13%)
     
  • 10-Yr Bond

    1.6340
    +0.0110 (+0.68%)
     
  • GBP/USD

    1.3788
    +0.0035 (+0.26%)
     
  • USD/JPY

    108.9930
    -0.0550 (-0.05%)
     
  • BTC-USD

    63,413.69
    +568.29 (+0.90%)
     
  • CMC Crypto 200

    1,362.68
    -13.10 (-0.95%)
     
  • FTSE 100

    6,934.31
    +43.82 (+0.64%)
     
  • Nikkei 225

    29,620.99
    +82.29 (+0.28%)
     
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Despite Silicon Valley exodus, 'talent is still very much here': San Jose mayor

Akiko Fujita
·Anchor/Reporter
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

San Jose Mayor Sam Liccardo acknowledges the Bay Area has an outward migration problem.

He’s just sick of the tech industry being blamed for it.

As Mayor of California’s third largest city, Liccardo has long touted the success stories of home grown companies like PayPal Holdings (PYPL), Cisco Systems (CSCO), and eBay (EBAY). But when Hewlett Packard Enterprise (HPE), one of the city’s largest employers, announced it was moving its headquarters to Houston in December, and Oracle (ORCL) put its downtown San Jose tower up for sale last month, Liccardo found himself at the center of the “Silicon Valley exodus.”

“An awful lot of it is about taxes and regulation and a lot less about the talent. The talent is still very much here,” Liccardo said, on Yahoo Finance Live. “Obviously the cost of living is a giant challenge...if we really want to find solutions it's important for political leaders to stop blaming tech and start focusing on those solutions.”

Tech companies have largely been blamed for driving up the cost of living in the San Jose area. The median price of an existing, single-family home has gone up 15% over the last year, to $1.3 million, well above the U.S. average of $266,222, according to Zillow.

But, Liccardo says that only tells half the story. He recently penned an op-ed in the San Francisco Chronicle saying, “policy choices” by local lawmakers contributed to the parade of tech executives leaving the Bay Area.

Specifically, he has singled out the California Environmental Quality Act, and regulatory barriers that limit commercial construction, drive up per-unit land costs, and tack on “prohibitively high” impact fees and parking requirements. And, he adds, the California Legislature has shown “no stomach for reform” even as “the statewide system allocates tax revenue to reward cities that favor commercial development and discourage housing.”

High taxes have also been a key factor, driving out some notable tech names. While California’s corporate income tax rate remains among the highest in the country at 8.84%, other states like Florida have reduced their rate. That, combined with the allure of no individual income tax in the Sunshine State, no sales tax in Montana, and no corporate or individual taxes in Nevada, Liccardo says, it’s no surprise companies are heading for those states.

“I'm no tax purist here, I'm a Democrat. Like many of my other fellow Democrats, I've certainly advocated for revenues at different times, but we have to recognize when we are simply driving folks out,” Liccardo said. “Already in the state legislature there are new proposals for taxes. That is not what we need to do at a time of very high unemployment, we've got to recognize the environment for what it is. This is a time to be welcoming employers and not creating more barriers for them.”

A general view of eBay headquarters in San Jose, California February 25, 2010.  REUTERS/Robert Galbraith  (UNITED STATES - Tags: BUSINESS SCI TECH)
A general view of eBay headquarters in San Jose, California February 25, 2010. REUTERS/Robert Galbraith (UNITED STATES - Tags: BUSINESS SCI TECH)

Liccardo says he‘s not looking to offer tax breaks, but a pause on new taxes. That may be a high hurdle, given the region’s economic struggles stemming from the COVID-19 pandemic. Last year, the Bay Area lost 360,800 jobs, while Santa Clara County alone shed 79,400 jobs or 6.9% of the workforce, according to California’s Employment Development Department.

In November, San Francisco overwhelmingly approved tax measures aimed at property owners and businesses, to raise additional revenue for affordable housing and health services, further cementing the city’s high tax status.

But, Liccardo says there is a silver lining. While the local labor market saw declines in overall hiring, tech companies actually added jobs in Santa Clara County. In the case of HPE, the company added 600 to 1,200 jobs to its San Jose hub, even as it moved its headquarters east.

“I'm less concerned about the movement of a few headquarters or a couple billionaires to other states. I'm much more concerned about whether we can continue to be the place where young innovators, where small companies want to be, want to scale. That really is a critical issue for the future of our region,” Liccardo said.

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

Find live stock market quotes and the latest business and finance news

For tutorials and information on investing and trading stocks, check out Cashay