California as a whole is an affluent state where the cost of goods, services, and wages is higher than in many other states. Companies operating in California may make more money, but the cost of doing business is also much higher than anywhere else.
“We decided to move out of California in 2018,” Ross said. “It was just getting too expensive both in terms of taxes and in terms of operations. Of course there is the issue of taxes, but in California you also have to deal with higher wages, higher cost of living, higher commercial property rents and more.”
According to the US Bureau of Economic Analysis, California’s per capita personal income is significantly higher than the national average. Californians earn an average of $62,586 a year while the average American loses $53,712 annually. While this means the average Californian has to spend more, it also drives up the cost of living.
Moreover, California’s income is unevenly distributed. There is a relatively large income disparity in the state that puts low-income Californians at risk of being price-blind in every market and giving them fewer dollars to spend on small business goods and services.
As of January 1, 2019, the state has changed hourly wages. For businesses with 25 employees or less, the minimum wage this year is $11. Next year it will be 12 dollars. For businesses with 26 or more employees, the minimum wage is $12 in 2019 and will rise to $13 next year. But these numbers vary by city. For example, Oakland’s 2019 minimum wage is $13.80, while Mountain View’s is $15.65.
The annual minimum wage for exempt workers in California is twice the minimum wage for 2,080 hours per year. As the minimum wage rises, so do the minimum wages for exempt workers. For small companies it is $47,760, for large companies it is $49,920.