Charles Schwab has been headquartered in San Francisco since its Sacramento-born founder established the company in the 1970s. Alas, that is no more. Charles Schwab announced today that it was acquiring TD Ameritrade, and in the process, it is moving its headquarters to … wait for it… Westlake, Texas.
The company says that it will still keep some of its workforce in the city (for the time being), but this is a major loss for the city (and the State of California). The company was already intent on moving its operations to Texas, and with the new acquisition is picking up major facilities in other low-cost states. Divesting from California just became a lot easier.
Schwab personally made $100,000 in campaign donations to oppose 2018’s Proposition C, which raised taxes on companies’ gross receipts over $50 million to fund homelessness services. The city has become a magnet for homeless and drug addicts, and now has more drug addicts than children enrolled in public high schools.
Schwab is only the latest major defection telling San Francisco (and the State of California) to pound sand. Not to point out the obvious here, but this investment adviser is literally following all the money to Texas.
In June, North Face finished moving from Alameda to Denver. In April, the McKesson Corporation – which sells medical devices and pharmaceuticals, and is one of the largest companies in the world – ditched San Francisco for Los Colinas, Texas. In June of last year, Bechtel – the massive engineering firm that created San Francisco’s BART transit system – moved to Virginia. Before that, Jamba Juice moved to Frisco, Texas.
San Francisco’s economy is now almost completely built on the tech industry. From a government perspective, having a highly concentrated economy makes the city’s tax structure very fragile. While it may seem like high times in San Francisco now (literally and figuratively), the next recession will likely have a profound impact on the city. That should be of even more concern to folks there, as government services are already breaking them in a robust economy. Demand for government services only increases during a recession.
And even beyond that, Silicon Valley representatives have already suggested that problems with California’s electrical grid may start driving (highly inter-connected) tech companies to less dysfunctional states.
A bad political landscape can destroy economic value a heck of a lot faster than you’d think. California needs to get its act together big time.