Exit, stage left

Everybody’s getting new digs

Everything is bigger in the Lone Star state, it’s said, from the cowboy hats to the tall tales to the NIL payments. And now, apparently, so are the backhoes.

The ever-intoxicating corporate refuge known as Texas has landed another giant soon-to-be expat. Construction equipment manufacturer Caterpillar announced plans to move its global headquarters from Chicago’s north shore to the Dallas-Fort Worth metroplex.

This is on the heels of global giants like Google, Apple and Tesla ditching California for the more corporate-friendly and affordable environs of Austin, which has somewhat quietly grown to become the nation’s 11th-largest city.

A $51 billion company, Caterpillar had been dropping hints to Illinois state leaders for at least a decade that they needed to address an increasingly difficult business environment. After all, the state ranks No. 1 in the United States — or last, depending on one’s perspective — for the highest local tax burden and No. 2 for the highest property taxes, per the nonprofit Illinois Policy Institute. Its corporate tax rate of 9.5% is rated the nation’s fifth-highest by the Tax Foundation.

The Land of Lincoln has been hit with other corporate evacuations of late: Boeing to northern Virginia, Takeda Pharmaceuticals to Boston, $50 billion VC firm Citadel to Miami.

Caterpillar and Takeda will leave behind large corporate footprints in the tony north-shore village of Deerfield. That’s just up from downtown and nestled among the wealthy hamlets that served as the settings for movies like “Sixteen Candles” and “Ferris Bueller’s Day Off.” (Someone get the estate of John Hughes and Deerfield-based Walgreens on the phone; “Corporation Alone,” anyone?)

Simply put, businesses are taking their cue from residents and pulling up stakes for lower-tax states, most of which skew red.

Illinois and California experienced population declines in 2021, with California’s growth rate dropping into the red for the first time ever in 2020. Another first? The Golden State lost a U.S. House seat following the 2020 census.

And it’s interesting to note that many Californians who aren’t moving out are moving in, as in away from the coast. The Inland Empire, the Central Valley. The U.S. Census Bureau reports that last year all but three coastal counties in California — including Los Angeles, Orange and San Diego — experienced a population decline.

Given that the median price for a single-family home in California last year was about $849,000 (and the closer to the coast, the higher you go), it’s no wonder folks are relocating to San Bernardino. Or Austin. Or . . . Fayetteville?

Texas, meanwhile, had the nation’s third-highest growth rate from 2010 to 2020, behind Utah and Idaho. (The nation’s top 12 fastest-growing states are in the South or Rocky Mountain West.) And with no personal or corporate state income taxes, as well as a growing skilled labor force that trends young, Texas is considered a pretty good place to do business.

Fittingly, Austin is poised to leapfrog Silicon Valley’s own San Jose, which lost 30,000 residents in 2021 alone, into the nation’s population Top 10. The Texas capital is closing in on a head count of 1.1 million in the city proper, and its metro surpasses 2 million.

People will follow the jobs, after all. Just ask the Arkansas Delta.

Arkansas, it of the slow and steady overall growth, has northwest Arkansas and the sixth fastest-growing midsize area in the country. By 2050, the region will surpass central Arkansas as the state’s population center, projections say.

The region’s population doubled between 1990 and 2020, and comparisons have been made to late 20th-century Austin. Local officials may sometimes bristle at the comparison (for obvious burnt orange reasons), but indeed, the trajectory is similar.

There’s Walmart’s new Google-like corporate campus coming to life, the region’s commitment to the arts, its emergence as an international biking destination, and Canoo, the Austin-based electric vehicle manufacturer, which announced plans to move its corporate headquarters to Bentonville plus build manufacturing and research facilities in the region.

And don’t forget that in January, the final phase of 2019 tax cuts kicked in, lowering the state’s top marginal corporate tax rate from 6.2% to 5.9%. Shortly thereafter, U.S. Steel announced plans to build a $3 billion mill near Osceola, the “steel mill of the future” and a true game-changer for the industry.

The project should further establish that slice of northeast Arkansas as a national manufacturing corridor and Mississippi County into the country’s epicenter of steel production.

Thank you, Pittsburgh, but we’ll take it from here.

When the project was announced, U.S. Steel CEO David Burritt said the company entertained numerous competitive site options, but Osceola offered “incomparable advantages.”

That seems to be the case across the country for corporations looking to build or relocate. Competitive advantages turn the tide, and it seems some states are more prepared than others to offer them.

One thing to consider, though: As blue-state expats continue to follow jobs and opportunity, it’ll be fascinating to see if they begin to skew their new states purple.