California Boosts Tech

One of the worst places to develop a career in tech from the ground up is now California.

Since 2020, the tech scene has changed by the leaps and bounds, and the end result will keep you happy with the price of tech shares moving forward.

The biggest expense item for tech firms is the labor expense, and by tech firms “democratizing” the talent pool outside of California, they have unlocked another level of growth.

A highly distributive tech workforce is now found everywhere and anywhere, and for a fraction of the price.

Remote flexibility, state taxes, and housing costs made tech dispersion inevitable. The next Silicon Valley is everywhere.

The revelation that California’s share of U.S. tech jobs has dipped below 2008 levels marks a pivotal moment in the state’s economic narrative.

Pre-financial crisis, California claimed about 19% of national tech employment, fueled by Silicon Valley’s unassailable dominance in innovation and venture capital.

In 2024, the figure has plummeted to 16% and is dropping by the day.

The Bay Area alone has hemorrhaged 44,900 tech positions from 2022 through mid-2024, with San Francisco losing 54,000 since 2020—the steepest drop among major U.S. metros—and the South Bay down 33,300 in 2023-2024.

Yet, relocation dominates.

Austin, for instance, lured Oracle (HQ move in 2020, adding thousands of jobs) and Tesla (2021 relocation, shifting engineering roles), boosting Texas’s tech listings to 152,090—far outpacing California’s 140,582 despite fewer CS graduates.

Florida’s no-income-tax allure drew Hewlett Packard Enterprise (HPE) expansions, while Colorado and Arizona saw rapid posting growth via economic incentives.

Remote work amplifies this: 12% of U.S. software jobs (177,002 listings) are now remote, with Texas and Florida topping non-California openings at 13,302 and 9,703.

AI’s role is double-edged—driving efficiency (and layoffs) while creating niches elsewhere, like data centers in Virginia. Quantitatively, California’s 16% share masks a 3-4% annual outflow, equating to 50,000-70,000 jobs annually shifting east or south.

Ridding itself of the California wage bill has boosted tech stocks in immeasurable fashion.

Mass firings in California is probably the best sign of a high share price for many of these tech firms and often boost investor confidence by signaling cost discipline amid AI-driven efficiencies.

If anyone is surprised by this, it is me to understand that there is now a negative correlation between Californian tech employment and tech share prices.

As more tech jobs in California get cut, these stocks tend to head from the bottom to the top right.

This trend will only get stronger and will usher in a new “doom loop” in San Francisco, where office vacancies hit 30%, denting ancillary services and indirectly hiking operational costs for remaining firms.

Relocation winners are those embracing the shift, cutting California exposure for learner ops. Tesla (TSLA) tops the list: Its 2021 HQ move to Austin slashed regulatory headaches, enabling Gigafactory expansions and 50% stock gains in 2024 on EV/AI autonomy bets.

Oracle (ORCL), post-2020 Texas shift, added cloud jobs there, driving 25% revenue growth and shares up 40% YTD via Austin’s talent influx.

Palantir (PLTR), relocating to Denver in 2020, leveraged lower costs for AI analytics and now employs 1,900+ outside California.

HPE (HPE), eyeing Florida/Texas for data centers, benefits from 20% cost savings, with shares up 15% amid cloud pivots.

Bullishly, relocation trims fat, freeing capital for AI investments, and these investments in AI data centers are the only driver of higher stock shares in the short-term as the American bifurcates further into a K-shaped economy.

These are the cards dealt to us investors, so until the conditions change again, we need to stay persistent in buying the dip in every AI company.