Amazon announced suspending or postponing plans for the construction and opening of warehouses and distribution centers in California as online shopping slows down. An article published in the Hoover Institution with the eye-catching title "Amazon no longer considers California the Golden State" bets that Amazon will probably give up those plans for good, with all that will mean for employment and economic activity in the quintessentially progressive state.
The media is trying to soften the company's decision; but, as Lee Ohanian notes in the aforementioned article, it's hard to downplay the fact that Amazon has given up on developing no less than five million square feet in warehousing and office space.
Nine operations centers have been cancelled by Amazon:
- Salinas: a 2.8 million square foot logistics center, due to the high cost of construction.
- Oceanside: a delivery station for failure to obtain a permit.
- San Leandro and Hayward: three delivery stations; no reasons given.
- West Covina: one delivery station. There have been reports in the press that it was due to public outcry against the company, but an Amazon spokeswoman declined to confirm this.
- Santa Rosa and Sonoma: two delivery stations (reason undisclosed).
- Bakersfield: a delivery center (reason not disclosed).
California's economic situation
California' s decline would be one of the reasons Amazon would also decide not to continue its expansion in the Golden State. The high cost of living causes thousands of people to leave for other territories: between 2010 and 2020, some 7.5 million Californians left for other states in the country. Between July 2020 and July 2021, California lost another 250,000 residents.
Some of the reasons for the population decline in California:
- Strict business regulations and low quality public services.
- The growing tax burden.
- Per capita public spending rose 52% in the period 2000-2019.
- The price of housing has skyrocketed: it is one third above the national average.
- High energy costs.
- The increase in crime.
"For years, politicians have hidden California's problems. under the rug because the solutions to these problems don't align with their vision or the visions of their most valued political contributors, including labor unions and environmental groups," Ohanian says. "And despite the record number of companies and people leaving, politicians continue to pretend these problems don't exist."