California's Competitiveness

California’s Competitiveness: Macy’s and Shutterfly Move Jobs Out of California

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During the same week that San Francisco Mayor London Breed endorsed the split-roll property tax initiative, newspapers reported that two more Bay Area employers – Macy’s and Shutterfly – are moving area jobs to other states with lower business costs.

As part of a national reorganization, Macy’s is closing its offices in San Francisco and laying off hundreds of workers in the city, and will consolidate its technology operations in Atlanta and New York City. In a letter to the California Employment Development Department, a Macy’s executive said the company intends to lay off 831 technology division workers between April and August. The positions include 24 software engineering managers, 74 software engineers, 91 senior software engineers and 45 software technical leads.

The company, which is closing more than 100 stores and its Cincinnati headquarters as part of the restructuring plan, informed its San Francisco employees that they will be able to apply for 500 new jobs in Atlanta, and possibly additional positions in New York.

“After careful consideration, Macy’s offices in San Francisco will close,” a Macy’s official told the Business Insider.

Shutterfly Inc., a photo-sharing company headquartered in Redwood City, is moving approximately 100 marketing jobs to Eden Prairie, Minnesota. The jobs will be added to the company’s Lifetouch operations, which specialize in school photos.

“Minnesota may have benefited from a trend of California companies shifting workers and even headquarters out of the state in favor of locales with lower taxes and housing costs,” the St. Paul Business Journal reported.

On top of California’s high taxes and regulatory costs, Redwood City imposes a local “headcount” tax that taxes businesses based on their number of employees, with higher employment equating to a larger tax bill. Additionally, the city has a local minimum-wage ordinance that is the second-highest minimum wage mandate in the country.

Shutterfly is offering to move California employees to Minnesota, but “officials expect most of the workers will opt to stay put, meaning the jobs will be largely filled by new hires,” the Business Journal reported.

Greg Hintz, who was promoted to Lifetouch president in July, is moving from California to Minnesota. Minnesota’s state income tax has a top rate of 9.85 percent, compared to California’s 13.3 percent.

(Sources: Business Insider, February 5; Bisnow Atlanta, February 3; and the St. Paul Business Journal, January 30.)

In related news:

Twitter Plans to Hire 1,000 Employees, but Many Won’t Be in San Francisco Headquarters. Twitter Chief Executive Officer Jack Dorsey announced February 6 that the company plans to hire approximately 1,000 new workers this year, especially in engineering, product design and research.

“But don’t expect its San Francisco headquarters to capture most of those jobs,” the San Francisco Business Times reported, citing statements made by Dorsey during the company’s earnings call.

“We’re reaching a talent pool that expects to work remotely and we’re building our company around that,” Dorsey said. “We are figuring out how to build a company that has a distributed workforce.” (Source: San Francisco Business Times, February 6.)