Is Silicon Valley facing a tech exodus?

This appeared in The Millennial Source

For years, commentators have written about the possibility of a “tech exodus” from Silicon Valley spurred by high rental prices and the difficulty of achieving homeownership in the Bay Area, even for high-earning tech workers.

Coronavirus has added new pressure to this forecast exodus. With companies increasingly shifting to work from home regimes, the necessity of living in pricey environs like Silicon Valley has been greatly reduced. Some workers have already opted to exit while these new arrangements allow them.

Time will tell if this present exodus is a COVID-induced blip or is more indicative of a wider desire for tech workers and others to escape the high cost of living in Silicon Valley.

The old normal

Even before the coronavirus pandemic, Silicon Valley was facing a variety of issues that put an immense strain on those living in the area.

Despite small decreases in some areas, the average cost of rent in the San Francisco Bay Area at the end of 2019 was among the highest in the country, with the average home valued at around US$1.34 million, a figure that falls far outside even the most well-paid IT employee’s budget.

A survey by the workplace chat app Blind, polling around 3,000 tech workers, found that 70% could not afford to buy a house near where they work. Some workers even reported living in mobile homes outside of their workplaces.

The exorbitant rents and high house prices prompted one official with the United Nations to describe the Bay Area’s standard of living crisis as a “human rights violation” in a 2018 report.

A 2018 study found that, in terms of real wages — wages adjusted for inflation — 9 out of 10 workers in Silicon Valley are worse off than their counterparts were some two decades prior. This is the result of wages remaining stagnant while inflation and the cost of living in the Bay Area rises.

High rents, the impossibility of homeownership and worse wages in real terms had prompted some Silicon Valley and Bay Area residents to look elsewhere even before the onset of the coronavirus pandemic. One November 2019 survey found that one in three San Francisco residents wanted out, claiming they were “very likely” or “somewhat likely” to move within the next three years.

The new normal

With the coronavirus pandemic, the difficulties of living in Silicon Valley have only been exacerbated.

Many of the biggest tech companies operating in Silicon Valley have traditionally required employees to work out of physical offices. This all changed with the onset of the coronavirus pandemic as many companies drew up work from home plans.

Initially, Google told its employees they could work from home until June, but as the crisis escalated, companies in Silicon Valley extended this into 2021. Twitter’s chief executive officer, Jack Dorsey, announced that workers for the social media platform could work from home indefinitely, stating “opening offices will be our decision. When and if our employees come back, will be theirs.”

With the onset of work from home regimes for the foreseeable future, or in some cases indefinitely, some Silicon Valley workers have fled the high rents and high cost of living that come with living in the area.

Speaking to The Verge, one Facebook employee justified moving away from Silicon Valley by saying “it makes no sense paying Bay Area rent if we can earn our salary living elsewhere.”

For Silicon Valley tech workers, the shift to working from home may prove easier than most other professions. This could potentially fuel the exodus away from the office life that is prevalent among the largest tech companies but that forces employees to live within commuting distance of their offices.

Forced exodus?

The pandemic has significantly harmed tech startups in Silicon Valley, with some of the largest tech employers in the Silicon Valley area laying off thousands of employees. Uber has laid off more than 3,000, Airbnb nearly 2,000, LinkedIn just under 1,000 and Lyft another 1,000.

Regardless of the impact from the coronavirus, Silicon Valley is already facing an employment crisis.

The Trump administration’s ban on visas for skilled foreign workers for at least the rest of the year — and potentially longer — has hurt Silicon Valley companies in particular.

Venture capital money for startups is also down, which will result in startups making further layoffs and even potentially shutting down.

Some experts believe that this exodus of money and workers is merely a momentary blip caused by the coronavirus pandemic.

Sarah Karlinsky, a senior adviser at the San Francisco Bay Area Planning and Urban Research Association, doubts that someone who “works at Twitter and lives in downtown San Francisco” will “get up and move to Idaho” given the Bay Area’s traditional dominance of tech jobs and opportunities.

This confidence may be misplaced. A recent survey by the Brunswick Group of 300 Silicon Valley tech workers found that among respondents between the ages of 18 and 34, 41% planned to leave the area within the next year.

Analysis by the recruitment website ZipRecruiter of some eight million job ads across the United States further found that some of the fastest growing areas of the country for engineering, software and tech related jobs were located far away from the confines of Silicon Valley.

Huntsville, Alabama was one of the largest growth areas of the country, with a 300% increase in tech-related jobs. Thousand Oaks in Southern California and Phoenix, Arizona came in second and third.

Ultimately, living in Silicon Valley has proved difficult even in normal times. With the coronavirus pandemic forcing tech employees to work from home for the foreseeable future, many may take the opportunity to leave the region for good.

Originally published at https://themilsource.com on August 24, 2020.

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