The tech industry appears to be less susceptible to the downturn that’s affecting other sectors during the pandemic. This is predominantly due to the remote-work movement that permits employees to operate outside their office from anywhere they chose.
But as more and more major players in the tech world take part, Silicon Valley is looking less and less like the booming playground of its heyday.
“What I hear anecdotally from friends is that it’s pretty much a ghost town now,” Max Wesman, founder and chief operating officer of employment screening company GoodHire, explained to HR Dive.
The Silicon Valley exodus
It’s easy to forget that remote work models had been gaining momentum before COVID-19.
InVision and Automattic, two of Silicon Valley’s biggest successes, had adopted telework operations several years before the health crisis.
Airbnb, Uber, Yelp, Salesforce, and Pinterest have all downsized their Silicon Valley headquarters as more of their workers utilize remote work opportunities to leave the area.
As more companies downsize, CEOs and workers begin relocating
“California’s population and job growth have both slowed to a trickle, with many citing concerns about high taxes, cost of living and heavy regulations. With the rise of remote work in 2020, over 135,000 more people left California than moved in — the third largest net migration loss ever recorded for the state,” says Katie Schoolov, who covers the state of big tech for CNBC Make It.
Although the region is associated with high salaries, Wesmen believes the cost of living made a permanent move a no-brainer for some.
“Usually in downtown San Francisco at night, things were pretty dead. But during the day, things were more vibrant. Now, without office workers there during the day, things are going under.”
The median housing price for San Francisco is $1.3 million; surrounding regions like San Jose are closer to $3.3 million, according to real-estate brokerage Redfin. That’s a lot of money to spend for a home that you may rarely leave.
In recent data published by LinkedIn, collected between March and July and compared to data from March to July 2020, “San Francisco was among the cities losing, on net, the most people, “with a population loss of 16.6%.”
Many have been quick to point out that a lot of those who recently moved from Silicon Valley have taken up residence in areas nearby. A Silicon Valley realtor, says the exodus is more like a shift in which Bay Area regions are popular.
“People kept saying, ‘I thought everyone was leaving Silicon Valley,'” Mary Pope-Handy, an agent with Northern California firm Sereno told Business Insider. “People have been leaving San Francisco, but a lot of them are staying within 60 miles.”
The Chronicle reports that most of the households leaving San Francisco didn’t move very far. The top six new locations were Alameda, San Mateo, Marin, Contra Costa, Santa Clara, and Sonoma.
The end of COVID could reverse whatever trend there is
Still, the COVID-19 pandemic makes a compelling case for remote workers to steer clear of the Valley.
Wesman mentions that many small businesses are still recovering after limiting commercial activity to the public throughout the pandemic, putting them on “the financial brink.”
“How can restaurants and other small businesses plan work schedules when they don’t know if their customer base is returning this year?” asked Randy Shaw, editor of progressive Bay Area media site BeyondChron in the HR Dive report.
If COVID is minimized as a threat for commuting workers, there may be more obvious incentives for companies to remain in high-priced areas.
“I think that there still is a perception that once COVID is behind us someday, there still will always be some element of an office or in-person meeting,” Wesman said.
“There is an implicit assumption that if you have more face time with senior management, your odds of moving up [in the company] improve, even if you’re spending a lot of time on Zoom calls.”
Some jobs will remain. Some neighborhoods, beyond San Francisco proper and the best areas in Silicon Valley, will remain relatively affordable. But will the shops come back and open up? Could housing prices dip back into affordability if we all wait long enough? Will tech companies bring their headquarters back to the Bay Area? It’s hard to imagine.