San Francisco. Silicon Valley. The center for technological innovation and a hotspot for startups and established companies. It has been the Mecca of technology for decades. And that’s why the city also attracts some of the brightest talent in the country
The story of San Francisco becoming a technology hub not just in the United States but around the world has another side. This mass migration to The Golden City in recent years has had a massive impact on the city’s landscape, demographics, real estate, etc.
The city of San Francisco has the highest per capita income in the United States, but also the highest rental prices in the country. The claim that an annual household income of $ 400,000 was considered the “middle class” in San Francisco caused a stir a few years ago. The people in town agreed, the rest of the country gaped in amazement. No money no problems.
So talk of an exodus from San Francisco to other cities is nothing new. Analysts and industry gurus have long talked about it. But what was it all, just conversations, opinions and predictions.
Despite the commuting cost of living and the nightmare, people chose to stay in San Francisco for one reason and only one reason – there were some of the best jobs in the country.
High wages aside, it’s the work, the people, access to resources that attracted the masses, and why the millions of people who moved there now call it home. Not only the workforce, but employers as well, were drawn to what San Francisco has to offer.
Supply and demand drove each other up – nobody wanted to miss the gold rush. The city became a vibrant community of its own that people couldn’t get enough of.
The turning point
But now, for the past 12 months, it has been a whole different story. The Covid 19 pandemic hit and the boy hit hard. As a technology hub, San Francisco has been able to make the transition from working from the office to working from home fairly quickly. It seemed like a good temporary measure to help fight the coronavirus.
However, nobody had any idea what would happen afterwards. Almost all tech companies in the Bay Area, from the largest to the smallest, announced that they would be moving into the distance for the foreseeable future. Some even permanently. Some said they could from now on adopt a hybrid work system – partly from the office and partly from home.
One thing was clear, however: Almost no employer had expected that employees would work full-time from their offices again even after the end of the pandemic. Many companies have announced their new remote policies and how they will or could work fully or mostly remotely.
With remote being touted as the new normal and the future of the tech workforce, it made no sense to many people who had moved to San Francisco to continue living there.
Thus began the foretold and often romantically prophesied Exodus. All you needed to get your job done was a laptop and an internet connection. The millennials took this seriously.
Enough people have already returned to their hometowns, while some have moved to cities with much lower cost of living. Some people had cut their wages and the need to move became even more urgent for them. There are enough technicians willing to make wage cuts if that means they can work completely remotely from a location of their choice.
It no longer made sense for companies to spend excessive amounts of money on renting or renting office space. As the pandemic continues without a long break, every dollar spent makes a difference to every business. The middle and smaller couldn’t possibly sustain the cash flow bleeding when the markets were brutal.
Several big tech companies like Google, Facebook, Salesforce, Yelp, Twitter, to name a few, have seen remote work as their future beyond the pandemic. Those companies that are trendsetters in labor policy and make San Francisco today’s technology hub will lead other smaller technology firms to follow suit.
Organizations have also clearly recognized that employees can be productive when they work remotely. And also that they don’t necessarily have to be monitored and micromanaged. Remote work has also expanded the talent pool for them – they can now Hire a great candidate regardless of their geographic location or proximity to a physical office space. The talents these days are looking beyond big, fat paychecks and want the flexibility of how and where they work.
The technology is there. The trust was more or less built up. The obstacles to remote work have been removed. There’s no reason not to get into it and run with it. It would be stupid not to do that.
This leaves the Bay Area’s status as a technology center in serious doubt. Along with the loss of this perception, so will urban economic growth and vitality.
What could this mean for the future of San Francisco?
The businesses and services that depend on these technicians and their ability to spend money are sure to take a hit. The service industry was the hardest hit sector, bearing the brunt of the pandemic and lockdown orders.
While people are now back on their way, it’s nowhere near as much as it was before and not enough for long-term sustainability. Leaving a significant portion of the technicians will add to these sufferings.
This mass exodus has also enabled the decline in rents and house prices in San Francisco for the first time in years. With demand falling, property owners and developers simply cannot expect the same prices and margins as before. It remains to be seen whether and how this will affect low-income housing, property growth and demand for housing in the future.
Remote work is freedom for employees and workers. No longer do they have to leave their homes or move thousands of miles to a new city to do their dream job. Remote work is also beneficial for companies: productivity increases, the talent pool expands significantly and costs decrease.
But not everything is gloomy. The pandemic isn’t over yet, so some of these effects may not be long-term. Some of them will be. It has been announced that some companies will be adopting a hybrid working day policy. Here employees will work in the office a few days a week and work remotely or at home the rest of the days.
Remote work is the future, there is little doubt about that. Associated with this are city-wide changes and a new way of living and working. As we step out of the pandemic and think about the enduring innate social and structural changes it has caused, we need the flexibility of thinking and the space to be adaptable to steer us through the new normal.
It will be interesting to see how the ecosystem self-balances and emerges from it.