A Blog by Jonathan Low


May 18, 2020

Why Silicon Valley Remote Work Is Causing Workers To Leave SF's High Living Costs

The pandemic is changing the behavioral economics of life in Silicon Valley. The open plan office is history. The free meals and beer in relaxed settings are shut down. Even the wifi-enabled bus from The City to The Valley will become an exercise in exhausting hygenic protocol, unless you prefer being stuck in a car.

So all of the expenses and sacrifices associated with life at the center of the tech universe are suddenly up for reconsideration. The productivity numbers have held up, which has given Apple, Google, Facebook et al comfort in letting the workforce work from...wherever. So why not take that handsome salary and live somewhere that doesn't require paying exorbitant rent or mortgage for a cramped apartment or tiny house? And increasingly, tech workers are acting on that calculation. JL

Casey Newton reports in The Verge:

Residents of Silicon Valley are beginning to think about the arbitrage opportunities. You take your mid-six-figure Bay Area salary and your laptop. You decamp to the countryside, or the mountains, or the beach. Maybe forever. Open floor plans will be spread apart, some covered by plastic shields. Beer taps, snack containers, coffee bars and gyms that once set high-dollar, white-collar environments apart will remain closed to prevent the spread of coronavirus. “It makes no sense paying Bay Area rent if we can earn our salary living elsewhere.”
Live in Silicon Valley long enough and someone will tell you that the party is over. As far as I can tell, this phenomenon dates back to at least 1874. As Peter Hartlaub recounted last year in the San Francisco Chronicle, upon the occasion of a writer for the Washington Post announcing that San Francisco had broken her heart, that was the first time a citizen had lamented the region’s vanished glory days. (The reason for the citizen’s heartbreak: the construction of the Palace Hotel, which he viewed as too tall and a blight on the skyline at 120 feet.)
San Francisco and its surrounding tech hub have continued to die ever since, most spectacularly during the dot-com crash, but certainly well before then, too. (Here, via Andreessen Horowitz partner David Ulevitch, is the founder of onetime search giant AltaVista announcing that Silicon Valley was dead in 1993. “The cost of housing and office space has spiraled out of control, Paul Flaherty wrote. In 1993.)
But then again, San Francisco really has been in a state of crisis for the past decade, thanks to the regional refusal to build adequate housing. And now it has another, global crisis to worry about: the COVID-19 pandemic, which is upending plans and expectations everywhere — but particularly for people who need only a laptop and Wi-Fi connection to be productive, and can therefore easily move away.
This has been encouraged by the tech companies themselves. First Google told employees they could continue to work from home until June. Then Facebook told employees they could work from home through the end of 2020. And then finally this week Twitter said what everyone had been thinking anyway, and just told employees they could work from home indefinitely, portending the glorious day in the future when the company will be forced to acknowledge it has hundreds of employees on the payroll who haven’t showed up for years. (I should note that I made this joke on Twitter and that the company’s head of finance operations vowed not to let this happen.)
But as a result of the past week’s WFH fervor, the more opportunistic residents of Silicon Valley are beginning to think about the arbitrage opportunities. It is not a particularly complicated scheme to work out. You take your mid-six-figure Bay Area salary and your laptop. You decamp with your family to the countryside, or the mountains, or the beach. Maybe you simply ride out the hard times there, maybe you stay forever. Already in my weekend and off-hand Zoom calls, friends are plotting cross-country moves — maybe just for a few months, maybe longer. Multiply their experiences by several thousand, and this time Silicon Valley really might find itself changed forever.
Sachin Dhar thought he and his fiancée had a great deal paying $2,650 per month for a one-bedroom rental in South San Francisco, a short commute from Facebook Inc.’s offices in Menlo Park, where she works. But when the social networking company announced that most employees would be working from home until the end of the year, their calculation changed. “It makes no sense paying Bay Area rent if we can earn our salary living elsewhere,” says Dhar, 25, who already works remotely for a New York advertising startup. They’re considering moving to Hawaii—or, to really save money, somewhere in the rural U.S.
Dylan Hecklau is thinking along the same lines. His ad-tech employer, Jelli Inc., was dubious about letting people work from home before the pandemic hit. Now that employees have proven productive, its attitude has changed. Hecklau, 32, is planning to take the money he would have spent on a Lake Tahoe vacation home and make a down payment on a permanent home in Sacramento, abandoning his $3,200-a-month rental in San Francisco. “With nothing keeping me here, I can’t justify paying the rent prices,” he says.
Of course, it’s not just the jobs that lure people to San Francisco: it’s the restaurants, the nightlife, the sports teams, the other cultural amenities. With those all shuttered for the foreseeable future, the city loses much of its appeal.
If tech companies were keen to keep workers close by, they might incentivize them by radically re-thinking offices in a way that made them more appealing. Some have speculated that COVID-19, which spreads easily among people in close contact with one another for extended periods, might mean the end of the open-plan office.
But reading early ideas about how to bring employees back to work, the pandemic seems to herald the end of much more. Chip Cutter and Suzanne Vranica examined plans for re-opening offices around the world in anticipation of work restrictions easing, and what they describe sound less like offices and more like torture chambers for white-collar workers. Here they are in the Wall Street Journal:
Elevators may only take one person at a time. Desks, once tightly packed in open floor plans, will be spread apart, with some covered by plastic shields and chairs atop disposable pads to catch germs. The beer taps, snack containers, coffee bars and elaborate gyms and showers that once set high-dollar, white-collar environments apart will likely remain closed to prevent the spread of coronavirus. Many changes won’t go away until the virus does. [...]
McCann’s New York office will close its bar and cafeteria for the rest of 2020. Instead, the company has ordered dozens of microwaves and refrigerators so people can bring in their lunch. The appliances will go in enlarged kitchen areas being erected on every floor. Nobody will need an elevator to access food, and everyone will be expected to use the cleaning supplies stationed nearby to wipe down communal buttons and door handles.
Of course, some workers will need to stick close to headquarters to attend to servers and the other physical infrastructure of running large internet companies. But given the size of the workforce at tech giants like Apple, Google, and Facebook, these teams amount to skeleton crews. Facebook has historically paid new hires a $10,000 bonus to live near the office. But who wants to go into an office like the ones described above?
With more tech workers preparing to head for the hills, tech giants could have much to reconsider: preserving productivity, creativity, office culture, diversity, and inclusion; taking a more expansive view of recruiting; and, inevitably, lowering salaries for those living outside the blast radius of the Bay Area housing crisis. How many people will really flee the Bay Area in the coming year? Will Silicon Valley finally be wounded in the manner that so many skeptics have long predicted?
At this early stage of the pandemic, the answer is still unknowable. But as of this week, it is no longer unthinkable.


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