Exodus From Silicon Valley?
A report from the Silicon Valley Leadership Group on Silicon Valley competitiveness has caused quite a stir despite a number of positive findings for the region:
- Innovation industry jobs increased by 7 percent in 2014, with Silicon Valley leading the way as 25 percent of its total jobs are in innovation industries – the highest in the country; and
- Silicon Valley ranks first among global innovation regions for its ability to launch and support development of new businesses and technologies, followed by New York City, Los Angeles, Boston and London. The one warning sign is that China’s R&D investments increased 304% between 2004 and 2013 compared to 25% in the U.S.
What capture everyone’s attention, however, was the report’s warnings about the loss of talent to other domestic innovation hubs such as Seattle, Austin and Southern California.
The current installment of the SVCIP shows that while Silicon Valley continues to have a white hot economy and high job growth, there are several warning signs. Skyrocketing housing prices and increasing traffic congestion are eroding our quality of life and causing many residents to relocate to other parts of the country. Slow growth in STEM degrees conferred and widening disparities in educational outcomes point to serious leaks in our talent pipeline. And, steady decreases in university and federal R&D funding mean there is less capital to fund innovation.
This point was illustrated by Bizness Apps CEO Andrew Gazdecki’s touting how his move out of Silicon Valley to San Diego will “facilitate faster expansion than we ever saw in San Francisco.”
San Francisco sees the world’s best in terms of tech talent, so it’s easy to assume that if you want the best, this is where you should be. In reality, the recruiting war has never been bleaker. Here you’re competing with not just the biggest names in tech, but in the world. Google, Uber, Twitter, Zenefits, Apple and hundreds of other “unicorns” have more than enough leverage to swoop in on talent before startups even hear the echo of a name..
Startups need tech talent on all sides: engineering, sales, customer success, business development, marketing, etc. To identify and welcome that talent aboard, you can’t be a small or even medium fry. On the flip side, bringing your San Francisco size to an area like San Diego means instant growth. Suddenly, you’re a big fish, capable of recruiting the best of the best for a lower price tag.
More than 7,600 U.S. residents left Silicon Valley in 2015, the first negative outflow since 2011, according to the report. (The outflows were more than offset, however, by people from other countries, who moved in at a rate of about 2,500 net new residents per month.)
By contrast, Seattle experienced average monthly inflows of 1,450 new U.S. residents during 2015. Austin had a more modest gain of 720 U.S. residents for the year.
Maya Kosoff (Mar. 9, 2016)
In the latest sign that Tech Bubble 2.0 is bursting, Silicon Valley residents are now moving out of the are afaster than they’re arriving. According to a study conducted by the Silicon Valley Competitiveness and Innovation Project, the California tech corridor lost more than 7,500 residents to other areas of the U.S. in 2015. That was the first time in four years the area lost more domestic residents than it gained. A loss of residents in Silicon Valley is significant because one out of every four Silicon Valley jobs are in tech-related “innovation industries”—software engineering, for example, and I.T. services. Access to those workers is crucial for the health of the Silicon Valley ecosystem, but residents are leaving for lower-cost tech-friendly cities, such as Seattle and Austin, according to the study.
A slowdown in the tech sector has started to hit companies and workers in Silicon Valley and San Francisco. Venture capital money is harder to come by. More than a dozen companies have announced layoffs, including Yahoo, Twitter Inc. and Zenefits and other companies are closing money-losing projects.
Henry Cisneros, former Secretary of the U.S. Department of Housing and Urban Development, issued a warning to the region recently that the lack of affordable housing could hinder future economic development. He pointed to land restrictions that make building new housing “almost impossible,” and said the region isn’t dedicating enough resources to the problem.
“Silicon Valley is not dealing with some basic urban realities,” he said during a conference in San Jose, Calif. in February. “Regions and their leaders too often do not, when they are in their prime, look ahead and adjust their systems to sustain that arc of prosperity.”
Ashley Rodriguez (Feb. 9. 2016)
A growing number of engineers and tech workers from the San Francisco Bay Area are looking to leave Silicon Valley for burgeoning tech hubs such as Austin, Texas, and Seattle, Washington, according to a job-search site’s data.
Indeed.com found that the share of searches from within the Bay Area for tech jobs outside of it is on the rise. As of Feb. 1, 35% of tech job searches on Indeed.com from the region were for jobs elsewhere, data from the company shows. That share, which is based on 30-day averages and adjusted for seasonal factors, was up about 30% year-over-year.
Most-searched cities for tech jobs from people in the San Francisco Bay Area
- New York
Silicon Valley’s loss may be these other cities’ gain in other ways. A 2005 study by the National Bureau of Economic Research looked at Nobel Prize winners in physics, chemistry, medicine, and economics over the last 100 years, as well as inventors of innovative technologies. The findings?
People in their twenties were responsible for 14% percent of the innovations, the same proportion as the over fifties. A further 30% came from people in their forties. Meanwhile, individuals in their thirties were responsible for 40% of the innovations—and that, of course, is precisely the demographic we find increasingly on the search for work outside Silicon Valley.
Redfin analysis finds Bay Area residents are
increasingly looking for homes in Seattle and Portland
John Cook (May 25, 2015)
Redfin, the Seattle-based real estate brokerage which operates in the Bay Area, just concluded a fascinating analysis of home search behavior on its site. The results are startling, and they speak to a possible trend that could have huge implications for cities such as Seattle and Portland.
Twenty five percent of Bay Area residents on Redfin.com are now looking for homes outside of the Bay Area. That compares to one in seven residents who did so in 2011.
Leaving Because They Can’t Afford to Stay
Folks are leaving Silicon Valley mostly because they can’t afford to stay. For the first time ever, the median price for a Silicon Valley home just exceeded one million dollars. That’s about double what it is in other tech cities like Boston or Seattle, and triple what it is in aspiring technology hubs like Portland, Denver or Austin.
Those in technology who can afford to stay in Silicon Valley all know it as one of the most beautiful places to live in the world, but a wariness has sunk in as folks from other walks of life are forced to leave: coffee shops are wall-to-wall with aspiring entrepreneurs, and restaurants buzz with talk of valuations and venture capital. It can be too much.