On March 11, 2020, The WHO officially declares COVID-19 a pandemic, reshaping the way we work and shop (AJMC Staff, 2021). Companies began to shift to remote work for fear of transmission of the virus. This included much of the technology industry in Silicon Valley, dubbed so for being the epicenter of technological innovation in the United States, a reference to the material’s importance in the manufacturing of electronics. Since the shift to working from home, large technology companies (HP and Oracle), investors, and billionaires (Elon Musk, Larry Ellison, Keith Rabois) alike have begun to move out of the valley (Hartmans, 2020). However, is this just the next step of a long-standing trend, or has the advent of the prevalence of at-home work heavily accelerated the Silicon Exodus?
Historically, Silicon Valley’s work environment has been very office-oriented: Apple and Alphabet are examples of this, with even companies like Best Buy, Reddit, and Yahoo having reversed accommodations that would allow for more flexible work arrangements within the last decade (Bliss, 2020). The idea was that having people with similar knowledge backgrounds together in physical proximity would yield innovative ideas and greater economic productivity (Bliss, 2020). In general, this seemed to have worked for much of the 21st century: according to Bloomberg CityLab, “the Bay Area produced nearly 20% of all patents in the United States in 2015 (up from 4% in 1970)” (Bliss, 2020). Because of the exodus, this has been changing.
The Silicon Exodus has actually been happening for a longer period of time than the span of the pandemic. Even pre-pandemic, Silicon Valley was experiencing a net outflow of residents (Swindells, 2021). However, the year 2020 with the pandemic saw a marked increase in the net outflow, with a near quadruple to 34% (Swindells, 2021).
Although the pandemic has provided an extra nudge towards a move away from the Bay area, the factors ultimately driving this move have been long present: high housing prices (the median one-bedroom rental was over $3,700 per month in the area before the pandemic [Bliss, 2020]) combined with the increasingly ideologically polarized culture in the nation are key reasons why many are leaving.
The shift to remote work has increased both of these. The shift to at-home work has also prompted a decrease in attachment to the physical area of Silicon Valley. Especially with companies like Twitter and Slack that are now allowing their workers to work wherever they want even post-pandemic, this has become more true, causing many to reconsider physically living in the area with the high housing prices. At the same time, the COVID-19 pandemic has heightened and created ideological divisions. For example, before making a shift to Texas, Tesla and Space X’s Elon Musk protested California’s lockdown measures (Hamilton, 2020).
How will this shift impact Silicon Valley? Right now, it seems unlikely that there will be a sudden shift to other locations as technology hotspots: many of the large companies such as Facebook, Apple and Google still remain in Silicon Valley, and it’s also where many of the best job opportunities are (Iyengar, 2021). There are signs that the valley is recovering from the recent wave of departures as well, since rents have begun rising again after they bottomed out (Iyengar, 2021). Although its geographic dominance will likely not be as strong as it was previously, it will likely be a dominant player in North American technology for years to come.
The shift to remote work could also provide new possibilities for the Valley. Previously, it was extremely difficult to hire young talents in Silicon Valley and provide them with wages that would allow them to afford living there. Allowing them to live further away from the area may open up opportunities to these younger talents (Bliss, 2020).
At the same time, however, there are downsides. Some companies have seen decreasing productivity for remote work (Bliss, 2020), which could become much more of a long-term problem. Furthermore, working remotely could deprive younger, less experienced recruits of the skill training gained by working alongside older, more experienced colleagues (Bliss, 2020). The absence of nearby employers could also negatively affect entry-level workers’ career growth.
In conclusion, the exodus of workers from Silicon Valley caused by long-term issues and amplified by the pandemic has the potential to reshape the technology industry. While it has downsides, it can also open up new possibilities. It may weaken Silicon Valley’s position as the dominant geographical hub of technological innovation, but it likely will not cripple it. However, it is too early to be certain of all of this. Only time can tell what will happen next. For now, it is important for the companies in Silicon Valley to carefully consider their choices and build flexible plans to deal with the upcoming years.
References
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Hamilton, I. A. (2020, April 29). 'FREE AMERICA NOW': Elon Musk is now protesting US
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