How tech industry's shift to remote work will forever change Silicon Valley
Living in Silicon Valley was a requirement for many people in top jobs at the technology companies. But that's changing in the wake of the coronavirus.
After the pandemic-forced experiment with work from home proved successful, several tech companies are already planning not to return everyone to the office even after the social distancing restrictions ease. The biggest example so far: Facebook chief executive Mark Zuckerberg said yesterday that at least 50 percent of its 45,000-person workforce could start working remotely in the next five to 10 years.
"Certainly being able to recruit more broadly, especially across the U.S. and Canada to start, is going to open up a lot of new talent that previously wouldn't have considered moving to a big city," Zuckerberg said.
The company plans to "aggressively" start hiring more remote workers, my colleagues Rachel Lerman and Elizabeth Dwoskin write.
This could be the end of the Silicon Valley era: Tech workers soon be distributed throughout the country.
Tech companies have clustered in regions like the Bay Area and Seattle, where an entire ecosystem of venture capitalists, lawyers and engineers have congregated for decades since the rise of personal computing. Major tech companies invested in sprawling campuses, complete with perks like high-end coffee shops and tech shuttles, that defined the industry's culture.
But in recent years, skyrocketing rents, rising paychecks, traffic congestion and local political backlash forced many companies to consider offices outside of coastal tech hubs - but the pandemic has shown that a mass shift to distributed work could happen faster than many previously predicted.
"More radical changes occur in bad times than in good times," said Mark Muro, senior fellow and policy director at The Brookings Institution's metropolitan policy program.
"As tragic a driver as covid is, it potentially could precipitate a more healthy geography of tech," Muro added. Muro's research has shown that coastal tech hubs are snapping up most new, high-tech jobs, and he's previously proposed a massive investment in federal funding to help other cities keep up.
Facebook's sudden announcement underscores how dramatically coronavirus has changed companies' calculus. The company previously had a reputation for not being permissive to remote work, preferring to have employees clustered at its Menlo Park, Calif., headquarters. It stands in stark contrast to other companies' approaches to expanding beyond coastal hubs before the pandemic, such as Amazon's protracted HQ2 contest that ultimately resulted in the company expanding its presence in Northern Virginia.
Other tech companies have announced plans to allow workers to log in from anywhere. Twitter said last week that many employees would be able to work from home forever. Coinbase announced plans for a "remote-first" policy. And e-commerce service Shopify said most employees would continue to work remotely in 2021.
Tech companies have a financial incentive to embrace remote work.
Companies will be able to reduce spending on rent and even employee salaries if they're living in areas with lower costs of living. Zuckerberg said yesterday that Facebook will begin in 2021 to lower paychecks to reflect cheaper costs of living in some instances, depending on location.
Danny Trinh, the head of design at the location-sharing app Zenly, said the cost savings could push more companies to embrace the remote work trend - comparing it to the shift to open office floor plans.
A greater distribution of workers could benefit the tech industry politically.
Many people in the country's heartland have not had access to the high-paying jobs the largest tech companies have created in coastal cities such as San Francisco, Seattle and New York over the last decade. That divide has emerged as a politically divisive issue.
But politicians are cheering on the recent shift.
"This is a game changing proposal, and I applaud Facebook for taking this step. All Americans, regardless of where they live, should be able to participate in the digital revolution," said Rep. Ro Khanna (D-Calif.). "It should not have taken covid for us to realize this, but I'm glad that tech companies like Facebook and Twitter will allow people to work remotely and not have to move for a good-paying job in tech."
Khanna previously proposed a $900 billion plan to jump-start new tech hubs through federal research and development to counter President Trump's "Make America Great Again" messaging."
Other cities could come out as winners as tech looks beyond Silicon Valley.
Facebook plans to "immediately tap into" talent pools in cities including Portland, San Diego, Philadelphia and Pittsburgh, and the company later plans to expand hubs in Atlanta, Dallas and Denver.
That could lead to greater diversity at the company - both racially and ideologically. Muro says right now the tech companies' concentration is holding them back from accessing the best talent.
"We're likely not availing ourselves of all of the best talent and the best ideas and the best creativity," he said.
Kim-Mai Cutler, a partner at the venture capital firm Initialized Capital, said it's a boon to the budgets of second-tier cities:
Silicon Valley and other hubs will continue to be home to many high-tech workers.
Zuckerberg said the company would not be getting rid of its Menlo Park, Calif., office. And some experts predict that change may not happen so fast: Silicon Valley will continue to attract and be a home to many high-tech workers.
"I feel like Silicon Valley's obituary has been written prematurely a lot of times," Margaret O'Mara, a professor of history at University of Washington and the author of "The Code: Silicon Valley and the Remaking of America," a chronicle of the tech industry, said in an interview with Rachel.
"I would not say Silicon Valley is over," O'Mara added. "I think it will be different. It's a bust like Silicon Valley has experienced before, but it's different in that the big companies are still thriving and will get bigger."The Washington Post