The Bay Area’s skyrocketing housing costs aren’t just forcing out artists, teachers, and retail workers...now workers in the Bay Area’s tech industry are looking to move outside the Bay, where their paycheck can go farther.
In 2017, the hashtag #techxodus appeared on Twitter after Redfin CEO Glenn Kelman predicted in a CNBC interview that tech workers would flee from coastal cities inland to avoid growing cost of living. He stated that Denver, San Antonio and Houston would serve as prime cities for relocation. It seems Kelman wasn’t far off the mark.
For now, Bay Area tech workers make the most money in the industry. According to a 2018 State of Global Salaries report by Hired.com, tech workers make the most in San Francisco, a gross pay average of $142,000. However, tech salaries in Austin, Los Angeles and D.C. are increasing to compete with Bay Area conditions. Hired.com found that tech workers in Austin have seen a 7% increase in pay and also enjoy a lower cost of living than Bay Area residents. Even a cut in pay is not much of a deterrent when you still end up saving more money.
Despite San Francisco’s reputation as a tech haven, many workers are looking to move out of the area, unable to maintain their standard of living in an increasingly expensive housing market.
Housing was a central issue during the mayoral race. Newly-elected Mayor London Breed ran a platform describing herself as the “most pro-housing candidate” and led an effort for the city to purchase land at the site of the McDonalds on Stanyan and Haight in order to build more affordable housing and has pledged to continue the late Mayor Ed Lee’s promise to build 5,000 units annually.
However, San Francisco is struggling to keep up with the population growth. Curbed SF reports that one home was created per 8.2 jobs since 2010. The World Population Review says that 92,000 new housing units and 191,000 jobs will have to be created in San Francisco to shelter the thousands of new residents expected to move in by 2040.
Forbes likened the 2016 Bay Area housing market to the years leading up to the 2008 housing bubble collapse. They cite the tech boom as a major influence on the real estate hikes and comment that rates were climbing to “unsustainable levels”. According to Zillow, in 2018, the average price of a home is $1,358,500. This is a 9.8% increase from 2017 and it is predicted to increase by 7.8% in 2019. Renting is the more cost effective option in San Francisco. Zillow also reports a median average rent of $4,500 in the city while Zumper reports that rent has only slightly increased from 2017 about 1.5%, citing an average rent of $3,400 in the city.
We spoke with three tech workers of different backgrounds who currently or have worked in San Francisco about their experiences living there and the pressures on them to leave.
Tiana, who asked that we not use her last name, dropped out of community college early in her education to work as a recruiter for a tech firm full-time. After being approached for a recruiting position in San Francisco, she moved from the San Fernando Valley in April of this year. Tech is often appealing as a path to middle class status without completing a college degree. She loves working at her current company and enjoys many benefits, however, she acknowledges that San Francisco is probably not her “forever home.”
It isn’t for lack of employment opportunities. Tiana sees a cut off point in the not so distant future:
"I could see myself being at my current company literally forever because it’s been so great so far, but I’m not sure if I would like to stay in SF for 5+ years. It’s a wonderful place to be considering I’m in my early 20’s, but I’d imagine it’s difficult to have a family here solely due to the high living costs."
Back in the valley, she and her boyfriend shared the costs of a one-bedroom apartment in a “safe and beautiful area” which justified the cost. Now, in San Francisco, she pays $2500 a month for a studio apartment in Nob Hill. Although she has just a short walk to work from her place and plenty of food options, she is worried about the future.
“It’s odd being in a place where you’re surrounded by people making a good 6 figures each year and people who have nothing. It’s a bit concerning because I feel like it will only get worse.”
She does not plan to start a family or buy a house anytime soon--after all, she is young and as she said, rent won’t get any cheaper--but she remains optimistic that she will succeed in surviving in the new city.
Seasoned resident Christina Cortez, 29, is a systems operation analyst living with roommates in a cramped apartment in the Haight. Lucky enough to have moved into San Francisco before the tech boom, her apartment is rent-controlled in a pretty desirable location (if only for the shopping and cultural reputation). However, she is becoming disillusioned with city life and would prefer to live on her own in the city or East Bay but knows that is not likely.
After earning her Bachelor’s in graphic design, Cortez found a difficult job market and sought a tech position after being recommended by a coworker. She has been at her company for 2.5 years and is looking for a change. Her frustration revolves around cost of living. “I need to make at least 100k to live in a tiny studio without a partner to split rent with, she says.”
She recognizes that she has the skills to make it in a new tech role and plans to move on to another tech hub. She sees herself: “Making a lot of money, traveling and either staying here or moving to another big city...because...that’s most likely where a high paying job will be.”
Omar Diab, 26, the son of immigrant parents from Syria and the Philippines and a Stanford graduate in computer science, is the epitome of the American Dream. After graduating, he moved to San Francisco and began working at a tech company providing data infrastructure services for U.S. schools. Diab quickly realized that there was no financial future for him in the Bay and admits, “[I] don’t even think about starting a family. Really, your future is not in San Francisco, and San Francisco likes it that way.”
He explains that the city is alluring at first: “There’s a draw that makes it seem like you have no other option but to be in the Bay Area tech scene forever since people constantly talk about it as the only tech scene in the world worth considering.”
Diab hits a few important reasons that he felt inspired to leave:
“It’s unsustainably expensive, for one. Besides that, I just felt an overwhelming feeling that there was a very low diversity of opinions in the people that surrounded me, and breaking out of that was difficult because of how encompassing work is to your life, and the social dynamics above between the tech and non-tech world.”
In his current home of Shanghai, people don’t care about his profession, to his relief. After traveling around for a few months, he settled there to practice his Chinese and enjoy life at “a fraction of … [the] cost, [and] at a significantly higher standard of living”.
Although the primary concern among all three of the interviewees was financial, they each touched on the bias that non-tech residents have against tech workers. Tiana was aware of this bias prior to moving, but says that tech workers are just trying to make a living like anyone else. “I don’t think it’s right to hate on that! These people are employed, they pay taxes, and they do their part for the economy.”
Cortez admits that some of the negativity is justified as the tech industry has certainly driven prices up and some transplants don’t show the same appreciation for the city. However, she does not believe that someone should be demonized because of their profession.
Diab agrees, believing that segregation is fuelling the divide. “I think the tech industry loves itself but few outside of it feel similarly. The tech industry tends not to participate in other parts of society, so I think there’s a strong divide between tech and non-tech worlds.”
But what about the rest of San Francisco? The prospects for young people are dismal. The average income of adults between 25 and 44 is $78,810 a year: 55.5% lower than the average income of tech workers. Single adults in San Francisco qualify as low income if they make $82,000 a year, and a family of four qualifies if they bring in $117,400.
According to the World Population Review , San Francisco’s overall poverty rate is 12.45%. The poverty rate among full-time employees is 1.3% and among part-time workers, 16.75%. With such large wealth disparity, residents have voiced a demand for more housing options, including subsidized affordable housing.
Lack of jobs is not the issue; people simply can’t afford to live here. Todd David, Executive Director of the San Francisco Housing Action Coalition, remarks that it isn’t just the poor being priced out, but that middle-income residents are being affected, too. “By not building housing at all levels of affordability we are losing low income and middle income workers. Scarcity...is always going to favor the wealthiest people. If we want to be committed to keeping our teachers, firefighters and first responders in San Francisco, it is imperative that we build housing at all levels of affordability,” he says.
While some in the tech industry can look forward to following better prospects outside the city and weighing their economic options, the rest of San Francisco is anxious. Housing prices are projected to increase, despite the “techxodus.” Both those who cannot afford to stay, as well as those who cannot afford to save and leave, are hoping that new political leadership follows through on its promises.
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