Are Silicon Valley Housing Costs to Blame for Tech’s Talent Crunch?

Are Silicon Valley Housing Costs to Blame for Tech’s Talent Crunch?

Last year, analyzed its job search data and found that a remarkably high proportion of technology workers in the San Francisco Bay Area were looking for jobs in other parts of the US. Marketwatch passes along some updated findings from Indeed showing that this trend hasn’t changed:

From October 2016 to January 2017, more than 38% of technology job seekers in the San Francisco and San Jose area have clicked on postings outside of the area, up from just 27% four years ago. That trend stands out especially among mid-career employees between 45 and 54 years of age: Half of the Silicon Valley technology job seekers in this age group have been looking for opportunities beyond the border.

And it’s not the only study to suggest tech workers are looking beyond San Francisco. The Federal Reserve’s most recent regional economic round-up on the San Francisco district said that talent shortages in the technology industry have both increased the time required to fill positions and the cost per hire.

Indeed attributes tech workers’ desire to get out of Silicon Valley primarily to the high cost of living there, noting that the median monthly rent for a one-bedroom apartment is $3,000 in San Francisco and $2,500 in San Jose, or more than twice the national average of $1,200 a month. The Bay Area isn’t the only metropolitan area where high housing costs are making talent think twice about settling there—business leaders in Los Angeles, for example, recently identified housing costs as a barrier to attracting talent to the city—but it draws the most attention given Silicon Valley’s importance to the US economy today.

In fact, Elaine Ou argues at Bloomberg View, the sky-high rents in the Bay Area may be a bigger factor in the tech sector’s talent shortage than the skills gap. The industry, she writes, “doesn’t have a skills shortage so much as a shortage of employees who can afford to live within commuting distance of their jobs”:

For whatever inexplicable reason, big technology companies insist on building their offices in areas with tight zoning restrictions. Mountain View, hometown to Alphabet Inc.’s Google, gained 17,921 jobs between 2012 and 2015, but added only 779 units of housing over the same period. San Francisco added a bit more than 9,000 housing units while gaining half a million jobs. Given the scarcity of housing, many new incoming residents have to outbid a current resident to move in. Palo Alto’s city planning commissioner recently resigned because she and her husband could not afford to raise a family in Palo Alto — even though both had jobs at leading tech companies.

Furthermore, Ou points out, housing costs may also contribute to the sector’s lack of age diversity:

Beyond a certain stage in life, Silicon Valley employees simply pack up and leave. As a result, the industry workforce is skewed towards the extremely young. … Tech companies have been accused of age discrimination before, but a lot of the bias stems from the fact that employees in their twenties can better tolerate the lifestyle required to live near their jobs.