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I can recall no less than 4 recessions hit the Bay Area in the past 30 years. Silicon Valley lost 10% of it's jobs in the dot-com bust of 2000-2001, then gained them back and then some but then lost 10% of all jobs again during the great recession and now is booming like gangbusters yet again. I feel a recession is probably on the way again.
The looming problem that those areas face won't be in hits to the tech sector, but rather the living costs in those areas. Even if employees at places such as Google and Apple can afford to live in Silicon Valley or within a reasonable commuting distance, the rising cost of real estate is making it impossible for workers in supporting functions, from grocery store workers to school teachers.
I read research three years ago that found that the average California school teacher in that area can afford less than 1% of the homes for sale in Silicon Valley. So when you start realizing that any industry, even one as immensely profitable as tech, has to have a huge supporting community of teachers, firemen, cooks, electricians, and everyone else around it, you realize that those people have to have affordable housing. Or that location no longer becomes tenable.
Well, not quite. In 1970, Seattle lost 4.7% of their population, and 7% in 1980. Not huge, but definitely a loss.
That's my point about smaller households, not fewer households. That was a big trend in the 1970s. And that's my point about looking beyond the city limits, hence my post about counties.
Paris has lost what, 1/3 of its population? It's not because it emptied out. Families are smaller, and more singles/couples have taken units formerly occupied by families.
These tech areas are more likely to be impeded by high COL than their ability to provide jobs. I guarantee eventually people in these beautiful and expensive West Coast cities are going to demand high, high wages to accommodate the fact they are losing housing to rich foreigners, and eventually companies won't pay it anymore and will leave.
I wouldn't be surprised at one point no longer will people want roommates anymore like they do in SF, and will demand higher pay and then the companies are going to have to make a choice, stay and pay the exorbitant wages needed to keep up with COL or move and keep the wage scales?
This will eventually happen unless we change how we regulate zoning and the housing industry. So at that point, where will they go? Probably liberal, outdoorsy areas. Even if they are expensive, because at that point they will still be less expensive than where they come from.
If we want to prevent this, then housing will have to be regulated. Personally I have always been in favor that a US citizen should only be the ones allowed to own land in this country. Visas, etc. should rent. Certain cities like Seattle, SF, and NYC are seeing COL beyond wages partially because of foreigners parking money in empty condos. We would also have to ban AirBnB and similar businesses, since apartment owners can earn more money turning apartments into these fake hotels, which reduces housing stock.
One thing I've been thinking about lately is the commonalities in much of the "Rust Belt"... the urban planning decisions made at their peak, the housing stock, the general culture. It's interesting to think about the era when cities like Detroit, Buffalo and Cleveland were the Factory Belt, boomtowns driving American progress.
It isn't a leap to analogize those cities in their heyday to the Seattles and Austins of today, cities whose growth is predicated on employment opportunities in a handful of booming sectors. My question is, are those cities going to be caught up in the same cycle when new technology or (more likely) mass offshoring changes the dynamics of those industries? There really isn't a historical precedent for the impact deindustrialization has had on American cities, but could those cities serve as a future precedent for the kind of decline and decay that we can expect to see going forward in industry-focused boomtowns?
Interesting question. I think it's quite possible if these areas don't have some economic diversification and make some bad decisions as the Rust Belt did where unions made decisions based on satisfying the moment and not looking out for the long term interests.
I think this line is what the Seattle folks strongly disagree with. If it was economically devasted for years than this was hardly a booming decade.
I was young then but I remember the feeling of depression. A tough time for the area but Seattle had the port and was the regional center of the PNW and then along came Bill Gates & Paul Allen and the area has forever changed.
I think this line is what the Seattle folks strongly disagree with. If it was economically devasted for years than this was hardly a booming decade.
I think most other people agree with you, just because one doesn't isn't indicative of anything. I have family from there, the 1970's were obviously a very bad decade for the region given how things were before and after. It was the slowest growth the region had seen, the city shrunk, unemployment and the mood was quite tempered for years. It wasn't just some "blip" in one year or anything, to say so does a disservice to everyone who lived through that period, to the adults and older generation that was in charge of sustaining the area. Kids probably wouldn't have known it as much, people in their teens or younger by 1975-1980.
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