Feb 26, 2014
Austin, TX, has beat out the Bay Area as the most attractive location for tech companies.
The article referenced below from the Austin Business Journal reports that Austin has passed San Francisco as the best city in which tech companies should locate, according to a survey by Savills, Plc, a major international property firm. Why? It’s a lot about affordability. It’s a lot about the amount of young talent, and that is highly dependent on the affordability of housing.
According to Forbes, the median home price in Austin is $221,000, while in SF, we have crossed the $1 million mark. Median income there is $53,000. Here it is not that much higher–$76,000. Consider the 50% gap between incomes vs the almost 500% gap between home prices. This translates into a much happier and plentiful lifestyle for young tech workers in Austin than in San Francisco, notwithstanding some weather advantages we enjoy. If I get paid only 33% less there, but my housing cost is almost 80% less, I’m smart enough to figure out that is a better life style.In fairness, other studies still show us still on top, but we are losing ground fast.
There are some of the wealthy who recognize the risk in allowing capitalism to simply run unfettered. The Patriotic Millionaires and Wealth for the Common Good may be among them, as well as a few Republican members of Congress. But the weight of Republican agenda does not recognize the need for redistribution, even if proceeds are to go for infrastructure, which benefits everyone. As Paul Krugman writes today, much Conservative rhetoric goes to blaming Obama or blaming the problems of schools for the dramatic rise in inequality. That’s not the explanation, and only part of the answer.
No one should doubt the sheer force of such economics in determining destination–haven’t we seen enough evidence in textiles and other forms of manufacturing to be aware? Business can move easily and rapidly now–to Austin or to Mumbai.
This is just a reminder to all–wherever you may feel your wealth is centered: better consider the ramifications of not addressing inequality. For San Francisco wealth, there is not only a consequence to the quality of life we enjoy here, but also a negative consequence to the wealth of those heavily invested in local technology.
I suppose the question is, do the investors in Bay Area tech ventures care enough to want to do something about it, given that wealth can easily follow the migration to Austin,and then to Tel Aviv or Stockholm, which also rank high on the list of attracting tech companies?
But if that migration happens, what are the rest of us left with here in San Francisco? Imagine a local recession which could be quite painful.