How COVID-19 Will Accelerate Silicon Valley Exodus

When Verious Smith graduated college, he was like many young entry-level software engineers—he planned to get a job in technology and climb the ladder, eventually reaching the Promised Land, Silicon Valley.

That was in 2010, and the number of jobs for tech workers in that region was unparalleled in the world. So it was reasonable to assume he'd end up there eventually.

Smith got a job for a smallish local company in Houston as one of the organization's only two web developers. This job didn't last long. The company hit a financial bump, and soon Verious was out of work.

So he took up freelancing. One of his earliest clients was another local company that needed work done to their website. They offered him a $1,700 contract, and Verious took it. "That was the most I'd ever made at that time," he said, after comparing the hours he spent working on the project against what he was paid.

A light bulb lit up. He just made a Silicon Valley job's wage working on his couch, enjoying the lower cost of living in Texas. This was the first time he'd questioned what many entry-level tech workers just assume; that the ideal path for a developer is to work your way up until you land in Northern California.

He loved the prospect of not having to punch a clock, not having to report to a boss, not having to fear the potential that his job could disappear tomorrow. It was then that he decided to be a permanent freelancer.

He did eventually migrate to California, though not to the Northern end, but Southern. Today he lives in Corona, CA, which is not known for a booming tech industry—though, Smith is quick to point out it does have a small but active techie scene. He formed his one-man-plus-several-virtual-assistants agency, Philoveracity, and has been going strong ever since.

He discovered 10 years ago what many people are only now discovering, because of the COVID-19 stay-at-home orders; You don't need to be in an office to do most technology-related jobs.

As more people in the industry realize this, it could have big implications for Silicon Valley, a place where technologists congregate physically to work in offices together.

What it means for Silicon Valley

The region has already been experiencing an exodus. A survey by the Brunswick Group of 300 Silicon Valley tech workers found 49 percent of respondents expected an area outside the San Francisco Bay Area to take the title as the world's leader in innovation. About 74 percent predicted China would be more of a competitive threat to the region's dominance than anywhere in the U.S.

About half of those surveyed said their organization is finding it harder to find fresh talent than it was a year ago. This is because the younger tech workers are less inclined to stay in the Bay Area; 41 percent of respondents 18–34 years old said they planned to leave in the next year.

Not only are young engineers gravitating to Silicon Valley in smaller numbers, but many smaller tech hubs are popping up all over the U.S. to pull talent into their orbit.

Job search site ZipRecruiter analyzed its more than 8 million job ads and found the 20 fastest growing areas for engineering, software and other tech jobs, and they uncovered some surprises.

Huntsville, AL topped the list with more than 300 percent growth. Thousand Oaks in Southern California came in second with 200 percent, and Phoenix, AZ came in third with 188 percent. A lot of Midwest states made the list, such as Kansas City, KS, Cincinnati, OH and Indianapolis, IN. A few surprises came out of the south, such as Nashville, TN and three cities in Florida: Orlando, Jacksonville and Tampa.

"The tech industry is no longer bound to the coast," ZipRecruiter's Chief Economic Adviser, Cathy Barrera, told Business Insider shortly after the report came out. "As a result, we're seeing the tech industry expand out of the major metropolis areas, and into smaller regional cities that have since flown largely under the radar."

Why this is happening: Cost of living

A few things could explain this. The most obvious one to anybody who pays attention to real estate is, the Bay Area has the most astronomically expensive housing costs.

For perspective, a tiny one-bedroom, one-bath, 570 square-foot house on Laidley St. in San Francisco's Glen Park neighborhood recently made headlines as the city's cheapest piece of real estate at $599,000, no front or back yard, no garage, wedged on a weird triangle-shaped lot.

On the other side of the coin is Nashville, where you can get a small mansion for this price, usually with acreage, often with your own personal river, forest or even a cave.

"That's how I get a lot of Californians to move out here," said Jason Galaz, a real estate agent in Nashville, Tennessee. He's from Corona, CA—the same town where Smith lives, coincidentally—so he knows how nice it is to move someplace where you can buy more living space for less money.

He's also noticed that more people are moving to the area to work in the Nashville-area's growing tech industry. Amazon recently opened an operations center there, which employs about 5,000 people, and Facebook is expected to open a data center soon on 200+ acres in Gallatin City, not far from Nashville.

Galaz recently met a woman who works for a Silicon Valley tech company, but she chose to live in Nashville because the cost of living—and the cost of buying a home—is dramatically less. "If there's any way you can live outside Silicon Valley, why wouldn't you take advantage of that? I don't know who would want to pay such insane prices for a home," he said.

Some experts say the Midwest might weather the economic storm most economists are expecting in the wake of COVID-19 because they tend to manage their budgets for long-term survival, while many Silicon Valley unicorns tend to have a "growth at all cost" mentality.

Another reason this is happening: New tech hubs

A less obvious reason is, other regions are actively trying to attract talent that might otherwise migrate to Northern California. Regions such as Tulsa, OK. This city's Tulsa Remote plan offers a sweet deal to tech workers who can do their jobs remotely—if they move to Tulsa, they get $10,000 a year and a subsidized home. In Alabama, one region offers the Remote Shoals program, which also offers the remote tech worker $10,000 to make the move. Vermont has the New Worker Relocation Grant that offers $7,500, Kansas has the Choose Topeka program, which pays $15,000.

But these programs can only work if working remotely is possible; and for developers, IT pros, programmers, etc., this has been possible for years. Even practical. But few employers have shown support for this option.

Then came COVID-19, and along with it came the remote work experiment no one asked for.

"This is not how I envisioned the distributed work revolution taking hold," said Matt Mullenweg, CEO of Automattic, the company behind WordPress.com, Tublr, WooCommerce and others in his blog. "It’s not ideal on any level." Nonetheless, he's a longtime proponent of remote work, and in fact, all 1,100 Automattic employees work remotely.

The virus is teaching companies that their staff members can be productive outside the office, and many experts are predicting this will lead to a cultural shift in many workplaces. In fact, Mullenweg has an entire podcast series based on this premise.

This is a continuation of a trend that was already in progress, said Matthew Warzel, a Certified Professional Resume Writer and President of MJW Careers, a recruitment and career coaching firm based in Wilmington, North Carolina. The number of applicants seeking work-from-home jobs has been growing in recent years, he said. "The remote workforce is growing hand over fist each year and especially with the existence of COVID, I think companies will be more apt in allowing telecommute employment as part of their normal staffing plans."

What this means for tech pros

Chas Larios lives in Austin, Texas, but works for VMware, a Silicon Valley-based tech company. She's a mother of two young children and loves working remotely so she can spend more time with them. This arrangement was rare before COVID-19, especially in the higher ranks of a tech company, but now that everyone is working remotely, she sees the culture shifting. "I’m one of very few at my director level that wasn’t hired in Palo Alto. That is drastically changing," she said.

She thinks the diaspora from Silicon Valley and the rise of remote work is especially great for moms. "With remote work now the new norm, no need to hire locally so that employees can come into the office. Many moms my age started in Silicon Valley, but moved after starting a family due to the lack of affordable real estate and the desire to be close to family while raising kids. Even in Austin, after I started working remotely we moved 7 miles outside of the city to have more space for the kids to run, which would have been an impossible commute if I were forced to go into the office," she wrote in her blog, Mamas In Tech.

As for me, COVID-19 brought a crash course in online teaching. When the virus broke out, I was teaching several Digital Arts courses at Fullerton College in addition to teaching Web Development for WP Code Camp, the coding boot camp my wife and I run. Suddenly, I faced the challenge of getting my courses online—and I had about three days to do it. Instead of giving my lessons live in front of my students, I delivered my lessons via videos and set up Zoom conferences for one-on-one help. I wasn't optimistic about how it would turn out, but I was pleasantly surprised. My students turned in excellent work, every bit as good as I'd expect had the classes been in person.

I have mixed feelings about it though. I miss seeing people. I miss giving my students high fives. I miss chatting with colleagues. Truth be told, remote work might not be for me. But I can see how it can be a huge boon for some, like Larios, who wants to be around her kids. Or Smith, who doesn't want to pay $599,000 for the smallest house in San Francisco. Or Warzel's and Galaz's clients, looking for a better work-life balance. Or for workers with disabilities who have difficulty working in an office.

Larios says in her blog that remote work can allow more women to take leadership roles, and "more women in leadership roles equals more representation of women in tech." I think this can be extended to a lot of other people who have difficulty working in an office environment. Remote work can bring more people into the fold. And more diversity can only make this industry stronger.