The increasing decline in Silicon Valley in wealth inequality is particularly stark when you compare Big Tech with small businesses in the San Francisco Bay area.
Consider: While Alphabet Inc. GOOGL,
GOOG,
is building at a breakneck pace – Google’s parent company plans an 80-acre mixed-use campus in downtown San Jose that will house 25,000 employees – and hiring at a steady pace, the service industry in the valley is in ruins. Jobs in this sector plunged 41% in 2020 amid a wave of closings and reduced operations in restaurants, beauty salons and family stores, while Big Tech added jobs in technology.
“I feel like a plane crash survivor, but with regret and regret,” Victor Escobedo, owner of two Mexican restaurants, a food truck and a salsa company in the San Francisco Bay area, told MarketWatch. “I consider myself one of the lucky ones because I simplified operations in 2018-20 to better handle deliveries.”
“We don’t consider our business better than others; we are a neighborhood restaurant that feeds people who can’t leave home, ”said Escobedo. “Once again, we are one of the lucky ones.”
Don’t miss it: Silicon Valley is not experiencing a technological exodus and money is entering a record pace
The gap between the 15 largest technology employers in Silicon Valley and their smaller peers is equally striking. The anointed group – Apple Inc. AAPL,
Google, Cisco Systems Inc. CSCO,
Tesla Inc. TSLA,
Facebook Inc. FB,
Intel Corp. INTC,
Gilead Sciences Inc. GILD, Oracle Corp. ORCL, Lockheed Martin Corp. LMT, Nvidia Corp. NVDA,
LinkedIn and parent company, Microsoft Corp. MSFT, Amazon, Salesforce.com Inc. CRM and Uber Technologies Inc. UBER,
– had sales of approximately $ 1.35 trillions in 2020, which would give them the 15th largest gross domestic product in the world, between Spain and Mexico.
“Will Silicon Valley remain Silicon Valley? It depends on your perspective, ”Rachel Massaro, research director at the Joint Venture Silicon Valley’s Institute for Regional Studies, told MarketWatch. “What the data shows us is that we continue to increase the technology workforce, especially among the top 15 technology employers. The magnitude of this growth is enormous compared to anywhere else. “
The disparity, based on the main economic indicators compiled by the 2021 Silicon Valley Index, is compelling, indicating that the concentration of corporate power in the region is increasingly dependent on fewer companies.
The jobs
Technology jobs grew in 2020, even as the pandemic devastated much of the economy. The participation of the Silicon Valley workforce in technology grew from 26% in mid-2019 to 30% in mid-2020. At the same time, participation in the community’s infrastructure
and services fell from 50% in 2019 to 46% in 2020.
Of the 619,000 tech jobs in Silicon Valley and San Francisco, 38% are employed at one of the region’s 15 largest technology companies. Google and Apple employ the largest shares, around 7% each, followed by Facebook (4%), as well as Cisco, Amazon and Oracle AMZN,
(3% each). Jobs in computer hardware, software, the internet and information and biotechnology services remained 47% higher in mid-2020 (more than 147,000 jobs) than at the time of the Great Recession in 2010.
Meanwhile, pandemic-related job losses have affected community infrastructure and service jobs (down 15% between mid-2019 and mid-2020) – especially personal services such as beauty salons, manicures and dry cleaning ( -54%), and accommodation and food (-41%).
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Transportation, and contract workers in particular, had the most jobs, led by 6,700 at Uber (representing 25% of the company’s workforce), and almost 1,000 at Lyft Inc. LYFT,
when consumers stopped using hitchhiking services. Consumer technology companies accounted for the second largest share of layoffs in the Bay Area pandemic period, with the largest losses at Yelp Inc. YELP,
(1,000 employees), Juul Labs (900) and Eventbrite Inc. EB,
(500).
Few workers will return to jobs until mid-year, when most Americans are vaccinated, according to an article on the medium-term prospects for the valley, by Steve Levy, senior economist at the Center for Continuing Studies in the Economy of California in Palo Alto, California.
“The shutdown of most face-to-face economic activity in the spring of 2020 led to a dramatic increase in unemployment – especially in hard-hit sectors such as leisure, hospitality and personal services,” Sarah Bohn, vice president of research at the Public Policy Institute of California (PPIC), said in a report released in December. “Nine months later, the job market has improved a little, but it remains precarious, with low-income workers bearing the brunt of the consequences.”
The offices
The footprint of major technology companies has increased, despite pandemic-related construction delays. More new commercial space was under construction than ever (21 million square feet) and another 14 million square feet are in preparation.
Only six major technology companies – Google, Apple, Facebook, Amazon, LinkedIn and Netflix Inc. NFLX,
– occupy 19% of all office / research and development space available in Santa Clara County, Menlo Park and Fremont, swallowing 48.5 million square feet. Google occupies the most, with about 22.1 million square feet in 2020.
Major construction projects underway at the end of 2020 included major
owner-user developments, such as Adobe Inc.’s ADBE,
North Tower in downtown San Jose, Google’s 1.1 million square foot Office project in Mountain View, Nvidia’s 755,000 square foot Flex / R & D building in Santa Clara and Fortinet Inc.’s FTNT
headquarters in Sunnyvale.
Despite delays related to the pandemic, nearly 5 million square feet of new commercial space was delivered to the Silicon Valley market in 2020 – more than a third of which were accounted for by technology.
While tech workers have fled the expensive San Francisco Bay area to remote suburbs in northern and southern California, the ability to work from home has allowed them to stay in the field and visit their employers’ headquarters in the valley at will, technology recruiter Andy Price told MarketWatch.
The Joint Venture report did not release data on the use of real estate space by small businesses.
While past recessions have exacerbated income inequality in California, the effects of the pandemic are concentrated among low-income workers, African Americans, Latinos and women, Bohn from PPIC told MarketWatch.
The current crisis, she says, threatens to “reinforce existing inequalities and deepen the state’s long-standing economic divide”.