Menus Subscribe Search

Burgh Diaspora

silicon-valley

(Photo: Patrick Nouhailler/Flickr)

Bright Flight From Silicon Valley

• April 08, 2014 • 2:00 AM

(Photo: Patrick Nouhailler/Flickr)

Talented people are starting to move to places where the cost of living is more reasonable, but a town can’t just be cheap and wonderful. It also has to be connected.

The Innovation Economy is moving to where the cost of living is reasonable. The anecdotes and data points are piling up, putting the squeeze on talent-starved Silicon Valley companies. Tale of the domestic migration tape:

“It’s a kind of middle-class flight—a bright flight,” said William Frey, a demographer at the Brookings Institution, a think-tank in Washington, D.C. “People are moving to where the cost of living is reasonable.”

The shift holds some long-term implications for the economy. The clustering of workers with advanced degrees has been a driver of America’s growth, economists say. That is because skilled workers are more productive when they collaborate with similarly skilled colleagues. Consider Silicon Valley, for example, or Detroit’s Motor City in the 1950s, where innovation and industrial-scale operations drove economic development.

However, if professionals young and old fan out to more places, that could spread the nation’s talents more widely. A broader dispersal of America’s skilled workers eventually could mean more jobs and new businesses, boosting the economy’s dynamism.

Emphasis added. Detroit’s Motor City in the 1950s is today’s Silicon Valley. Then manufacturing fanned out to more places, at home and abroad. Government labs attracted the best and brightest to new knowledge hubs. Detroit slipped into the cul de sac of globalization. Now it’s Silicon Valley’s turn.

Before we stick in fork in the geography of innovation, not every place will benefit from Silicon Valley’s decline. Finding cheaper digs is easy. Attracting highly mobile talent to some forgotten corner is another story. Can Buffalo compete with Barcelona?

Another attraction Barcelona holds for fledgling tech companies, aside from its warm climate, location and cultural appeal, is its relatively low cost base for anyone looking to build a start-up in its early stages.

While high competition for engineers in Silicon Valley means that talented engineers can demand ever higher salaries, the lower wages that are paid in Barcelona to workers who want to stay in Europe and enjoy the city’s lifestyle can allow new ventures to flourish. …

… “Lots of people want to live in Barcelona, and this helps companies to have a much lower cost base than other places, but still operate out of Europe in an attractive location,” he says.

The other side of the Silicon Rust coin is the cost of talent. Start-ups can’t compete with Google or Apple for employees. Places such as Barcelona comprise the minor leagues for tech. Thus, proximity to the largest markets matters. A town can’t just be cheap and wonderful. It also has to be connected.

Barcelona has another asset going for it. It’s a tourist destination. Restaurant workers and housekeepers already have an economic rationale to be there. Furthermore, returning to the original concern about the rent being too damn high, Barcelona has a long way to go before it bubbles over with Silicon Valley-like gentrification pressures:

East Palo Alto is the last haven of low-rent housing in a region where companies like Tesla, Facebook Inc. and Google Inc. have minted at least two dozen billionaires and thousands of millionaires. Woodland Park is where Silicon Valley’s cooks, janitors and housekeepers live, often working second jobs to hang on to their homes as rents soar and wages stagnate.

The service class can’t afford to work in Silicon Valley. The foreign born usually fill that void. But California has reached peak immigration and is rapidly sliding into demographic decline. Better opportunities await elsewhere, including in the homeland. With plummeting birth rates worldwide, the absolute number of potential workers is constricted. The supply crunch is hitting Silicon Valley at both ends of the labor market. Get out while getting is good.

Jim Russell

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

July 25 • 11:07 AM

The West’s Groundwater Is Being Sucked Dry

Scientists were stunned to discover just how much groundwater has been sucked from beneath the Colorado River during the past ten years.


July 25 • 10:00 AM

Shelf Help: New Book Reviews in 100 Words or Less

What you need to know about Bad Feminist, XL Love, and The Birth of Korean Cool.



July 25 • 8:00 AM

The Consequences of Curing Childhood Cancer

The majority of American children with cancer will be cured, but it may leave them unable to have children of their own. Should preserving fertility in cancer survivors be a research priority?


July 25 • 6:00 AM

Men Find Caring, Understanding Responses Sexy. Women, Not So Much

For women looking to attract a man, there are advantages to being a caring conversationalist. But new research finds it doesn’t work the other way around.


July 25 • 4:00 AM

Arizona’s Double-Talk on Execution and Torture

The state is certain that Joseph Wood’s death was totally constitutional. But they’re looking into it.


July 24 • 4:00 PM

Overweight Americans Have the Lowest Risk of Premature Death

Why do we use the term “normal weight” when talking about BMI? What’s presented as normal certainly isn’t the norm, and it may not even be what’s most healthy.


July 24 • 2:00 PM

California’s Lax Policing of the Fracking Industry Has Put the Drought-Stricken State in a Terrible Situation

The state’s drought has forced farmers to rely on groundwater, even as aquifers have been intentionally polluted due to exemptions for the oil industry.


July 24 • 12:00 PM

What’s in a Name? The Problem With Washington’s Football Team

A senior advisor to the National Congress of American Indians once threw an embarrassing themed party that involved headdresses. He regrets that costume now, but knows his experience is one many others can relate to.


July 24 • 11:00 AM

How Wildlife Declines Are Leading to Slavery and Terrorism

As wildlife numbers dwindle, wildlife crimes are rising—and that’s fueling a raft of heinous crimes committed against humans.


July 24 • 10:58 AM

How the Supremes Pick Their Cases—and Why Obamacare Is Safe for Now

The opponents of Obamacare who went one for two in circuit court rulings earlier this week are unlikely to see their cases reach the Supreme Court.



July 24 • 9:48 AM

The People Who Are Scared of Dogs

While more people fear snakes or spiders, with dogs everywhere, cynophobia makes everyday public life a constant challenge.


July 24 • 8:00 AM

Newton’s Needle: On Scientific Self-Experimentation

It is all too easy to treat science as a platform that allows the observer to hover over the messiness of life, unobserved and untouched. But by remembering the role of the body in science, perhaps we humanize it as well.


July 24 • 6:00 AM

Commercializing the Counterculture: How the Summer Music Festival Went Mainstream

With painted Volkswagen buses, talk of “free love,” and other reminders of the Woodstock era replaced by advertising and corporate sponsorships, hippie culture may be dying, but a new subculture—a sort of purgatory between hipster and hippie—is on the rise.


July 24 • 5:00 AM

In Praise of Our Short Attention Spans

Maybe there’s a good reason why it seems like there’s been a decline in our our ability to concentrate for a prolonged period of time.


July 24 • 4:00 AM

How Stereotypes Take Shape

New research from Scotland finds they’re an unfortunate product of the way we process and share information.


July 23 • 4:00 PM

Who Doesn’t Like Atheists?

The Pew Research Center asked Americans of varying religious affiliations how they felt about each other.


July 23 • 2:00 PM

We Need to Start Tracking Patient Harm and Medical Mistakes Now

Top patient-safety experts call on Congress to step in and, among other steps, give the Centers for Disease Control and Prevention wider responsibility for measuring medical mistakes.


July 23 • 12:19 PM

How a CEO’s Fiery Battle Speeches Can Shape Ethical Behavior

CEO war speech might inspire ethical decisions internally and unethical ones among competing companies.


July 23 • 12:00 PM

Why Do We Love the ‘Kim Kardashian: Hollywood’ Game?

It’s easy enough to turn yourself into a virtual celebrity, complete with fame and mansions—but it will likely cost you.


July 23 • 11:49 AM

Modern Technology Still Doesn’t Protect Americans From Deadly Landslides

No landslide monitoring or warning systems are being used to protect vulnerable communities.


July 23 • 10:00 AM

Outing the Death-Drug Distributors

Calling all hackers: It’s time to go Assange on capital punishment.


July 23 • 8:00 AM

The Surprising Appeal of Products That Require Effort to Use

New research finds they enable consumers to re-establish a feeling that they’re in control of their lives.



Follow us


Subscribe Now

The West’s Groundwater Is Being Sucked Dry

Scientists were stunned to discover just how much groundwater has been sucked from beneath the Colorado River during the past ten years.

How Wildlife Declines Are Leading to Slavery and Terrorism

As wildlife numbers dwindle, wildlife crimes are rising—and that's fueling a raft of heinous crimes committed against humans.

How a CEO’s Fiery Battle Speeches Can Shape Ethical Behavior

CEO war speech might inspire ethical decisions internally and unethical ones among competing companies.

Modern Technology Still Doesn’t Protect Americans From Deadly Landslides

No landslide monitoring or warning systems are being used to protect vulnerable communities.

The Link Between Carbs, Gut Microbes, and Colon Cancer

Reduced carb intake among mice protected them from colon cancer.

The Big One

Today, the United States produces less than two percent of the clothing purchased by Americans. In 1990, it produced nearly 50 percent. July/August 2014

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.