Menus Subscribe Search

Follow us


Burgh Diaspora

downtown-sf

Downtown San Francisco. (Photo: Christian Mehlführer/Wikimedia Commons)

Why Technology Firms Are Moving Downtown

• January 17, 2014 • 9:26 AM

Downtown San Francisco. (Photo: Christian Mehlführer/Wikimedia Commons)

Young and inexperienced (and cheap) talent has never wanted to live in the suburbs. It’s just not cool.

The Innovation Economy, that epoch on the heels of manufacturing’s decline, is dying. How do I know? The cost of talent is too damn high. Dave taking me to task and supporting my assertion:

You don’t go from Big City to IBM in Dubuque. IBM is interested only in recent college grads who are willing to work cheap in exchange for some tech experience. When they hire these folks into Dubuque, they bluntly recommend against them buying a house – IBM has no intention of keeping them for many years.

IBM Dubuque represents the opposite of what you’re describing (“cut teeth in expensive Big City, then migrate to smaller place where your experience will be impressive”). They are cutting people’s teeth in cheap small city, then telling them to take a hike when they want more money.

In any case, the Dubuque, and similar efforts by IBM in Columbia MO and East Lansing MI, are not about dispersing talent from Silicon Valley or Boston, it is about keeping outsourcing costs down, because there are so many tech jobs in India now, that employees over there are able to demand higher salaries, quitting and going to a competing firm if the company refuses. Dubuque and Columbia are competing with Bangalore and Mysore, not SV and Boston.

I don’t know Dave from Adam, save the occasional comment on a blog post. I gather he has some experience in such matters. If he’s right, then IBM is in Dubuque for exactly the reason I argue. The cost of talent is too damn high.

Young and inexperienced talent is cheap talent. Dave’s jabs got me to thinking. Why would a tech firm move to where the rent is too damn high, in the urban core? The alpha and omega of innovation geography, Silicon Valley:

Last year, my colleagues at Stamen and I used a grant from the ZERO1 Biennial in San Jose (with the support of the James Irvine Foundation) to follow the corporate commuter shuttles around San Francisco, count people getting on and off them, and collate and combine their reports into a map of the area’s clandestine private transportation network. …

… Egon Terplan at SPUR, a non-profit organization that promotes good planning and government for the city of San Francisco, suggested a novel way of thinking about the shuttles. That is, conventional wisdom has it that the routes are a way for companies to respond to the desires of young, hip urbanites who want to experience the frisson of urban life in between their shifts down to soulless suburbia.

But when you look at the zoning regulations in Palo Alto, you learn that the tech companies have basically run out of room to build parking lots on their campuses — they can’t grow any further using the model of one parking spot per worker. So it’s logical that the tech companies would need to use shuttles to bring their workers to campus.

And where’s the densest place in the Bay Area, the place where the largest numbers of people can use the smallest numbers of buses? By this logic it’s not the youngsters that have chosen San Francisco to gentrify, but the Facebooks and the Googles who are incidentally causing this kind of development through the simple calculus of where they can house the most workers.

That they’re young and educated and lots of them are millionaires is kind of beside the point. Only a map is going to lead you to this kind of thinking. It’s about more than gentrification as we’ve experienced it thus far: It’s about an entirely reconfigured relationship between density and sprawl, and it’s going to need new maps to help us navigate this landscape.

Emphasis added. Conventional wisdom supports my converging Innovation Economy hypothesis. Cater to the wants and needs of talent and win the war for talent. Great, save that isn’t what the private bus map reveals. Cramming employees into San Francisco neighborhoods is a cost effective way to house talent while sparing dearer real estate for production. I’m still standing on firm ground.

Nonetheless, tech firms are moving to downtown San Francisco. Why? I didn’t have a good answer for that question until I read this story about businesses abandoning the suburbs for the urban core of Chicago:

For longtime employees, however, corporate moves to the city mean longer commutes and disrupted schedules and family life. And the corporate quest for youth and innovation can leave some workers feeling slightly unwelcome.

“We joked about the older suburbanites being excluded from the new [business] model,” said Jon Scherf, age 42, a marketing professional who left Hillshire shortly before its December 2012 move to downtown Chicago. “They would’ve been happy to have me but they’re also happy to bring in new blood.”

Companies say some attrition is normal. Motorola is offering full relocation packages for employees who choose to sell their suburban homes and move closer to the new office. Still, management expects 2% of its staff to depart and about 75% to stay after the relocation. The remainder, said Mr. Sullivan, will likely be “on the fence.”

The shift to urban headquarters favors cities such as Chicago, San Francisco and Boston, destinations of choice for recent college graduates, while aging cities like Cleveland and Detroit struggle with corporate flight and economic decline.

Emphasis added. Welcome back to Dubuque, Iowa: “IBM is interested only in recent college grads who are willing to work cheap in exchange for some tech experience.” Dump the older and more expensive suburban-based employee. Plug in the millennial intern dazzled by the streetcar. Chicago is so cool I would work there for nothing.

Jim Russell
Jim Russell is a geographer studying the relationship between migration and economic development.

More From Jim Russell

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

Recent Posts

October 31 • 10:15 AM

Levels of Depression Could Be Evaluated Through Measurements of Acoustic Speech

Engineers find tell-tale signs in speech patterns of the depressed.


October 31 • 8:00 AM

Who Wants a Cute Congressman?

You probably do—even if you won’t admit it. In politics, looks aren’t everything, but they’re definitely something.


October 31 • 7:00 AM

Why Scientists Make Promises They Can’t Keep

A research proposal that is totally upfront about the uncertainty of the scientific process and its potential benefits might never pass governmental muster.


October 31 • 6:12 AM

The Psychology of a Horror Movie Fan

Scientists have tried to figure out the appeal of axe murderers and creepy dolls, but it mostly remains a spooky mystery.


October 31 • 4:00 AM

The Power of Third Person Plural on Support for Public Policies

Researchers find citizens react differently to policy proposals when they’re framed as impacting “people,” as opposed to “you.”


October 30 • 4:00 PM

I Should Have Told My High School Students About My Struggle With Drinking

As a teacher, my students confided in me about many harrowing aspects of their lives. I never crossed the line and shared my biggest problem with them—but now I wish I had.


October 30 • 2:00 PM

How Dark Money Got a Mining Company Everything It Wanted

An accidentally released court filing reveals how one company secretly gave money to a non-profit that helped get favorable mining legislation passed.


October 30 • 12:00 PM

The Halloween Industrial Complex

The scariest thing about Halloween might be just how seriously we take it. For this week’s holiday, Americans of all ages will spend more than $5 billion on disposable costumes and bite-size candy.


October 30 • 10:00 AM

Sky’s the Limit: The Case for Selling Air Rights

Lower taxes and debt, increased revenue for the city, and a much better use of space in already dense environments: Selling air rights and encouraging upward growth seem like no-brainers, but NIMBY resistance and philosophical barriers remain.


October 30 • 9:00 AM

Cycles of Fear and Bias in the Criminal Justice System

Exploring the psychological roots of racial disparity in U.S. prisons.


October 30 • 8:00 AM

How Do You Make a Living, Email Newsletter Writer?

Noah Davis talks to Wait But Why writer Tim Urban about the newsletter concept, the research process, and escaping “money-flushing toilet” status.



October 30 • 6:00 AM

Dreamers of the Carbon-Free Dream

Can California go full-renewable?


October 30 • 5:08 AM

We’re Not So Great at Rejecting Each Other

And it’s probably something we should work on.


October 30 • 4:00 AM

He’s Definitely a Liberal—Just Check Out His Brain Scan

New research finds political ideology can be easily determined by examining how one’s brain reacts to disgusting images.


October 29 • 4:00 PM

Should We Prosecute Climate Change Protesters Who Break the Law?

A conversation with Bristol County, Massachusetts, District Attorney Sam Sutter, who dropped steep charges against two climate change protesters.


October 29 • 2:23 PM

Innovation Geography: The Beginning of the End for Silicon Valley

Will a lack of affordable housing hinder the growth of creative start-ups?


October 29 • 2:00 PM

Trapped in the Tobacco Debt Trap

A refinance of Niagara County, New York’s tobacco bonds was good news—but for investors, not taxpayers.


October 29 • 12:00 PM

Purity and Self-Mutilation in Thailand

During the nine-day Phuket Vegetarian Festival, a group of chosen ones known as the mah song torture themselves in order to redirect bad luck and misfortune away from their communities and ensure a year of prosperity.


October 29 • 10:00 AM

Can Proposition 47 Solve California’s Problem With Mass Incarceration?

Reducing penalties for low-level felonies could be the next step in rolling back draconian sentencing laws and addressing the criminal justice system’s long legacy of racism.


October 29 • 9:00 AM

Chronic Fatigue Syndrome and the Brain

Neuroscientists find less—but potentially stronger—white matter in the brains of patients with CFS.


October 29 • 8:00 AM

America’s Bathrooms Are a Total Failure

No matter which American bathroom is crowned in this year’s America’s Best Restroom contest, it will still have a host of terrible flaws.



October 29 • 6:00 AM

Tell Us What You Really Think

In politics, are we always just looking out for No. 1?


October 29 • 4:00 AM

Racial Resentment Drives Tea Party Membership

New research finds a strong link between tea party membership and anti-black feelings.


Follow us


Levels of Depression Could Be Evaluated Through Measurements of Acoustic Speech

Engineers find tell-tale signs in speech patterns of the depressed.

We’re Not So Great at Rejecting Each Other

And it's probably something we should work on.

Chronic Fatigue Syndrome and the Brain

Neuroscientists find less—but potentially stronger—white matter in the brains of patients with CFS.

Incumbents, Pray for Rain

Come next Tuesday, rain could push voters toward safer, more predictable candidates.

Could Economics Benefit From Computer Science Thinking?

Computational complexity could offer new insight into old ideas in biology and, yes, even the dismal science.

The Big One

One town, Champlain, New York, was the source of nearly half the scams targeting small businesses in the United States last year. November/December 2014

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