Menus Subscribe Search

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

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

Recent Posts

September 17 • 8:00 AM

Why Don’t We Have Pay Toilets in America?

Forty years ago, thanks to an organization founded by four high school friends, human rights beat out the free market—and now we can all pee for free.


September 17 • 6:32 AM

Do Conspiracy Theorists Feed on Unsuspecting Internet Trolls?

Not literally, but debunkers and satirists do fuel conspiracy theorists’ appetites.


September 17 • 6:00 AM

The Grateful Dig: An Archaeologist Excavates a Tie-Dyed Modern Stereotype

What California’s senior state archaeologist discovered in the ruins of a hippie commune.


September 17 • 4:00 AM

The Strong Symbolic Power of Emptying Pockets

Israeli researchers find the symbolic act of emptying a receptacle can impact our behavior, and not for the better.


September 16 • 4:00 PM

Why Is LiveJournal Helping Russia Block a Prominent Critic of Vladimir Putin?

The U.S. blogging company is showing an error message to users inside Russia who try to read the blog of Alexei Navalny, a prominent politician and critic of the Russian government.


September 16 • 2:00 PM

Man Up, Ladies! … But Not Too Much

Too often, women are asked to display masculine traits in order to be successful in the workplace.



September 16 • 12:00 PM

What Makes You So Smart, Brilliant 12-Year-Old?

Charles Wang is going to rule the world.


September 16 • 10:09 AM

No Innovation Without Migration: The Harlem Renaissance

The Harlem Renaissance wasn’t a place, but an era of migration. It would have happened even without New York City.


September 16 • 10:00 AM

A Law Professor Walks Into a Creative Writing Workshop

One academic makes the case for learning how to write.



September 16 • 7:23 AM

Does Not Checking Your Buddy’s Facebook Updates Make You a Bad Friend?

An etiquette expert, a social scientist, and an old pal of mine ponder the ever-shifting rules of friendship.



September 16 • 6:12 AM

3-D Movies Aren’t That Special

Psychologists find that 3-D doesn’t have any extra emotional impact.


September 16 • 6:00 AM

What Color Is Your Pygmy Goat?

The fierce battle over genetic purity, writ small. Very small.



September 15 • 4:00 PM

The Average Prisoner Is Visited Only Twice While Incarcerated

And black prisoners receive even fewer visitors.


September 15 • 2:00 PM

Gambling With America’s Health

The public health costs of legal gambling.


September 15 • 12:23 PM

The Scent of a Conservative

We are attracted to the body odor of others with similar political beliefs, according to new research.


September 15 • 12:00 PM

2014: A Pretty Average Election

Don’t get too worked up over this year’s congressional mid-terms.


September 15 • 10:00 AM

Online Harassment of Women Isn’t Just a Gamer Problem

By blaming specific subcultures, we ignore a much larger and more troubling social pathology.


September 15 • 8:00 AM

Atheists Seen as a Threat to Moral Values

New research attempts to pinpoint why non-believers are widely disliked and distrusted.


September 15 • 6:12 AM

To Protect Against Meltdowns, Banks Must Map Financial Interconnections

A new model suggests looking beyond balance sheets, studying the network of investment as well.


September 15 • 6:00 AM

Interview With a Drug Dealer

What happens when the illicit product you’ve made your living off of finally becomes legal?


September 15 • 4:00 AM

A Feeling of Control: How America Can Finally Learn to Deal With Its Impulses

The ability to delay gratification has been held up as the one character trait to rule them all—the key to academic success, financial security, and social well-being. But willpower isn’t the answer. The new, emotional science of self-regulation.


Follow us


Do Conspiracy Theorists Feed on Unsuspecting Internet Trolls?

Not literally, but debunkers and satirists do fuel conspiracy theorists' appetites.

3-D Movies Aren’t That Special

Psychologists find that 3-D doesn't have any extra emotional impact.

To Protect Against Meltdowns, Banks Must Map Financial Interconnections

A new model suggests looking beyond balance sheets, studying the network of investment as well.

Big Government, Happy Citizens?

You may like to talk about how much happier you'd be if the government didn't interfere with your life, but that's not what the research shows.

Give Yourself a Present for the Future

Psychologists discover that we underestimate the value of looking back.

The Big One

One in three drivers in Brooklyn's Park Slope—at certain times of day—is just looking for parking. The same goes for drivers in Manhattan's SoHo. September/October 2014 new-big-one-3

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