The Gold Rush for the Exits
It’s the end of California as we know it…
I’m writing this with the windows sealed in our home in San Francisco. The air purifiers are on full-blast. We now have six of them. The air quality hit 200 again today and is hovering around 150 right now. But it could be worse — much worse. We could be up north where the fires are actually burning down trees and homes and cutting down lives. Such is the state of California in 2020.
I moved to California 16 years ago. After a handful of years in the southern part of the state, I made my way up north to the Bay Area and found myself. I’ve thrived both personally and professionally here. I now have a family here. This is my home.
And yet here I am effectively preemptively writing the cliched “Why I’m Leaving San Francisco” Medium post, even though I’m unlikely to leave for at least a few years. But I think this will help me clarify my own thoughts and answer questions I get asked a lot these days.
You’ve undoubtedly heard the rumblings or read the trend pieces that some combination of San Francisco, the Bay Area, or California itself is over. These will continue. They are similar to the posts about New York being over, but have their own unique properties. The main one being that there is some amount of truth to the California varietal.
The thing is: our region isn’t “over” because of COVID, or homelessness, or taxes, or fires, or even the tech scene. But it is just the right combination of all of those things which is causing many to take a look inward and at their surroundings and to wonder if it’s not time for a change.
And if not now, when?
Six months in, COVID has obviously been a nightmare. A surreal one. But California, and the Bay Area in particular, has seemingly done a pretty decent job managing it (relatively speaking). And while the virus has put a spotlight on some of the problems with living in a city, this will all pass.
The pandemic has also highlighted the concept of remote work — a trend which was already underway thanks to newer tools like Slack and Zoom — and has now been forced upon all of us. But this too shall pass. Well, not exactly pass, but we’re already feeling a bit of pushback against the all-remote workforce. For some companies, it works. For others, they’re making it work. For most, it’s going to be a hybrid model when the dust settles. Many people in centralized offices, most of the time. But not all the time. And some employees and functions will be fully remote. New companies will be formed built this way from the ground up. A shift towards centralization will be hard (but necessary) for some. But not all.
The key is that this situation has highlighted to all of us that it is possible to work remotely. Perhaps it’s more effective in some ways and undoubtedly less so in others, but we can and have made it work. It will take a while once things are back to “normal” to find the right balance, but we will.
And again, part of that balance will be people not needing to be in the office, in the Bay Area, all the time. And for some roles and functions, perhaps not even most of the time. Or even any of the time.
At the same time, this sounds enticing to people because the Bay Area, and San Francisco in particular, is expensive.¹ This has more or less always been the case, but if it’s shown that you may not need to live here to work here, why would you? There are actually reasons, of course.² But they are less good reasons than they were six months ago.
And this is especially true now because our entire region — and really, state — is constantly under a literal cloud of smoke. Some of it is bad forest policy. Some of it is climate change. At the end of the day, when you’re sitting in your boiling hot San Francisco home with your windows sealed and air purifiers running to protect your family, does it really matter?
California seems sadly fucked in this regard. This is only going to get worse. And so per the above, why you would choose to live here if you didn’t have to is… well, now a real question! Again, for some people it will still make sense. For most, even, I imagine, for a while. But for some…
A lot also gets made of the fact that California has the highest income taxes in the country. This is both very true and very secondary. This has basically always been true, but the reality is that it used to make sense to pay such a fee to live here when all of the above issues were not true. Now that they are… you’re essentially paying a massive fee to work in the heart of the tech scene, but you can’t go to an office. And you’re paying to live in a beautiful place with the great outdoors at your doorstep, but you can’t go outside.
And even if you could, those high taxes are paying for… a whole range of befuddling and complicated municipal issues. Namely, an intense and sad homelessness issue. It’s entirely unclear what that looks like post-pandemic, but it’s hard to see a world in which it’s any better than it was. And there are many ways to see how it’s worse. Again, this is not new, nor is it alone a reason to leave, necessarily. But all of these things together…
Let me try to put it more succinctly. We live in a state that offers fantastic career and life opportunities. But the pandemic has negated many of those opportunities. They will be back, but it has also highlighted that many of those same opportunities are available elsewhere or remotely. At the same time, when not avoiding a virus, we have to avoid poisonous smoke or deadly fire on an ever-increasing basis. So when the pandemic is over and we can go out and about as we once did — we still probably won’t be able to at all times. And yet we pay a premium in terms of rent and mortgages and taxes to live here. Taxes which have yet to solve some of the very real and very sad issues within our cities.
I mean, I won’t go so far as to say it’s becoming a no-brainer to leave San Francisco or the Bay Area or California in general. But I won’t not go there either given a long enough time horizon.
If I had to predict what will happen, it’s this: the pandemic will be under control at some point next year. Around the same time, there will be a full-on backlash against work from home, and people will be ready and willing to go back to the office. And it will seem like a bounce back — but it will be more of a dead cat kind.
Many who moved and/or were hired remotely will stay working in that regard. New companies will start this way. And a hybrid model will become the norm. This will slowly but surely ease the strain on Silicon Valley. It will still be the “tech capital” of the world, but it will stop growing at such a rapid clip. Other hubs will become far stronger as a result. This is a natural and good thing and was already happening, but all of the above will accelerate it.
Meanwhile, the deceleration of the Bay Area flywheel will also make it easier for people to leave the region, thus eroding the foundation of “home”, causing others to question their commitment. And others to never come here in the first place. And the environmental issues will only further pump the breaks. And once again the gold rush will be over.
¹ It is also, of course, expensive for companies to pay employees high enough salaries to be able to live in the Bay Area. The regional pay scale topic is already a bit of a thorny and complicated issue with people relocating during COVID, but it too will get sorted out with time.
² The travel-for-work element is also going to be fascinating to watch over the next few years. Presumably there will be more “internal” travel to get remote teams together in the same space from time-to-time. But there may well be less “external” travel as Zoom and the like have proven themselves invaluable (read: cost-saving) tools for meetings all around the world. Who needs to get on a plane, most of the time? We’re going to find out!
