Silicon Valley’s ever-deepening descent into wealth inequality is especially stark when Big Tech is compared to the small businesses of the San Francisco Bay Area.
Consider: While Alphabet Inc. GOOGL,
GOOG,
is building at breakneck speed – Google’s parent company plans an 80-acre mixed-use campus in downtown San Jose that will employ 25,000 workers – and with steady recruitment, the valley’s services industry is in ruins. Jobs in that sector plummeted 41% in 2020 amid a wave of closures and scaling back operations in restaurants, beauty salons and mom-and-pop shops, while Big Tech added tech jobs.
“I feel like a plane crash survivor, but with regrets and regrets,” 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 streamlined operations in 2018-2020 to better handle deliveries.”
“We don’t see our company as better than others; we are a neighborhood restaurant that feeds people who cannot leave their homes, ”said Escobedo. “Again, we are one of the lucky ones.”
Don’t Miss: Silicon Valley Not Suffering From a Technology Exodus, and Money Flowing In at Record Speed
The gap between the top 15 tech employers in Silicon Valley and their smaller peers is just as 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 trillion in 2020, which would collectively make them the 15th highest gross domestic product in the world, between Spain and Mexico.
Silicon Valley will remain Silicon Valley? It depends on your perspective, ”Rachel Massaro, research director at Joint Venture Silicon Valley’s Institute for Regional Studies, told MarketWatch. “What shows us is that we will continue to grow the technical workforce, especially among the top 15 largest technical employers. The magnitude of that growth is huge compared to anywhere else. “
The inequality, based on the key economic indicators compiled by the Silicon Valley Index 2021, is compelling and indicates that the concentration of corporate power in the region is increasingly vested in fewer companies.
The jobs
Tech jobs grew in 2020, even as the pandemic devastated much of the economy. The share of Silicon Valley’s workforce in technology grew from 26% in mid-2019 to 30% in mid-2020. At the same time, the share in community infrastructure
and services decreased from 50% in 2019 to 46% in 2020.
Of the 619,000 tech jobs in Silicon Valley and San Francisco, 38% work for one of the region’s 15 largest technology companies. Google and Apple hold the largest shares at around 7% each, followed by Facebook (4%) and Cisco, Amazon and Oracle AMZN,
(3% each). The number of jobs in computer hardware, software, the Internet and information services and biotechnology remained 47% higher by mid-2020 (more than 147,000 jobs increased) than the trough of the Great Recession in 2010.
Meanwhile, job losses related to pandemics had been a sledgehammer to community infrastructure and service jobs (15% less between mid-2019 and mid-2020) – especially personal services such as beauty salons, nail salons and dry cleaning services (-54%), and accommodation and meals (-41%).
Small Business Diaries: Learn how a Bay Area bar and a San Francisco corset maker weathered the pandemic
Transportation, and especially indentured servants, got the most jobs, led by 6,700 at Uber (accounting for 25% of the company’s workforce), and nearly 1,000 at Lyft Inc. LYFT,
because consumers stopped using taxi services. Consumer tech companies accounted for the second highest 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).
According to a paper on the medium-term outlook for the valley by Steve Levy, senior economist at the Center for Continuing Study of the California Economy in Palo Alto, California, few workers will return to their jobs until mid-year, when most Americans have been vaccinated.
“The cessation of most personal economic activities in the spring of 2020 led to a dramatic spike in unemployment – especially in hard-hit sectors such as leisure, hospitality and personal services,” Sarah Bohn, vice president of research at Public Policy Institute of California (PPIC), said in a December report. “Nine months later, the labor market has improved somewhat, but is still uncertain, with low-income workers bearing the brunt of the consequences.”
The offices
The footprint of the major tech companies grew despite pandemic-related construction delays. More new commercial space was under construction than ever before (21 million square feet) and another 14 million square feet is in the pipeline.
Only six major technology companies – Google, Apple, Facebook, Amazon, LinkedIn and Netflix Inc. NFLX,
– collectively occupying 19% of all available office / research and development space in Santa Clara County, Menlo Park and Fremont and devouring 48.5 million square feet. Google occupies the most, with about 22.1 million square feet in 2020.
Major construction projects underway in late 2020 included major ones
owner-user developments such as ADBE from Adobe Inc.,
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,
head office in Sunnyvale.
Despite pandemic-related delays, nearly 5 million square feet of new commercial space was delivered to the Silicon Valley market by 2020, more than a third of which came from technology.
As tech workers have fled the pricey San Francisco Bay Area to remote suburbs of Northern and Southern California, the ability to work from home has allowed them to stay in the field and headquarters for their employers in the valley tech recruiter Andy Price told MarketWatch.
The Joint Venture report did not include 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 have been concentrated among low-income workers, African Americans, Latinos and women, PPIC’s Bohn told MarketWatch.
The current crisis, she says, threatens to “exacerbate existing inequalities and deepen the state’s long-standing economic divide.”