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Silicon Valley’s growing descent into wealth inequality is particularly striking when comparing Big Tech with the small businesses of the San Francisco Bay Area.
Consider: Although Alphabet Inc. GOOGL,
GOOG,
building at a breakneck pace – Google’s parent company is planning an 80-acre mixed-use campus in downtown San Jose that will house 25,000 employees – and hiring at a rapid pace, the valley’s service industry is in shambles . Jobs in this industry fell 41% in 2020 amid a wave of closures and cuts to operations at restaurants, beauty salons and mom-and-pop stores, while Big Tech added jobs technological.
“I feel like a plane crash survivor, but with remorse and regret,” Victor Escobedo, owner of two Mexican restaurants, a food truck and a salsa business in the area, told MarketWatch. from San Francisco Bay. “I consider myself one of the lucky ones because I streamlined operations in 2018-2020 to better manage deliveries.”
“We don’t consider our company to be better than others; we are a neighborhood restaurant that feeds people who cannot leave their homes, ”Escobedo said. “Once again, we are among the lucky ones.”
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Equally glaring is the chasm between Silicon Valley’s Top 15 Tech Employers and their smaller peers. 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 the parent company, Microsoft Corp. MSFT, Amazon, Salesforce.com Inc. CRM and Uber Technologies Inc. UBER,
– had sales of around $ 1.35 billion in 2020, which would collectively give them the 15th highest gross domestic product in the world, between Spain and Mexico.
“Will Silicon Valley remain Silicon Valley? It depends on your perspective, ”Rachel Massaro, research director at Joint Venture Silicon Valley’s Institute for Area Studies, told MarketWatch. “What the data is showing us is that we continue to grow the tech workforce, especially among the top 15 tech employers. The magnitude of this growth is huge compared to anywhere else. “
The disparity, based on key economic indicators compiled by the 2021 Silicon Valley Index, is compelling, indicating that the concentration of corporate power in the region is increasingly relying on fewer companies.
Jobs
Tech jobs increased in 2020 even as the pandemic ravaged much of the economy. The share of the Silicon Valley workforce in technology has increased from 26% in mid-2019 to 30% in mid-2020. At the same time, the share of community infrastructure
and services increased from 50% in 2019 to 46% in 2020.
Of the 619,000 tech jobs in Silicon Valley and San Francisco, 38% are employed at one of the region’s 15 largest tech companies. Google and Apple employ the largest shares, around 7% each, followed by Facebook (4%) as well as Cisco, Amazon and Oracle AMZN,
(3% each). Jobs in computer hardware, software, internet and information services, and biotechnology remained 47% higher in mid-2020 (up more than 147,000 jobs) than during the Great Recession – low in 2010.
Meanwhile, job losses linked to the pandemic have sent community infrastructure and service jobs down (down 15% between mid-2019 and mid-2020) – especially personal services such as than beauty salons, nail salons and dry cleaning services (-54%) and accommodation and food services (-41%).
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Transportation, and contract workers in particular, was the hardest hit, led by 6,700 at Uber (representing 25% of the company’s workforce) and nearly 1,000 at Lyft Inc. LYFT,
because consumers have stopped using carpooling services. Consumer tech companies accounted for the second highest share of Bay Area pandemic layoffs, with the largest losses at Yelp Inc. YELP,
(1000 employees), Juul Labs (900) and Eventbrite Inc. EB,
(500).
Few workers will return to work before mid-year, when most Americans will be vaccinated, according to an article on the Valley’s medium-term outlook by Steve Levy, senior economist at the Center for Continuing Study of the California Economy at Palo Alto, California.
“The shutdown of most in-person economic activities in the spring of 2020 has led to a dramatic rise in unemployment, especially in hard-hit sectors like recreation, hospitality and personal services,” Sarah Bohn, vice president of the research at the Public Policy Institute of California (PPIC), said in a report released in December. “Nine months later, the labor market has improved somewhat but remains precarious, with low-income workers the most affected by the fallout.”
The offices
The footprint of large tech companies has grown despite construction delays linked to the pandemic. More new commercial space was under construction than ever before (21 million square feet) and an additional 14 million square feet is in the works.
Only six big tech companies – Google, Apple, Facebook, Amazon, LinkedIn and Netflix Inc. NFLX,
– occupy a total of 19% of all available office / research and development space in Santa Clara County, Menlo Park and Fremont, consuming 48.5 million square feet. Google occupies the most, with around 22.1 million square feet in 2020.
Major construction projects underway at the end of 2020 included
owner-user developments such as ADBE from Adobe Inc.,
Downtown San Jose North Tower, 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’s FTNT Inc.,
head office in Sunnyvale.
Despite delays related to the pandemic, nearly 5 million square feet of new retail space was delivered to the Silicon Valley market in 2020 – more than a third of which was attributed to technology.
As tech workers fled the expensive San Francisco Bay Area to the outlying suburbs of northern and southern California, the ability to work from home allowed them to stay in the field and visit headquarters. of their employers in the Valley at will, tech recruiter Andy Price told MarketWatch.
The joint venture report did not disclose 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 are concentrated among working poor, African Americans, Latinos, and women, PPIC’s Bohn told MarketWatch.
The current crisis, she says, threatens to “reinforce existing inequalities and deepen the state’s long-standing economic divide.”
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