Housing costs key factor

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Goodbye, Silicon Valley. Hello, Silicon Slopes.

The tech hubs of San Francisco and San Jose fell precipitously in this year’s ranking of U.S. cities’ economic performance released Wednesday morning by the Milken Institute, a nonpartisan think tank that’s published the index every year since 1999. San Francisco and San Jose, which ranked Nos. 1 and 5 last year, respectively, fell to Nos. 24 and 22. Meanwhile, the Provo-Orem region in Utah captured the No. 1 spot, and Salt Lake City rose to No. 4. Utah, the report notes, “has been a recipient of the tech sector’s out-migration from the more expensive coastal cities of California,” attracting companies like Qualtrics, Vivint and SmartCitizen.

The report — which ranked cities based on jobs, wages, high-tech growth, housing affordability and household broadband access — found that the pandemic’s shift to remote work has likely affected California more than any other state. With companies like Salesforce, Twitter, Square, Dropbox, Yelp and Pinterest permitting most employees to permanently work from home, downtown San Francisco is reeling. And Silicon Valley companies Hewlett Packard Enterprise and Oracle recently decamped to Texas, though Google is still planning to expand its offices in San Jose and San Francisco.

  • Kevin Klowden, executive director of the Milken Institute Center for Regional Economics: “The pandemic has had an outsized impact on cities where the economic effects of the current recession are exacerbated by high housing costs.”

Of the 10 cities that saw the biggest drop in rankings, three were in California: Salinas, Santa Cruz and Oakland. The report attributed this partly to “extremely high housing costs” due to their proximity to the San Francisco Bay Area, noting that many residents don’t have “jobs and salaries in high-tech industries to compensate for high costs of living.”

But costs can even be prohibitive for those who do. After CJ Paillant, a product manager for a Silicon Valley software company, lost his job early in the pandemic, his $5,400 monthly rent payments began piling up. He and his roommate now owe $43,805 in rent, CalMatters’ Laurence Du Sault reports.

  • Paillant“I got stuck in my luxury apartment. Now I’ve got to raise this money. My life feels like a movie.”

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics. 

 

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