Silicon Valley’s deepening descent into wealth inequality is particularly marked when Big Tech is compared to small businesses in the San Francisco Bay Area.
Consider: While Alphabet Inc. GOOGL,
is building at a breakneck pace: Google’s parent company plans an 80-acre mixed-use campus in downtown San Jose that will house 25,000 employees, and hiring at a steady pace, the service industry in the valley is in shambles . Jobs in that sector fell 41% in 2020 amid a wave of closures and reduced operations at restaurants, hair salons and family-friendly stores, while Big Tech added tech jobs.
“I feel like a survivor of a plane crash, but with remorse and regret,” 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 optimized operations in 2018-20 to better handle deliveries.”
“We do not consider our business better than others; We are a neighborhood restaurant that feeds people who cannot leave the house, ”Escobedo said. “Again, we are one of the lucky ones.”
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The gulf between the top 15 tech employers in Silicon Valley and their smaller peers is equally stark. 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 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 the Joint Venture Silicon Valley Institute for Regional Studies, told MarketWatch. “What the data shows us is that we continue to grow the tech workforce, especially among the top 15 tech employers. The magnitude of that growth is enormous compared to anywhere else. “
The disparity, based on key economic indicators compiled by the Silicon Valley Index 2021, is compelling, indicating that the concentration of corporate power in the region is increasingly based on fewer companies.
Tech jobs grew in 2020 even as the pandemic devastated much of the economy. Silicon Valley’s workforce participation in technology grew from 26% in mid-2019 to 30% in mid-2020. At the same time, participation in community infrastructure
and services fell 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 15 largest tech companies in the region. Google and Apple employ the largest stocks, about 7% each, followed by Facebook (4%), as well as Cisco, Amazon and Oracle AMZN.
(3% each). Jobs in hardware, software, Internet, and information and biotech services remained 47% higher in mid-2020 (more than 147,000 jobs) than the Great Recession low in 2010.
Meanwhile, the pandemic-related job loss was a hammer for infrastructure jobs and community services (down 15% between mid-2019 and mid-2020), especially personal services such as beauty salons, nail salons and services dry cleaning (-54%) and accommodation and food services (-41%).
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Transportation, and outsourced workers in particular, suffered the biggest job impact, led by 6,700 at Uber (representing 25% of the company’s workforce) and nearly 1,000 at Lyft Inc. LYFT,
as consumers stopped using ride-sharing services. Consumer industry technology companies accounted for the second highest proportion of layoffs during the Bay Area pandemic period, with the largest losses at Yelp Inc. YELP,
(1,000 employees), Juul Labs (900) and Eventbrite Inc. EB,
Few workers will return to their jobs until the middle of the year, when most Americans are vaccinated, according to a paper on the medium-term outlook for the Valley by Steve Levy, senior economist at the Center for the Continuous Study of the Economics of California in Palo Alto, California.
“The shutdown of most in-person economic activity in the spring of 2020 led to a dramatic rise in unemployment, especially in hard-hit industries such as entertainment, hospitality and personal services,” said Sarah Bohn, vice president of research at the California Institute of Public Policy. (PPIC) said in a report issued in December. “Nine months later, the job market has improved a bit, but it is still precarious, and low-income workers are hit the hardest.”
The footprint of major tech companies increased despite construction delays related to the pandemic. More new commercial spaces were being built than ever (21 million square feet) and another 14 million square feet are in the pipeline.
Just six big tech companies: Google, Apple, Facebook, Amazon, LinkedIn, and Netflix Inc.NFLX,
– occupy a combined 19% of all available office / research and development space in Santa Clara County, Menlo Park and Fremont, gobbling up 48.5 million square feet. Google takes up the largest share, at about 22.1 million square feet in 2020.
The major construction projects underway at the end of 2020 included large
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.
headquarters in Sunnyvale.
Despite pandemic-related delays, 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 for technology.
While tech workers have fled the expensive San Francisco Bay Area to the outlying suburbs of Northern and Southern California, the ability to work from home has allowed them to stay in the field and visit their employers’ headquarters in the valley. at will, tech recruiter Andy Price told MarketWatch.
The Joint Venture report did not reveal data on the use of the small business real estate space.
While past recessions have exacerbated income inequality in California, the effects of the pandemic are concentrated among low-income workers, African Americans, Latinos and women, PPIC’s Bohn told MarketWatch.
The current crisis, he says, threatens to “reinforce existing inequalities and deepen the long-standing economic division of the state.”