Yahoo Finance Austin named big winner in Covid tech worker migration
Austin has been named one of the biggest economic winners of the migration of tech workers from Silicon Valley during the coronavirus pandemic.
Local businesses and economic data reveal that the Texas state capital has seen an influx of companies and workers from California’s Bay Area.
Long a centre for technology thanks to IBM, Texas Instruments, and the 1984 launch of the Dell PC company by Michael Dell, a University of Texas at Austin alumni, the city always played second fiddle to the might of Silicon Valley in the era of mobile phones and social media.
At the onset of the pandemic in 2020, the cancellation of SXSW, Austin’s annual tech and arts forum, was a jolt to the city and the tech industry — a sign that things were about to get very bad.
However, the upended economy of lockdowns and enforced remote working began to loosen Silicon Valley’s grip on the tech industry.
The San Francisco Chronicle reports that studies show that while there wasn’t an exodus of firms from the Bay Area, Austin was a major beneficiary of company expansions and the migration of tech workers.
Many asked why they should struggle in one of the country’s most expensive housing markets when they could afford so much more for their money in Texas.
Austin subsequently has the highest net inflow of tech workers of any major US city over the year from May 2020 to April 2021. The perception that workers needed to be in close proximity to their employers’ headquarters was seemingly broken.
According to Linkedin data cited by the Chronicle, the Texas capital gained 217 tech workers for every 10,000 users, while the Bay Area lost 80 per 10,000.
Tech firms have responded to this shift, most notably with Oracle relocating its headquarters from Redwood City to Austin after 44 years in the Bay Area.
Google has leased a new tower currently under construction, Apple is opening a second campus to the north of the city, and Tesla announced the location of its new Gigafactory to the east. One of Facebook’s largest offices in the US is in the heart of the city.
Local authorities are also offering incentives to lure more firms, including property and payroll tax reimbursements, with better terms offered if policies are adopted that benefit the community, such as working with minority and women’s groups or offering paid sick leave.
The city has now regained 97 per cent of the jobs it lost during the pandemic, according to the chamber of commerce. Unemployment is down to 4.6 per cent from a peak of 12 per cent in April 2020. By contrast, San Francisco has lagged behind bringing employment back to pre-pandemic levels.
While this is all good news for Texas, don’t count out California just yet. The state has defied doomsayers and surprised everyone by turning a projected $54bn budget deficit into a $75.7bn surplus. There is also $27bn in federal aid still to spend.
Even as the tech majors expand in Austin, they are also investing more in California – Google plans to invest $1bn in California real estate, and Apple has signed a huge lease to expand in Sunnyvale.
The Golden State also leads in venture capital needed to fund start-ups and take tech firms to the next level. According to data from research company Pitchbook, VC deal activity in the Bay Area topped $61.5bn in 2020, and in Los Angeles, it was $19.3bn. Austin’s total was just $2.3bn.
While the Bay Area will continue to be the centre of the tech industry, other metropolitan areas have benefitted from the upheaval of the pandemic economy to capture a share of the business.
Austin appears to be leading the way.
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