close
Money Matters

Silicon Valley needs to be a better neighbour

By Richard Florida
Mon, 08, 17

For most of history, high-tech companies and the entrepreneurs that founded them were seen not just as job creators but as heroes, from Benjamin Franklin and his eponymous stove to Henry Ford’s assembly lines, from Andy Grove’s semiconductors to Bill Gates’ software and Steve Jobs’ laptops and mobile phones.

That is no longer the case. Today, tech entrepreneurs are increasingly seen as contemporary versions of the old “robber barons,” master manipulators of huge, near-monopolistic enterprises that exploit their workers and gouge their customers. Uber has been under fire for its labour practices and its toxic “bro” culture, while Airbnb has been accused of unfairly competing with hotels, evading taxes and safety regulations, and exacerbating housing shortages. San Francisco’s Bay Area has seen substantial protests over the shuttle busses that move tech workers between their homes downtown and the tech complexes of Silicon Valley.

The backlash against technology companies may be understandable, but it is potentially disastrous for our cities and the economy as a whole. For all their flaws, the groups remain important sources of innovation that power wealth creation, generate new and better jobs, lift living standards, and pump much-needed revenue into public coffers. Nobody can do more to halt this backlash than the tech companies - by becoming better neighbours in the cities they depend upon for their talent and growth.

Tech groups have surged into cities over the past decade or so, because that’s where knowledge workers increasingly prefer to live and work. Google’s New York City complex in the old Port Authority building in Lower Manhattan is bigger than its Googleplex headquarters in suburban Silicon Valley. Another huge complex is under construction in London. Amazon, long housed in downtown Seattle, occupies between 15 and 20 per cent of that city’s office space.

Urban centres are the top locations for tech start-ups as well. Downtown San Francisco and downtown New York outrank Silicon Valley as a source of venture capital-backed start-ups. Across the US as a whole, nearly six in 10 high-tech start-ups are in urban neighbourhoods. London has emerged as one of the world’s leading tech hubs.

There is little doubt that the urban shift in the tech industry has put pressure on housing costs in superstar cities. The income gap between techies and many of their new urban neighbours is wide. Cities cannot survive when nurses, paramedics, teachers and police officers can no longer afford to live in them.

But tech companies have the resources and capabilities to change cities for the better and lay the groundwork for a more inclusive prosperity.

They can afford to do their part to alleviate the housing crunch in cities by investing in and building workforce housing for their employees and affordable housing for the less-advantaged in and around their urban complexes - and by pressing cities to liberalise their zoning and building codes to allow for denser development in general. Amazon has placed a homeless shelter in its new headquarters in Seattle, and Google has pledged to include affordable housing in its new complex in downtown San Jose.

Tech companies can also put their weight and money behind more and better public transport. Their own shuttle buses look selfish and self-interested because they are. Salesforce’s decision to buy the naming rights to a new transit hub in San Francisco for $110m has been deemed a tacky self-promotion by some, but it shows that high-tech groups are beginning to recognise the importance of much-needed transit investment.

Perhaps most importantly, tech companies have the means and the know-how to lead their city-regions and the local economy in upgrading the millions of routine service jobs in catering, office work, retail, and the caring professions in which nearly half of workers toil for very low wages. Instead of staffing their on-site healthcare facilities, gyms, gourmet cafés and other amenities with outsourced contract labour, they can hire service workers directly and pay them better wages. Tech companies can help us turn precarious low-wage service jobs into the middle-class jobs we so badly need today.

Leading high-tech companies have generated a host of challenges for cities. They need to apply their creative energy and innovative prowess to become the solution rather than the problem.