Imagine a stressed out technical worker living in San Francisco. Even though he earns a high wage, he must contend with a mind-numbing commute, jaw-dropping rent and a nose-bleed-inducing cost of living. Many savvy professionals in this position have discovered a wealth- and sanity-preserving alternative: relocating to Arizona.
Phoenix has become the antidote to the crushing costs and pressures of Silicon Valley and the Bay Area. It boasts lower costs and affordable housing stock, a fact that has attracted a number of high-tech start-ups to the growing downtown.
Wages, energy and taxes are about 25 percent lower in Phoenix than in San Francisco. Unemployment has dropped below 5 percent, an eight-year low, and technology jobs have increased by 18.6 percent from 2010 to 2015. Several Silicon Valley companies, including Uber and Yelp, have come to Phoenix to open their regional offices.
The San Francisco/San Jose metropolitan mega-region has seen a 7 percent increase in engineering and tech employment in the last year, equal to about 530,000 jobs. While San Francisco has had the most explosive hi-tech job growth (up 71.6 percent from 2010 to 2015), many cities other than Phoenix have also benefited by creating more technology-centric jobs, including Raleigh (+38.5 percent), Austin (+37.2 percent), Nashville (+30.0 percent) and San Jose (+28.7 percent).
The San Francisco Bay area is, to some extent, a victim of its own success. Businesses there must pay wages so high that many find it more economical to expand to Salt Lake City, Boise, Phoenix or other cities where housing and salaries are less expensive.
For instance, Weebly, a Bay Area company that makes website-building software, has opened a Scottsdale, Arizona, office and used the savings to convert some employees from freelance to full-time. The Weebly branch office still offers some of the perks associated with Silicon Valley firms, including catered lunches and a massage room.
Housing is one major contributing factor why companies expand out of the Bay Area. The median house pricing in San Francisco is $812,000 versus $221,000 in Phoenix. This provides profound lifestyle improvements to high-tech professionals. For example, Bay Area folks who have had to rent a decrepit home and commute an hour to work might be able to buy a larger, newer home in Scottsdale and spend maybe only 10 minutes commuting to the office.
San Francisco has attracted many high-tech startups, putting additional pressure on the city's infrastructure, housing prices and parking. These companies might have trouble providing affordable jobs to entry-level workers in sales and customer service. By moving those jobs to Arizona, the high-tech firms can afford to hire good workers, and those workers can afford to live near the office. Really, it's a win-win situation.
Cities like Phoenix would like to see more senior engineering jobs relocate as well. It will be interesting to see how the culture clash between liberal Silicon Valley and conservative Arizona plays out as the number of relocated workers grows.
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