Will The Bay Area Lose Jobs Now That Employees Can Work from Anywhere?

No matter how inclined (or not) businesses were to work remotely before 2020, the coronavirus pandemic eliminated the question of whether working from home is an option. We’re doing it. Now that the ice is broken, will professional jobs move out of the Bay Area once and for all? Will companies relocate to cheaper areas? Will everyone keep working remotely, making the Bay Area less of a center for employment and innovation? I don’t think so, and here’s why.

This Isn’t A New Question

Companies have been looking to move people out of the Bay Area for a long time. I started working in San Francisco in 1999, and shortly thereafter we experienced the dot com bust. Companies were in cost-cutting mode, trying to get people out of the area to more affordable locations. While many larger companies successfully moved certain lower-level and lower-skilled functions to cheaper locations, many of the higher-level and specialized functions remained in the Bay Area. Future hires of this nature also primarily came in the Bay Area. As companies grow to a certain size, they can better deploy technology and capital to spread operations across the globe and save on costs. However, even these larger companies find it very difficult to find strong enough concentrations of talent in other locations when it comes to specialized professional functions like finance, product development, R&D, and engineering. Collaboration tools such as Slack or Zoom can bridge communication gaps to some extent, but they are still no match for having talent in an office together to tackle complex issues.

“Working remotely is getting us through our current crisis, but working from home 100% of the time is not ideal for many people or companies.”

The Bay Area As Innovation Engine

Now let’s look beyond the larger companies. Startups thrive in the Bay Area. We’re a hot spot for new companies and innovation—a recent Business Insider article showed 15 of the top 25 startups in the country are from the Bay Area and roughly 45% of venture capital investment in the US happens right here. These startups gain a clear advantage from this well-developed VC ecosystem, as well as the highly educated and skilled talent pool in the area. We have two universities in the Bay Area that are ranked in the top 15 in the world and are constantly attracting and producing the best and brightest minds. Before robust systems are in place in a new company, it’s especially difficult to get a critical mass, generate ideas, and make quick-moving decisions without face-to-face collaboration. They need a local hub for key employees to foster creativity and efficiency in execution. Sure, startup companies eventually hit that point where they need to (and can) move certain functions to lower-cost areas. But the fact remains that the specialized workers (leaders, professionals, innovators) within these startups and the publicly traded companies in the Bay Area are compensated well enough to continue to live here.

People Need Connection to Thrive

We will likely not go back to the office five days a week in the wake of the pandemic, but we will still go back to the office on some level, perhaps 2-3 days a week on average. We’re social animals who need connection to thrive personally and professionally. Isolation leads to all sorts of mental health issues that result in decreased productivity and functioning. Just look at the large spike in anxiety and depression symptoms we have seen during the COVID-19 shelter in place. Also, collaboration is key. A recent Harvard Business School study found that intermittent collaboration (as opposed to constant or no collaboration) is the most productive. And collaboration is best done with face-to-face interaction. How smoothly do those video meetings go when you have a large group trying to collaborate all at once? What is the quality of the participants’ attention and the speed of the resulting give and take? I think we have all learned these answers the hard way during the pandemic. Another study found that people are more optimistic about tackling problems when in collaboration with others. With team support, people feel their work is more achievable and look at situations with a more positive mindset. It is much easier to monitor when others on your team need this support if you are able to interact in person on a regular basis.

Remote Work Isn’t For Everyone

Working remotely is getting us through our current crisis, but working from home 100% of the time is not ideal for many people… or companies. Here are a few additional struggles that many who work remotely 100% of the time face:

– People hesitate to video chat in the same way they’d pop next door to their coworker to ask a question or troubleshoot. This can lead to more time being spent to figure out problems alone or correct errors and therefore more inefficiency.

– Companies have to over-hire to compensate for inefficiency. Because leaders have to budget for an increased level of inefficiency in their teams, they will sometimes pay for more experience than they would otherwise need to get the work done. Hiring might happen faster since location isn’t a limiting factor in the search, but you also might have trouble finding someone who wants to work remotely all the time given the related feelings of isolation.

– Remote work creates difficulties with team development, mentoring, and cultivating new skills. It’s simply more difficult to establish culture, train someone in nuances, and develop skills as a team when you’re not physically together on a fairly regular basis. How do you effectively assess and develop future leaders in the organization, when much of what makes an effective leader are soft skills and political shrewdness?

“This isn’t about if/when everyone is going to lose their job. It’s about how well companies will adapt to a new normal.”

Expect A New Normal

As a new normal emerges, our work habits aren’t going to look the same as they once did. Be willing to change and see what that looks like to fit your company and culture. Agility matters! Don’t expect offices to completely disappear—in the Bay Area or anywhere else. You might downsize your footprint, share workspaces, or alternate work days among employees. You’ll need to find new ways to save costs while maintaining productivity. This is a wake-up call to tweak the existing work structure, not scrap the system as we know it. Companies are built to drive efficiencies and profitability. With current technology and the way we’re wired socially, we cannot fully replicate the same efficiencies remotely or maintain a healthy and happy work culture. People want to be in the Bay Area working together for a reason. There are the deeply rooted advantages of a robust venture capital community, highly educated and deep talent pools, and even the amazing weather. This, coupled with the downsides of a truly remote workforce for both the individual and the company, means that we will still have a thriving local professional job market after this latest crisis. This isn’t about if/when everyone is going to lose their job. It’s about how well companies will adapt to a new normal.