For decades, Silicon Valley has been a magnet for tech talent, pulling the world’s best and brightest into California’s bay area.
It’s easy to understand why: Silicon Valley hosts many of the world’s most successful tech firms including Apple, eBay, Facebook, Google, Netflix and PayPal. These firms offer employees prestige, high salaries and opportunities to work on cutting-edge projects. In addition, there are thousands of startups in Silicon Valley to attract those who want to build something from the ground up.
However, recent analysis of Indeed job search data reveals a striking trend: Growing numbers of Silicon Valley tech workers between the ages of 31 and 40 are searching for work elsewhere.
In fact, the share of clicks to jobs outside of Silicon Valley by tech workers aged 31-40 increased 12 percentage points over the course of 2015—compared to a rise of just eight percentage points for tech workers overall. A closer look at the other age groups reveals just how concentrated this outward looking trend is among those in their thirties. Outward search from workers aged 21-30 and those aged 41-50 notched a bump of just 3 percentage points each in 2015.
The tech sector remains robust, however. So what lies behind this trend?
Silicon Valley’s sky-high cost of living is pushing people out
The cost of living is likely a major contributing factor. To take just one measure: According to real estate brokerage Redfin, the median sale price of a home in Silicon Valley is $1,050,000. Sky-high housing costs are driving what Redfin describes as a “digital exodus.”
Whether or not the situation is quite that dramatic, Indeed data confirms not only that tech workers are searching for work in other hubs but shows us precisely where they are looking.
Although the median sale price of a home in New York, the number one city, can be high (more than $1 million in Manhattan), the picture changes drastically when you consider boroughs. For instance, prices in Brooklyn are less than half of Manhattan or Silicon Valley. And the other cities on our list feature house prices that are much, much lower than in the Bay Area.
In San Diego, for instance, the median sale price of a home in late 2015 was $460,000. In the alternative tech hub of Austin however, it was $270,000—a quarter of what it costs to buy a home in Silicon Valley.
Even allowing for lower salaries, an experienced tech worker’s take home pay goes much further outside the bay area.
Unstable startups are less suited to experienced workers
Another explanation for why tech workers are searching outside Silicon Valley could be the instability of startups. After all, according to Fortune Magazine, 90% of startups fail, and of those that survive only a handful go on to become a multi-billion dollar “unicorn” like peer-to-peer rental powerhouse Airbnb.
Some tech workers aged 31-40 may be priced out of Silicon Valley’s startup-oriented labor market as they advance in their career and gain experience—which also leads them to require greater compensation. A typical startup cannot afford to pay high salaries, and instead offers the promise of a significant payout once the company is successful. More experienced workers may be less inclined to gamble on a startup and are increasingly looking for higher salaries outside of the Bay Area.
Other hubs will benefit from the tech migration
Silicon Valley will continue to thrive as a worldwide leader in launching innovative companies. However, the increasing number of experienced talent searching in other cities represents a clear opportunity for employers in alternative and emerging tech hubs.
After all, there are many more jobs calling for software skills than there are job seekers to fill them. Employers in these smaller hubs should be taking advantage of every shift in the market that makes them more attractive to their target candidates. Those keen to attract these more experienced workers can craft creative strategies to attract them, which we explore in more detail in the Indeed study Beyond the Tech Talent Shortage.
Silicon Valley’s loss may be these other cities’ gain in other ways. A 2005 study by the National Bureau of Economic Research looked at Nobel Prize winners in physics, chemistry, medicine, and economics over the last 100 years, as well as inventors of innovative technologies. The findings?
People in their twenties were responsible for 14% percent of the innovations, the same proportion as the over fifties. A further 30% came from people in their forties. Meanwhile, individuals in their thirties were responsible for 40% of the innovations—and that, of course, is precisely the demographic we find increasingly on the search for work outside Silicon Valley.