Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School, has studied the importance of industry clustering. She believes that the shift to remote work will largely be a good thing for tech companies, in that it can create more capacity for them to hire and grow. In recent years, the Bay Area’s absurdly high housing costs (pre-pandemic, the median one-bedroom rental in San Francisco surpassed $3,700 a month) created a barrier for new talent and even retaining workers.
“It was nearly impossible to get young talented people to join the workforce at wages that could cover those prices,” Wachter said. But the pandemic’s new paradigm “will make it possible to expand and increase Silicon Valley’s size, not in a geographic cluster sense, but in a network sense.” She envisions the formation of what she calls “neighbourhood nodes,” where divisions of employees constellate in communities up and down the West Coast. Silicon Valley
will still be the hub, she said, but its geographic dominance may lessen as new nodes rise.
Connective infrastructure might be the key to where these satellite nodes form, at least in the “next normal.” But what gets lost when companies
no longer convene hundreds or thousands of highly educated and innovative employees in a single site, allowing bright minds to bump up against each other in the cafeteria and in the moments after a meeting lets out? While remote work is getting good results for some companies, performance is slumping at others. Breaking up the motherships could similarly carry some long-term costs for the tech industry. For example, newer hires will miss out on skills grown alongside more experienced colleagues, diminishing their ability to develop new ideas, Wachter said. Entry-level workers’ career growth could also be hampered in the absence of other nearly employers. “They gain tremendously from being part of a geographically clustered pool,” she said. “For them, this is not good.”
On the other hand, those workers may also finally be able to afford a place to live.