Is it the end of an era for Silicon Valley? According to the CEO of Redfin, Glenn Kelman, it might be. Kelman is predicting a tech company exodus from expensive coastal cities to more-affordable middle-America.
While some companies, like Amazon, are already seeking headquarters in less expensive cities, other companies are predicted to follow. This is a trend that could pick up as a result of the recent tax bill. Under the Tax Cut and Jobs Act, state and local taxes are now deductible only up to $10,000 from your federal tax return. That means that high income and property tax states, like California, could certainly become less attractive to employees. Add in the already high housing costs, and that could make places like the Bay Area a tough sell for companies.
What does that mean for the relocation industry? Well, for one, companies who are not ready to pack up and leave their current location, might need to reevaluate their remote working opportunities. For these companies to keep a hold on top tier talent, they might need to be more flexible with candidates who refuse to relocate, or current employees who are looking to make a move to a more affordable location. This second group of self-initiated movers are what we call ‘hand-raisers.’ And companies will need to decide if they’re willing to accept their bids to work remotely or even support the moves financially. Some companies, like Zapier, are already offering their employees a $10,000 relocation bonus to move away from the Bay Area in an effort to stem the high cost of living and associated salaries. Could be a win-win.
For more information on self-initiated relocation, read our recent white paper “Understanding Employee Initiated Mobility."
Densely populated and pricey cities, he said, are already losing residents and businesses. "Google employs more engineers outside of Silicon Valley than it does in Silicon Valley, and if Google can't afford Silicon Valley, then no one can."