The End of Silicon Valley? How the Pandemic Has Changed the Tech Talent Market in California

In May of 2020, during what many optimistically hoped would be the midpoint of the pandemic, Twitter and Square CEO Jack Dorsey announced that employees at both companies would no longer be required to come into an office in order to do their jobs. Remote work, long seen as a benefit enabling employees to phone it in here and there on a casual Friday, had suddenly become the default for nearly 8,000 people, the majority of whom were based out of two of California’s densest and most expensive housing markets: Silicon Valley and San Francisco.

By the end of that same month, Mark Zuckerberg chimed in that Facebook employees would also go remote for now, adding that when he gazed into his Oculus-powered crystal ball, he saw a future in which roughly half of the company’s employees would remain remote permanently. Similar announcements followed within weeks from Amazon, Apple, Microsoft, and nearly every other technology company based in California.

Placed at the heart of tech hiring, we at Codility have been tracking the global employment market during the massive changes of 2020, and we’ve watched firsthand as companies have reacted to the pandemic in real time. We’ve looked at data from the Codility platform, which has helped tech companies around the world hire more than 10 million candidates, to track the movement of engineering candidates through the recruitment processes of various companies. By comparing the data from two periods — the peak of COVID-19 (April 1 to July 15, 2020) and the same period last year (April 1 to July 15, 2019) — we’ve been able to identify several surprising trends.

In summary: Hiring teams and developer candidates around the globe are now playing a whole new ballgame. Nowhere is this more evident than in California.

Six Figures Go a Lot Further in Idaho

Prior to the pandemic, our customers’ engineering teams were expanding rapidly, and recruiters were looking for alternative sources to find the candidates they needed. Nontraditional schools like Lambda were seen as new pools of potential, and relocating developers from foreign talent hubs in Eastern Europe and Southern Asia had become expenses worth absorbing.

At the same time, California’s Bay Area had long been threatening a sharp decline, due to limited housing stock and an astronomical cost of living. AltaVista founder Paul Flaherty said almost 30 years ago  that “the cost of housing and office space ha[d] spiraled out of control,” yet the magnetic mix of six-figure salaries, progressive worker protection laws, and unicorn origin stories rooted in Palo Alto chance encounters continued to pull the world’s brightest young minds into California’s orbit.

The response to COVID-19 finally altered the equation that made California such an irresistible draw by allowing — for now, at least — tech employees to take their Silicon Valley salaries along with them as they flee to Texas, Colorado, the Midwest, or the few countries still allowing Americans across their borders.

In the aftermath of this great migration, our data shows clearly altered behaviors among both workers and tech companies. California has experienced a 34 percent drop in the number of employers currently hiring for highly technical roles, compared to the pre-COVID period. While a devastating 47 out of 50 states have experienced similar slowdowns in tech hiring, California’s decline ranks among the worst. Despite significantly fewer open roles, the number of applicants remains unchanged, meaning job competition has never been fiercer.

So what’s a newly furloughed worker with bills to pay to do? Our data shows that only 47 percent of California tech workers seeking employment are looking for jobs in state, compared to 71 percent hunting in state pre-COVID. Nationwide, there has been a 10 percent uptick in applications for out-of-state high-tech jobs, from 58 percent of tech candidates looking for work out of state pre-COVID to 68 percent today.

In February, we began to see the earliest signs of our customers and the market reacting to COVID-19. Realizing the onsite interviews they had planned would need to be facilitated virtually, high-tech employers like Microsoft and Okta rushed to adopt fully virtual hiring practices and tools. To put this in perspective, we saw a 298 percent spike in usage of CodeLive, our virtual tech interviewing product, in March compared to February in the US alone.

The Future Is … Unclear

CEOs in the energy sector and at one of the world’s largest media companies have told me in recent weeks that conditions are notably more optimistic for them. Both sectors are experiencing surges in hiring, chiefly in highly technical roles, with some global companies even raising salary packages for new hires to combat the talent shortages they are experiencing. The news, it would seem, isn’t all bad for everyone.

My own personal and professional experience this year has largely been lived at the complicated intersection of California, hiring, and tech jobs. Although Codility was founded in Poland, I landed in San Francisco to open a second headquarters in 2015. In total, the company added 40 new jobs in the state in the years that followed.

The arrival of the pandemic, and subsequent travel bans in both directions between the US and the European Union, left me in lockdown in California, unable to continue splitting time across both offices and continents. After four months, I made the decision to move back to Warsaw to better support the mission-critical teams there. That decision however, means I am now prevented from returning to our California office, due to President Trump’s executive order affecting L-1 visa recipients. To put it mildly, this is a challenging way to do business, and it will most certainly impact our future hiring decisions.

So what does the future hold? Uncertainty, for the most part. Despite optimistic news drips about a vaccine potentially arriving before the end of the year — or even movie studios’ refusal to clear the autumn release calendar — most CEOs tell me that hiring will remain a fully remote process for them for at least the next year. With Silicon Valley’s legion of companies abandoning on-site interviews in their entirety, it appears likely that Californian workers will now be forced to compete with qualified candidates based thousands of miles beyond the Bay Area’s commute radius.

Whether or not Paul Flaherty’s ominous outlook on Silicon Valley comes true remains to be seen, but one thing seems certain: California and the greater technology industry have entered into a new era.

Natalia Panowicz is the CEO of Codility.