Silicon Valley Loses Grip On Tech Firms

Remote work practices and policies made necessary by COVID-19 and embraced by employees and companies alike are taking a toll on Silicon Valley, The Wall Street Journal reported Sunday (Dec. 13), noting that iconic Bay Area companies are moving to, and growing in, locales with lower costs and less congestion.

Silicon Valley Loses Grip On Tech Firms

Database giant Oracle Inc. announced Friday (Dec. 11) it was moving to Austin, Texas from Redwood City, California. And just weeks earlier, Hewlett Packard Enterprise announced it was moving its headquarters to Houston, Texas from Silicon Valley.

Among the reasons for corporate relocations cited by the WSJ and San Jose Mercury News in articles about the moves are cost-of-living disparities and differences in personal income taxes.

According to the nonprofit Tax Foundation, California has the highest marginal tax rate in the country for the highest-income taxpayers: 13.3 percent on income in excess of $1 million. Texas has no income tax.

According to the Wall Street Journal, employers and employees alike have embraced the flexibility of remote-work policies after they became a necessity because of Covid-19.

While noting corporate exits from Silicon Valley, the Journal also pointed out that the five counties that comprise the region remain home to a hugely disproportionate share of the countries’ technology company headquarters. But even Apple Inc., the Journal notes, has been expanding its presence in Austin.

More than a year ago, data provided to Reuters by The Brunswick indicated indicated that Silicon Valley was losing its luster — not just at the corporate-leader level, but among rank-and-file workers. Researchers found that 40 percent of tech-sector employees between ages 18 and 34 expected to leave the region within 12 months.

Originally published at Pymnts