Forbes: Why The Bay Area Should Have 11 Million Residents Today

[dimondpark]

Timothy B. Lee, Contributor
I write about how technology shapes society
Tech|5/10/2012 @ 4:41PM |959 views
Why The Bay Area Should Have 11 Million Residents Today

1 comments, 1 called-out + Comment now + Comment now Wired covers an angel investor who has decided to stay on the sidelines as the market becomes less and less favorable for investors:

“As an investor Hartz points to the usual signs of too much money-chasing deals. The billboards on highway 101 between San Francisco and Silicon Valley touting startups no one has heard of. The bus stop signs in tech-heavy locales like Mountain View and Palo Alto advertising scads of engineering jobs.

“Everyone is competing for the same people, going after the same real estate, the same support services,” Hartz says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital.”

There’s an interesting question here that’s totally unaddressed in the article: why are “the natural resources of the startup world”—people, real estate, and support services—getting scarcer and scarcer? Silicon Valley is part of a large and highly-educated nation that currently has a high unemployment rate. If Silicon Valley firms are desperate to hire more engineers, and investors are desperate to invest in more startups, why don’t more engineers move from other parts of the country, where demand is depressed, to Silicon Valley?

Obviously, many have. But since 1990, the population of the Bay Area has grown by less than 20 percent. That’s slower than the growth rate for the country as a whole. Silicon Valley is creating new opportunities at a rapid pace, but relatively few people are moving there to take advantage of them.

Probably the most important reason, as Ryan Avent has pointed out, is that housing regulations make it impossible to build a significant number of new housing units. A variety of regulations—minimum lot sizes, maximum building heights, parking mandates, restrictions on renting out basements, and so forth—place an upper bound on the number of units of housing that can be built in any given municipality in the Bay Area. And developers have simply run out of new places to build that are within a reasonable commuting distance of Silicon Valley or San Francisco...

http://www.forbes.com/sites/timothyl...sidents-today/

I totally agree. Beginning in the 1960s, we systematically zoned ourselves into a stand still as far as growth.

In the Bay Area its not uncommon to drive through large swaths of undeveloped land that separate larger population centers. The East Bay and Peninsula both have tons of developable land that should have made way for tens of thousands of homes.

I read an extremely interesting book in the Moraga town library several years ago when I was kid. It was from the 1930s and it was a regional blueprint for development. Planners back during that time envisioned a sea of development across the entire East Bay Hills all the way to where the San Ramon and Diablo Valleys are now. There was supposed to a second "Caldecott Tunnel" and major freeway that ran from present day Danville thru the East Bay Hills that burrowed its way out to where the Oakland Zoo currently sits, and so on.

They actually predicted that the Bay Area should have had 13 million people by 2000(or 1990, cant remember). You look at the Bay Area's intensely robust economy which at last count is over half a trillion dollars($544 Billion in 2010) and one gets the impression that our economy is actually supposed to support many more people that what we currently have.

Furthermore, if we expand out of the Bay Area and look at the 100-120 mile radius around Downtown SF, we see that there is a large megalopolis-like region that is currently home to 12 Million people. Here's a chart I made a while back regarding supercommuting comparing the number of persons commuting into the 11-county Bay Area Combined Statistical Area vs those commuting into the 5-county Los Angeles Combined Statistical Area:


I created this chart in response to a recent report about 'super commuting' cities where a report put together by a group from a NY university hypothesized that Los Angeles actually had 35,000 persons from the Bay Area commuting there, and I knew that this was a flat out inaccuracy, so I researched the data and it became clear that not only was there data inaccurate but also, the Bay Area has twice as many persons commuting in the bay area to work than the far larger LA Area(of course we need to keep in mind that the LA Area has 33,000 sq miles so if LA counties were tiny like NorCal counties, places like Temecula and Adelanto and Santa Clarita might be considered outside the CSA borders so LAs numbers would probably increase exponentially), nonethess the Bay Area is the supercommuter capital of the West Coast but their report stated otherwise. I eventually had a cordial exchange with the author of the report.

My findings confirmed what I already suspected, that based on county-to-county flows, the Bay Area had twice as many SUPERcommuters from within California than the Los Angeles Area. At least it did in 2000.

Here is the data for each county in CA:

Los Angeles Area to San Francisco Bay Area: 9,178
Los Angeles 5,099
Orange 1,909
Riverside 812
San Bernardino 791
Ventura 567

San Francisco Bay Area to Los Angeles Area: 4,984
Alameda 847
Contra Costa 896
Marin 237
Napa 82
San Benito 29
San Francisco 642
San Mateo 451
Santa Clara 946
Santa Cruz 157
Solano 362
Sonoma 335

Remaining California Counties
Bay Area: Alameda, Contra Costa, Marin, Napa, San Benito, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma Counties

Los Angeles: Los Angeles, Orange, Riverside, San Bernardino and Ventura Counties

Alpine
Bay Area 10
Los Angeles 2

Amador
Bay Area 470
Los Angeles 24

Butte
Bay Area 1,143
Los Angeles 131

Calaveras
Bay Area 1,100
Los Angeles 30

Colusa
Bay Area 114
Los Angeles 5

Del Norte
Bay Area 9
Los Angeles 0

El Dorado
Bay Area 1,688
Los Angeles 180

Fresno
Bay Area 1,729
Los Angeles 530

Glenn
Bay Area 112
Los Angeles 0

Humboldt
Bay Area 315
Los Angeles 60

Imperial
Bay Area 24
Los Angeles 846

Inyo
Bay Area 0
Los Angeles 161

Kern
Bay Area 300
Los Angeles 9,022

Kings
Bay Area 113
Los Angeles 108

Lake
Bay Area 2,933
Los Angeles 15

Lassen
Bay Area 42
Los Angeles 4

Madera
Bay Area 382
Los Angeles 145

Mariposa
Bay Area 237
Los Angeles 17

Mendocino
Bay Area 1,504
Los Angeles 46

Merced
Bay Area 4,899
Los Angeles 121

Modoc
Bay Area 7
Los Angeles 12

Mono
Bay Area 15
Los Angeles 188

Monterey
Bay Area 15,988
Los Angeles 225

Nevada
Bay Area 922
Los Angeles 52

Placer
Bay Area 2,712
Los Angeles 249

Plumas
Bay Area 22
Los Angeles 27

Sacramento
Bay Area 10,930
Los Angeles 764

San Diego
Bay Area 2,293
Los Angeles 28,759

San Joaquin
Bay Area 34,117
Los Angeles 439

San Luis Obispo
Bay Area 603
Los Angeles 981

Santa Barbara
Bay Area 259
Los Angeles 4,224

Shasta
Bay Area 630
Los Angeles 78

Sierra
Bay Area 41
Los Angeles 13

Siskiyou
Bay Area 105
Los Angeles 21

Stanislaus
Bay Area 13,761
Los Angeles 236

Sutter
Bay Area 484
Los Angeles 14

Tehama
Bay Area 173
Los Angeles 14

Trinity
Bay Area 118
Los Angeles 7

Tulare
Bay Area 275
Los Angeles 442

Tuolumne
Bay Area 765
Los Angeles 72

Yolo
Bay Area 4,920
Los Angeles 71

Yuba
Bay Area 197
Los Angeles 29

[Rail Claimore]

Going by that standard though, practically every large metro area in the country with a higher-than-average cost of living "should" have more people than it does. Hell, that means the New York Metropolitan Area should be as populous as Greater Tokyo then.

[fflint]

Clearly, the housing supply has failed to meet demand in the Bay Area for decades. NIMBY-friendly zoning should absolutely be changed to allow denser development, especially in flat, low-rise suburban areas like the South Bay.

Yet the author's projection of eleven million people here is off the mark, based as it is on using early-1900s Detroit and contemporary Phoenix and Las Vegas as models for calculating possible Bay Area growth if only we didn't have a history of such restrictive zoning and raging NIMBYism. The Bay Area is literally named for the huge inland body of water that occupies a vast amount of space in the heart of the region, and there's yet another large bay (and a major river delta) for good measure. Around the bays and delta are wetlands that flood occasionally and are not suitable for development; beyond that are narrow bands of flat land framed by mountain ranges. There is ocean on the other side of one of those mountain ranges, and yet more mountain ranges north, south and east.

Flat land is cheaper to develop, and easier to connect to the larger metropolis. When a region has a lot of contiguous flat land, like Phoenix and Las Vegas, they can grow quickly and affordably; when a region is hard up against the ocean and riven by bays and mountains--not so much. Only the South Bay has a large-ish amount of contiguous flat land, and I absolutely agree we could and should build that area up to urban densities. But there's just no way I can see how the Bay Area could have physically integrated another four million people--affordably or not--using only the tools we have now (and had in prior decades).

[emathias]

Cost is only part of it. I personally have no desire to live in the Silicon Valley because I've been there and it just felt like one long strip mall. And sure, San Francisco is just an hour away, but why on earth would I want a guaranteed hour commute in order to have an urban lifestyle.

I'd move to San Francisco for the right job, just like I'd move to Manhattan for the right job, but I'm quite happy living and working in central Chicago and I'm not about to have a guaranteed reduced lifestyle for a far-from-guaranteed better job. My perception of the Silicon Valley job market for mid-career types is that there are either jobs that pay above average but have very little likelihood of hitting it big because they're with big, stable companies, or there are jobs at no-name companies that require insane dedication to work for survival-level pay for what *might* turn into a decent payday. There are only so many people who can, let along will, take the second kind of job, and the first kind of job basically means people who take them really want to live the (nice but) suburban lifestyle of the Valley where prices are so high you still only really enjoy a middle-class life even on upper-middle-class pay. Many families would rather make a little less in some place like Austin.

[ardecila]

Maybe the capital should go where the talent is, instead of the other way around. If the Bay Area is truly approaching its capacity, then the investors will have to look elsewhere, either by funding startups in other cities or by finding a different type of investment.

The investors are the ones who can best shoulder the costs of relocation, not the starving young college grad with skills and ideas.

[10023]

Originally Posted by ardecila

Maybe the capital should go where the talent is, instead of the other way around. If the Bay Area is truly approaching its capacity, then the investors will have to look elsewhere, either by funding startups in other cities or by finding a different type of investment.

The investors are the ones who can best shoulder the costs of relocation, not the starving young college grad with skills and ideas.

That's never how it works though. There's infrastructure in place in the Bay Area. And the VC firms have young college grads working for them that want to be there too.

There is some increasing tech startup activity in cities like NYC and to a lesser extent Chicago, but there are a very limited number of cities in the country that can attract the best talent.

[emathias]

Originally Posted by 10023

That's never how it works though. There's infrastructure in place in the Bay Area. And the VC firms have young college grads working for them that want to be there too.

There is some increasing tech startup activity in cities like NYC and to a lesser extent Chicago, but there are a very limited number of cities in the country that can attract the best talent.

Ideas that are incremental and not world-changing can happen anywhere because they don't need huge capital to make them work. And there is more than just the Silicon Valley capable of supporting world- or at least industry-changing ideas. But the capital can only get stretched so thin. The Bay Area has the most VC money, but New York and Boston also have quite a bit, and places like Washington DC and Seattle both have good access. Then places like LA and Chicago do okay simply due to their overall size. After that the list starts getting a lot thinner and lighter-weight.

At the end of the day, if you want to change the world, you probably need to be in the Silicon Valley. If you want to change a major industry, you probably need to be in one of the other cities I mentioned. If you just want to make a company that helps new mothers trade advice and get good deals on baby supplies, you'll probably have better success outside of those areas since you don't need top-tier talent and the costs that creates, and you can keep your other costs much better controlled in smaller markets, too.

Most people won't have world-changing ideas or even industry-changing ideas. Most people have ideas that can happen anywhere, and while maybe those ideas can blow up faster in the Silicon Valley, it doesn't mean they're any more likely to stay big there than in other markets.

[Gordo]

The "jobs at no-name companies that require insane dedication to work for survival-level pay" of Silicon Valley really don't exist in large numbers. The only folks doing this are founders or employees at places in a pre-VC stage - and really, that can be done anywhere in the US (and is). It's when you're ready to move on to the VC stage that you might need to move to the Bay Area.

If you're an employee of these companies after the first round of funding, you don't have to live in your mom's basement to survive - any startup that has already attracted VC (or even angel) money pays a decent salary in addition to a small equity stake. It won't be the same salary that that person could get at a Google or Microsoft, but it won't be "survival-level".

For example, I lost a relatively decent engineer (Pylons/Django specialist) late last year to a startup in the first round of VC funding with around 10 employees. He was taking a huge cut in salary (he worked for me as a consultant to many VC-stage startups) in exchange for equity and a potential big payday - but he was still going to be making $80 -100k. Not enough to buy a house, sure, but he's not going to have to eat Ramen noodles to survive.

[iheartthed]

The article took a couple of logic leaps that kinda make the end point ridiculous...

First, that the nation as a whole has a high unemployment rate does not mean that there are a lot of computer engineers that are unemployed. In fact, that isn't true at all.

Second, markets like Atlanta, Phoenix and Vegas grew by leaps and bounds because they were attracting low skilled labor to build houses. And that's why those areas also suffered the worst of the worst from the housing market fall out.

[pdxtex]

i honestly don't know beans about california politics but given the amount of california people i see and meet who have fled the ship for very unsunny oregon, id say not all is well in other parts of paradise too. nobody single wants to try to move to the bay area because is fucking expensive. that whole mantra of gen x, move where you want and the money will follow died in denver....

[MolsonExport]

Why The Bay Area Should Have 11 Million Residents Today: Because Forbes says so.