What did Google just tell us about the future of work?
Did you know that renting in San Francisco takes up roughly half a person’s paycheck?
The cost of housing in the area has become so expensive that in many cases it’s just not worth moving to the area.
A lot of people with a lot of money in one place can lead to runaway inflation. Some have said tech companies such as Google and Facebook are at fault, because an explosion of highly paid people living in the one place has driven costs up.
But recently, Google parent company, Alphabet, put in a $30 million order for 300 modular homes to be built in San Francisco.
Big players investing in new housing projects for its employees isn’t a new development, nor is the concept of the corporate village, but how San Francisco deals with the housing cost crisis could be instructive for Australia.
How Australia’s tech dreams will change cities
Australia’s recent ‘mining boom’ led to runaway inflation in Western Australia similar to that in San Francisco.
The median house price in Port Hedland in Western Australia in 2012 was a staggering $1.2 million.
These days it’s just under $400,000.
The response to the exaggerated inflation in Western Australia was to use demountable housing in remote locations to house mining workers in ‘dongas’.
Is recreating or modifying that experience a possible response to an overheated real estate market in other Australian cities?
Think-tank The Grattan Institute previously told The Pulse that ‘knowledge economy’ jobs, which are expected to become one of the key drivers of the economy of the future, are heavily CBD-dependent.
“We’re seeing the growth in jobs coming from business services, finance and those kinds of industries,” said Transport Leader for The Grattan Institute, Marion Terrill. “Those are much more city focused and there’s a lot less in agriculture and manufacturing.”
Those jobs rely on in-person interaction and the ability to draw on a centralised talent pool, meaning activity becomes clustered rather than spread out.
Google has dealt with the San Francisco real-estate crisis by building low-cost housing for its employees to alleviate wage pressure.
It’s roughly the same way the mining industry tried to solve the issue of its remoteness from major population centres – two different problems with much the same solution.
But it’s unlikely that a typical mining donga will appeal to tech-industry workers, and few companies in Australia and New Zealand are likely to have a spare $30 million lying around for this kind of investment.
Is there another way Australia and New Zealand can alleviate a future real-estate crisis?
An alternate vision
MYOB Chief Technical Advisor Simon Raik-Allen has argued that the future of work isn’t necessarily about working in big cities, but rather working in community ‘clusters’.
He said the focus would be a ‘suburban village’, where the focus would be on ‘work centres’ used by employees from multiple companies.
“Rather than the office, or even the remote workspace, localised centres will emerge as the home of business – giant warehouses, which are used by employees from many different companies, spread around the globe,” wrote Raik-Allen.
“These will be based around suburbs or communities as a response to the growing expense of constructing traditional inner-city office buildings.”
Already the nature of work within cities is changing, with the rise of co-working spaces testament to that.
In San Francisco, Google is demonstrating that the way we live will need to adapt to the needs of the knowledge economy. How companies, communities and planners respond the challenges and opportunities the shift presents will be key.