Are big tech companies crippling local communities?

By Kitty Knowles 10 January 2018
Amazon CEO Jeff Bezos. Pic by Steve Jurvetson on Flickr.
Amazon CEO Jeff Bezos. Pic by Steve Jurvetson on Flickr.

This double-edged sword hurts.

Technology is a hugely profitable industry.

Just look at Forbes’ ‘rich list’ – topped by Microsoft’s Bill Gates and dotted with the likes of Amazon founder Jeff Bezos, and Facebook’s Mark Zuckerberg.

The companies they steer have the power to create jobs and boost local economies ‘for everyone’.

But with every new office or headquarters launched, we risk overlooking crippling social costs.

It's not uncommon to see people sitting on the side of the street with trolleys of their possessions. Image: Google Maps.

A global picture

Around the world tech elitism props up a global housing crisis, and fail to address the homelessness this fuels.

Silicon Valley rents – by one measure – are now the highest in the world.

We’ve seen the homeless people in the doorways of Twitter, Uber and Square on Market Street in San Francisco. Over 70% of the 7,000 homeless people sleeping rough in the city now live on the street after losing their housing.

It was celebrated when Amazon first set up shop in its grand three-tower campus in Seattle: offices that are today used by 40,000 employees and have seen $38bn pumped into the local economy.

But non-tech salaried locals are suffering.

While property prices are rising around the world, Amazon’s presence will no doubt have fuelled the drastic increase in the price of a four-bed home – from $510,000 five years ago to $756,000 last year and $847,000 today.

And, in Seattle, these hikes have forced many to the outskirts where they face gruelling commutes – the average Seattle driver now spends 55 hours stuck in traffic each year.

This may be better than the 73 hours drivers face in London, or the 65 hours drivers face in Paris, but by contrast, Seattle is climbing upwards in the ranks of the world’s worst congested cities.

Even those who keep their homes after the tech companies arrive don’t always benefit from the influx of new businesses (outcry over east London’s pricey Cereal Killer Cafe made Britain’s national news). At the other end, fancy new businesses don’t always see the footfall they’d expected and go bust.  

The London story

Development consultant Andrew Sissons oversaw east London’s transformation in his role as Head of Regeneration Delivery for Hackney (the borough now home to the capital’s Tech City and Fashion Hub Clusters, tech companies like Amazon and Google Campus and the corporate innovation centres for the likes of Aviva, Tesco, and McDonald’s).

He credits the influx of property companies with sending rents up from £15 a square foot to over £60 a sqft.

“The pace of rent increases, which was pretty savage, is the hardest issue for many of the Shoreditch originals,” he told The Memo.  

“Buildings are much more professionally managed but this has led to massive rental increases that are beyond a lot of small businesses.”

Like cities in America, this has forced both people and their businesses out of the area.

“The big problem of the future is housing and enabling people to live within reach of Shoreditch and tech city,” says Sissons.

“I was talking to a business the other day that has moved to Bristol because offices are cheaper and their staff can afford to buy a home.”

Still, Sissons is loathed to call the regeneration a failure.

“Areas change over time, there are now lots more facilities and opportunities and Shoreditch is the startup Capital of Europe – there are more MBAs and clever people per sq ft than anywhere outside of Silicon Valley.”

Is there a right way for companies to move in?

The real change that needs to happen is that companies need to be aware of the impact they’re having so they can move into new areas “in a more thoughtful way,” says Sissons.

“Often companies turned up to say they were coming to support tech city without realising the building they had brought and emptied had led to 20 companies becoming homeless.”

Only when everyone realises this, will we be able to support better futures for everyone.

More investment in innovative housing schemes could help too, he adds, pointing to both small starter homes and co-living accommodation.

The future

What is clear is that many of these lessons have still to be learned.

Amazon may have set a social example by pledging investment and shelter to counteract the homelessness problem at its front door, but it’s still happy to fan ‘lucky dip’ excitement over where it’s new second North American headquarters will be.

Right now, more than 200 American cities are battling it out to win Amazon’s ‘HQ2’ and the promise of $5bn in investment and the creation of 50,000 jobs.

Whoever lands it, should be prepared to get more than they bargained for.

Housing tech companies might be cool, but it can also be crippling.