Surging rent prices. Displacement of long-time residents. Rapid-scale construction. Disappearance of local culture. The unplanned mass migration of highly skilled professionals to super cities has had a devastating impact on the human and environmental ecosystems across the world.
Nowhere is this currently more pronounced than in the “Digital Gold Rush” to San Francisco. As techies continue to flock to the City by the Bay at full-speed ahead, they’re jacking up rent prices and pushing natives out. In 2014 alone, the median rent for one-bedroom apartments rose by 13.5%, making San Francisco the most unaffordable housing market in the nation. It is now also the city with the fastest growing income inequality in America.
For low- to moderate- income earners, one of the only ways to purchase homes is through the city’s below market program (BMP), which is designed to “maintain income and cultural diversity” by setting aside a small percentage of newly constructed homes for house-seekers in the bottom income quartiles. However, for those who meet all of the program’s specifications, the chances of winning the housing lottery are just 1 in 10, and only 15% of for-sale homes in the city are affordable even for middle class income earners.
Meanwhile, as Cobalt Corazon, a 30-year special-education teacher and recent winner of San Francisco’s BMP lottery, explained in an interview with Al Jazeera, “Some of the wealthy young people are literally coming down with bags of cash, and whatever the offer price is, they’re offering $200,000 over — in cash.” In the Mission district, historically a working-class latino neighborhood that has now become the trendiest and most expensive hotspot for young professionals, Facebook founder Mark Zuckerberg paid $10 million for a Mission house valued at $3.2 million. While most techies don’t have that type of money to throw around, they do have the disposable income to displace the Mission’s long-time residents. As Corazon put it, “If you’re just coming here, you’d better be a Twitterite.”
To varying degrees, the same story unfolds across all employment hotspots: gentrification destroys neighborhoods, pushing natives out while new money transforms the local landscape.
But that’s only half of the problem. The cost of brain drain is high on both sides of the equation. It strips small communities of their talent and dismantles a positive feedback cycle of giving back locally.
Take the case of the Balkan countries, which have seen hundreds of thousands of young people between the ages of 25-35 move abroad in search of better employment opportunities. Four decades ago, the number of Serbian university graduates emigrating to other countries accounted for 2% of the population; now, it’s 15%. Each year, around 12,000 young professionals leave Serbia, 10,000 leave Bosnia, and 9,000 leave Croatia.
For a young developer growing up in Sarajevo or Zagreb, the decision to emigrate is often wrought with frustration. They don’t want to leave their homes where their support networks and friends are, but vexation about the lack of competitive job prospects in their community eventually boils over, pushing them to either stagnate professionally or make a big move. Silva Meznaric, a Croatian migration expert, explained, “the main reason for educated people leaving is not unemployment, as people usually think, but to try to find themselves a decent job.” She continued, “Young people from the countries in the region want to go abroad in order to find jobs which will allow them to achieve their ambitions and plans. In the Balkans, they obviously cannot do that.”
Even though a Bosnian who lands a job with a Silicon Valley startup will undoubtedly earn more, it’s not uncommon for his or her quality of life to actually go down. What size paycheck makes it worth uprooting one’s life and leaving their support system behind? Not to mention, their paycheck is increasing by a factor of three, but so is their cost of living. The increase in disposable income is not what it might first appear to be.
From a sociological or demographic standpoint, we also have to consider what’s lost by the developer leaving their home communities. When they move away from home, all of their accumulated knowledge goes with them. They may visit a few times a year, but they aren’t there long enough to band together with other bright individuals and local government officials to host meetups or conferences and to create better opportunities for the next generation of aspiring developers in the community. And, instead of paying local taxes on their income, helping to train more teachers, or build better agricultural programs, they pay taxes in San Francisco or New York, where their contribution will amount to a tiny, negligible fraction of the economy.
In their 2011 study, Globalization, Brain Drain, and Development, Frédéric Docquier and Hillel Rapoport concluded that through brain drain, “globalization is making human capital scarcer where it is already scarce and more abundant where it is already abundant, thereby contributing to increasing inequality across countries, including among the richer ones.” The emigration of highly skilled professionals depletes the human capital stock of small communities and stunts the development of third world countries.
The Solution
Until now, a one-way ticket to an urban metropolis has seemed to be an inevitable, if destructive, eventuality for highly skilled professionals in small towns from Bosnia to Boise, Idaho. However, there is now a solution to the brain drain: the rise of the freelance economy. It’s the fastest growing sector of the global workforce, and it’s allowing talented professionals across the globe to access highly competitive job opportunities without being forced to leave home.
Historically, freelance work was mostly associated with “temps” and “gigs,” and it was predominantly taken up by people trying to make extra cash by taking on a side job. Now, over 53 million Americans are freelancing, and an increasing number of them are highly skilled workers trading in their office job benefits to pursue full careers in freelance work. They’re working how they want, when they want, and they’re making as much and sometimes even twice as much than they did at their office job.
As the options for freelance work have increased, the culture and perception surrounding it has completely changed, particular in the software engineering industry. Some of the biggest and best companies are now turning first to freelance talent to solve their most challenging problems, relying on remote talent networks like Toptal to connect them to the right developers for each project. Organizations like Airbnb, IDEO, and JP Morgan recognize that going the freelance route has not only become a trustworthy and mainstream option, it is also the most effective way to scale their team quickly with the best talent around.
The impact of going freelance-first for employers and freelance-only for workers is huge on brain drain. In 2014, FlexJobs compiled a list of companies that are following this model, building mostly or fully distributed teams. That list included 26 companies. A year later, the list had grown to 76 companies. Today at Automattic, a web services company, there are over 300 employees working in 174 cities. At Github, there are more than 260 people working across over 100 countries. And at Toptal alone, there are thousands of developers who are now working remotely.
By creating ways for their employees3 to work remotely, these companies are having a huge impact on the brain drain and on the global economy. According to Global Workplace Analytics, 79% of the American workforce wants to work from home at least part of the time and 50% of the workforce has jobs that are compatible with telecommuting. They developed a set of complex models to estimate the impact remote work would have on brain drain if employees with telecommuting compatible jobs worked remotely just half of the time. The results are staggering.
Businesses would save over $11,000 per employee each year, not to mention all they would save on office space, utilities, and maintenance services. They would also increase national productivity by $270 billion worth of work. Greenhouse gas emissions would be reduced by 54 million tons, which is equivalent to taking all of New York State’s workforce –10 million cars– off of the road for one year. The US would save over 640 million barrels of oil, valued at over $64 billion. Highway erosion would decrease dramatically, saving communities hundred of millions of dollars in highway maintenance, sparing over 90,000 people traffic accidents, and reducing traffic-related costs by $10 billion each year. These estimates are for the US alone.
The full-scale impact of the expansion of the remote workforce is incalculable. What’s clear is that it’s moving our world in the right direction. More and more companies are noticing the power of the global talent pool and taking advantage. They’re cleaning up the planet and making it possible for local talent to stay where they’ll make the biggest impact – at home.
