By Carolyn Said - May 6, 2020
Three marquee San Francisco tech companies — Uber, Airbnb and Lyft — which exemplified a new generation of megabillion-dollar startups, have now slashed staffs in response to the coronavirus pandemic and shelter-in-place orders.
Ride-hailing company Uber, among the city’s largest employers, was the latest to do so, laying off 14% of its workforce, or 3,700 recruiting and customer support employees worldwide, on Wednesday in the biggest round of layoffs to date for a San Francisco tech company during the crisis.
Uber’s smaller rival Lyft had 982 layoffs last week, or 17% of its staff, and will implement furloughs and pay cuts for hundreds more.
Vacation-rental site Airbnb on Tuesday said it would cut 1,900 jobs, or 25% of its workforce.
As the companies all acknowledged, their revenue has plunged as consumers stay home, and there’s no clarity on when that will change.
Following on the heels of layoffs at other Bay Area tech companies, including Yelp, Eventbrite, Opendoor, LendingClub, Zenefits, Patreon, GoPro, the RealReal and VSCO, the latest rounds underscore that every industry is exposed to the wrenching disruptions wrought by the pandemic.
“No one is immune,” said Richard Florida, an urban studies theorist and professor at the University of Toronto. “The recession — or depression — will bite everyone.”
San Francisco developed a love-hate relationship with the tech sector as Silicon Valley’s epicenter shifted here.
“The city may have congratulated itself on having the world’s greatest concentration of high-tech startups funded by venture capital, but it was always bemoaning the new urban crisis it faces, with techies driving up housing costs and gentrifying the city,” Florida said. “Now that may turn into (deeper) problems. When people are laid off, they can’t pay taxes.”
Still, he and others acknowledged, laid-off tech workers are undoubtedly in far better shape than those in the first wave of unemployment, which was heavily concentrated in low-wage service sectors: hotel housekeepers, restaurant workers, child care providers, for instance. Many of those workers live paycheck to paycheck.
“Tech workers should have savings socked away for a rainy day,” Florida said. “The pain will be felt broadly, but will fall most heavily on the least economically advantaged.”
The tech layoffs will have wider repercussions because of their multiplier effect, said Paul Saffo, a Silicon Valley futurist.
Even as shelter-in-place orders ease, “a whole lot fewer people will be returning to work in headquarters buildings in San Francisco,” he said. “They won’t be coming in with their cash to buy things in the city.”
“Losing all those incomes that supported restaurants and the arts and culture scene” will reverberate, Florida agreed.
On the other hand, the influx of highly paid tech workers into the Bay Area accelerated housing unaffordability, said Peter Cohen, co-director at the Council of Community Housing Organizations, a San Francisco nonprofit.
Even though the tech boom also helped create middle-wage and lower-wage jobs, developers aimed their production at the high end, “which drove housing prices all the higher and out of reach for a very wide range of everyday workers not in those high-paid ranks,” he said in an email.
Now that could change.
“Perhaps the reduction in some of that highly paid workforce from tech layoffs will begin to dampen housing prices as property owners have to adjust to new characteristics of demand,” Cohen said. “We’ll still need to address increased housing needs for middle-wage and lower-wage worker households going forward.”
Saffo also sees some potential silver linings.
Tech layoffs could spawn a new wave of startups, he said, just as the 1990s downturn spawned the dot-com boom.
“Startup culture is very resilient,” Saffo said. The layoffs “have unleashed a bunch of brain power that will now be out there looking for problems to solve and ways to have more control over their lives. And the pandemic has revealed a raft of obvious problems, from health care to employment equity, at all sorts of levels.”
San Francisco Chronicle staff writer Roland Li contributed to this report.