As I head out to Austin, Texas for South by Southwest Interactive, I'm impressed again. Not just by all the amazing minds in technology and business who will attend, including President Obama (giving Friday's keynote speech), but by Austin itself.

The city has long been the home of SXSW, but that's just the tip of the tech iceberg here. I think the bigger story is it's continued rise as a major hub for innovative tech companies. An updated 2016 report from the Silicon Valley Competitiveness and Innovation Project confirms it. More skilled American workers are leaving Silicon Valley than are arriving. As these people leave, Austin and other technology hotspots are attracting them. You know the story. Other regions have a lower cost of living and lower housing prices.

As a San Franciscan born and raised, my instinct is to bemoan such a "sorry" state of affairs. I'm not actually doing that though. This isn't a bad sign for Silicon Valley or San Francisco's future. It's actually a good thing. It has the potential to resolve a few problems and possibly even change the demographic makeup of the area. What follows is some of my reasoning on all of this.

It May Breath New Life Into the Region.

More than 7,500 residents relocated from Silicon Valley to other areas of the country last year, but Silicon Valley's top companies have no trouble finding talent. Thousands of highly-educated professionals born outside the United States continue to move to the Valley.

Over time, this may shift the demographics of the Bay Area, creating more diverse communities. Just last year, a report from PolicyLink stated that diversity in San Francisco is dwindling. The report predicted that by 2040, the number of white residents in the area would outnumber those of color. The influx of foreign-born residents could help San Francisco and surrounding communities retain the diversity that has long been one of its best features.

Income Inequality

As a center of high tech on Earth for decades, millions have migrated to Silicon Valley to be part of one of the most exciting times in history. As of 2014, more than 850 thousand people lived in San Francisco. The Silicon Valley's three millionth resident was just born.

Along with that growth has come some of the worst income disparity on the planet. In fact, the disparity has been compared to developing nations. In 2014, a report from San Francisco's Human Services Agency demonstrated that the city's rich were getting wealthier, while its poor were falling further behind. The middle class, the report said, were leaving town altogether. This is no surprise, given $3,500/month average rents, the highest in the nation. As tech workers leave the area to settle in cities like Seattle, Denver, New York and Austin, those hubs will benefit more from the injection of wealth into their urban and suburban areas. This diversification of where technology can thrive is good for the country as a whole.

At the same time, I hope that as these smaller tech hubs take more and more Silicon Valley businesses, the region's hand may be forced into truly making progress on policies that address the gap between its wealthiest and lowest-income residents.

Will NIMBY Cities Wake Up?

This leads me right into housing. San Francisco and the Silicon Valley have long been in the grip of an affordable housing crisis. Corporations and shortsighted local governments have helped create a cost of living that is far from affordable for middle and low-income folks. Longtime residents have been priced out of their own communities and new development in the area can't keep up with population growth.

Again, I am choosing to be optimistic that Bay Area communities and the companies headquartered here will adjust. There are signs that give me some hope. Mountain View recently approved high density housing near Google. Facebook famously offered individual employees $10,000 to live close to campus in Menlo Park. There is growing sentiment that billion dollar companies should give more to help cities deal with issues like homelessness and affordable housing. San Francisco is fighting it's never-ending battle to increase the number of affordable (and of course not-so affordable) housing all over the city. As much as these things tend to feel like only a drop in the bucket, they may be a sign of positive change to come.

As U.S.-born tech workers leave Silicon Valley for other areas of the country, it may force local governments to come to their senses in the coming years and build the more affordable housing needed in a region that has long shunned it (looking at you Palo Alto). As a longtime resident with no plans to leave, I hope to see real changes take place.

Resolving Transportation Issues

This is another tall order. Traffic has long been an ongoing problem for regional planners. The highway traffic in the Valley and in SF has been named among the worst in the United States, and the lack of affordable housing only complicates issues. Poor people have to drive into expensive areas to serve the rich. Then of course many Silicon Valley employees have to live in cheaper areas far from their office and must commute long distances, clogging up main highways and roads, especially during rush hour.

Residents have come to expect unreliability from the bus and train system in San Francisco and in other cities, but destinations are often too spread out for someone to walk. There are again, some signs of hope on the horizon. San Francisco will finally unveil its new  Central Subway in a few years. The region is working on bringing Caltrain commuter rail all the way into downtown, and there's talk of building a desperately needed second Transbay Tube to carry overnight train travelers to and from Oakland and San Francisco (like between Brooklyn and Manhattan). All of this sounds great but will probably take decades to come to pass.

I don't expect San Francisco and Silicon Valley to solve all of these problems overnight. That's not even possible anyway. Future generations will probably be in charge by the time many of these issues are truly dealt with to an effective degree, if they ever are. I'm bullish on Silicon Valley's future though. The small decrease in American workers here doesn't mean that the economy will be permanently harmed. It's just a statistical sign of the times.

This is one of the strongest economic regions in the U.S. and probably will be for several decades to come. I just hope we are able to make changes that will accommodate not only the area's continued growth, but many more waves of technological innovation that will improve all our lives.

Published on: Mar 9, 2016