Austin Tech Boom is a Bust for Locals

Since its inception in 1870, the capital city of Texas has been growing steadily from its original 4,428 residents to the 790,000 it boasted in the most recent census in 2010. City Demographer Ryan Robinson claims that about 105 people move to Austin each day, and he believes the city overtook San Francisco’s population in 2014 when it reached an estimated 865,000 residents (compared to 830,000 in San Francisco).

Austin tech boom

Construction is booming around the city

While the growth is nothing new – census data shows that population in Austin has consistently doubled every 20 years – this latest influx from the current tech boom is straining an already overwhelmed infrastructure.

What’s fueling current growth? 

Texas is well-known as a business-friendly state. According to a 2012 NY Times article, Texas gives out more incentives to businesses than any other state. Nationwide, states are estimated to dole out $80 million annually in tax incentives; Texas accounts for nearly 20% of that at $19 billion per year. State officials are quick to point out that half of all new jobs created nationwide in the past decade have come from Texas.

austin tech boom

Heard in Austin, Texas: “My wife and I used to live in the Bay Area but when we learned our second child was coming we realized we couldn’t afford to live there anymore. I saw a job posted on the internal Apple job board and took a few vacation days to come down and check it out. I told my wife the worst thing that can happen is that we don’t like it here and we move back. So far we love it. I drove Lyft in the Bay Area too. There, people just wanted to get where they were going. Here people like to chat. I laugh when people complain about traffic here. It’s nothing like it was in the Bay Area but since it is all they know, they think this is bad.”

The city of Austin provides fertile ground for tech companies. The University of Texas at Austin has 52,000 students and offers a robust computer science program, creating easy access to talent for tech companies starting from scratch or expanding operations from other locations. Silicon Valley companies have been particularly active in the city’s growth, with companies like eBay, Google, Facebook and Oracle taking advantage of the lower taxes and affordable property costs found in Austin. Flextronics, Samsung, Apple and AT&T add to the big-company roundup, along with home-grown Dell and National Instruments, the first companies to put Austin on the tech map.

It’s not just big companies though – Austin has become a burgeoning hub for tech start-ups too, boosted in part by the Texas Emerging Technology Fund (TETF). The TETF is a $485 million fund created by the Texas Legislature in 2005. To date, the TETF has allocated more than $205 million to over 145 early stage companies.

The city has lately been dubbed “Silicon Hills,” and the non-stop flight between San Francisco and Austin is known as the “Nerd Bird.”

What about housing?

New homes within city limits start around $400,000 and a 1-bedroom apartment downtown typically rents for $1,800 a month, making Austin a bargain for people currently living in places with higher housing costs, like New York, Washington DC or the Bay Area. But for locals it can be daunting.

With affordable housing within a reasonable commute disappearing to the north and south, developers are eyeing East Austin, a predominantly African American and Latino part of town. This is raising fears of gentrification — as property values rise from new development, so too do property taxes, but often the wages of the long-time residents don’t rise along with it. Retail rents are also on the rise as property becomes more valuable to developers. In the most publicized case, a developer is accused of demolishing the Jumpolin piñata store without giving any notice at all to the business owners. All of the inventory and assets of the business were inside the building at the time, leaving the owners with no way to earn a living and nowhere to do it. Austinites rallied on their behalf and decried the move, which is currently tied up in lawsuits.

What about non-tech workers?

austin tech boom

Heard in Austin, Texas: “Owning a home as a service worker isn’t even a possibility. The boom is great for the economy, but it’s hard to get by all the tech workers are moving in and hiking up the rents.”

City planners are taking all of this into consideration as they implement the Imagine Austin plan set forth in 2012. The plan addresses everything from environmental resources to transit and roadway needs. In 2008, the city also introduced the S.M.A.R.T. Housing program (Safe, Mixed-Income, Accessible, Reasonably-Priced, and Transit-Oriented), designed to spur the development of housing options for lower-income residents.

So far, service workers seem to be caught in the middle of the growth boom. According to one report, Austin boasts more than 3,000 restaurants and bars, with most employees earning only the $7.25 federal (and Texas state) minimum wage. Constructions workers saw some relief with the 2013 institution of an $11/hour Living Wage for workers on construction sites for companies moving to Austin. Still, owning a $400,000 home is out of reach for most people on those wages. Said one local restaurant server,  “I came from Hawaii, and you’d think that would be the most expensive place to live, but it’s nothing like Austin. Service workers have a hard time affording rent. I’m lucky because I live with a friend and pay lower than the going rate, but other people here have to live an hour or more away. The tech boom isn’t so great if you’re not in tech.”

 

What are your thoughts about urban growth and skyrocketing housing costs? Please share in the comments below.

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About Testarossa Travel

Testarossa Travel is a collection of stories about the amazing people of the world and the places they live. Adventurous, funny, and often humbling or downright embarrassing, these stories capture my experiences with authenticity and are meant to inspire readers to get out there and see the world. Each tale is designed to give the reader a true sense of a place, its sights, sounds and smells, and most of all, its people.

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