Uber Technologies Inc, Lyft Inc and Airbnb Inc have slashed thousands of jobs. Salesforce.com Inc and Visa Inc are letting employees work remotely for months; Twitter Inc and Square Inc are allowing them to do so for good.
For the companies’ hometown of San Francisco, the moves are early signs of a dire blow.
In a city with a long history of booms, busts and natural calamities, the COVID-19 pandemic has suddenly upended nearly a decade of prosperity. While municipalities across the US are grappling with economic fallout from the virus, San Francisco stands to take a deeper hit given its high concentration of office jobs that make remote working easier, a tech industry battered by layoffs and a pricey real-estate market that has already driven out some residents.
Photo: AFP
The city’s leaders predict a US$3.6 billion budget shortfall over the next four years, with the unemployment rate — as low as 2.2 percent a few months ago — to be at about 15 percent through September.
If business taxes, the second-biggest source of revenue, continue to decline and the property tax base erodes, “all city services would suffer,” city Controller Ben Rosenfield said in an interview.
It is a marked turn from the years of growth that made San Francisco a symbol of massive wealth — while also fueling gaping inequality and a homelessness crisis that has led to people sleeping on streets alongside swank office towers.
The pain wreaked by the pandemic is only accelerating negative trends for the city, such as the departure of companies, conventions and residents to less-expensive areas, Berkeley Haas Fisher Center for Real Estate and Urban Economics chairman Ken Rosen said.
“The boom is over and the question is how deep will the bust be,” said Rosen, who warned that the city might have diminished appeal to the tech industry. “We are going to need dramatic changes if we’re going to keep our golden goose here.”
Rosen expected San Francisco’s recovery to lag that of other US cities, which combined might lose about US$360 billion of revenue through 2022 because of the pandemic, a National League of Cities analysis showed.
As a whole, more densely populated, expensive locales might find themselves hit harder than others. Why live in a metropolis heralded for its bars and restaurants if you cannot safely patronize them or take mass transit without fear?
“The appeal of living in such large cities is definitely going to deteriorate in the next year or two, if not up to five years,” Moody’s Analytics economist Laura Ratz said. “If it takes two, three years to get a vaccine, these large cities like San Francisco are going to suffer for it.”
Major companies around the world are retooling office space for fewer workers, scouting suburban sites and considering permanent telecommuting.
In the Bay Area, there might be a particularly profound effect: About 40 percent of jobs depend on traditional office-using industries, double that of the US, according to Moody’s Analytics.
Most large firms in and around San Francisco are preparing at least partial remote-work policies, according to a survey this month from the Bay Area Council, a business organization.
About one-third of newly remote workers surveyed by brokerage Redfin Corp expected to remain so even when restrictions ease and more than half would consider moving away from San Francisco if they never had to show up to jobs in person.
Facebook Inc, based in Silicon Valley, has said that half of its workforce might be remote in 10 years.
In the meantime, San Francisco is dealing with the immediate hit to its revenue. The city and surrounding counties were the first in the mainland US on March 16 to order residents to stay at home to slow the spread of the virus — a move that has been credited in helping the region fare better than others in managing the outbreak, while also lengthening the blow to the economy.
The city’s payroll tax is calculated on work performed within its borders, and telecommuting is leading to an overall 8 percent drop in business taxes this year from the previous one. They were originally estimated to rise 15 percent. The tourism and convention industry has cratered, and hotel taxes next year are expected to drop by almost 60 percent from last year.
San Francisco Mayor London Breed is to release an interim budget tomorrow reflecting the turnabout in the city’s fortunes. She has already told departments to cut costs by 10 percent for the next fiscal year and to decide which municipal jobs can become permanent work-from-home positions.
The city is to adopt its final budget by October.
Still, San Francisco has suffered economic collapses before only to emerge stronger, and corporate policies are in flux. Remote work can help companies ride out the pandemic, which might ultimately help the city’s economy. If larger firms give up some real estate, that presents an opportunity to smaller businesses and nonprofits struggling to get space, former city supervisor and California Senator Scott Wiener said.
Another possibility: Companies might end up taking additional office space if they need to implement spatial distancing and other practices to reduce the virus risk, city Assessor Carmen Chu said.
She is one of the chairs of a city economic recovery task force that is not only addressing the immediate crisis, but sketching out ideas for how businesses can succeed.
“We have a city full of problem solvers,” said Rodney Fong, cochair of the task force and president and chief executive officer of the San Francisco Chamber of Commerce. “Creativity and innovation will bring San Francisco back to maybe an even more dynamic place than it was, over time.”
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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