Wednesday 20 February 2019

Adrian Weckler: 'Should tech firms build houses?

Microsoft president Brad Smith says ‘everybody has a role’ on housing
Microsoft president Brad Smith says ‘everybody has a role’ on housing
Adrian Weckler

Adrian Weckler

'But where will they live?" It's the biggest single reaction I now hear to new high-tech jobs announcements, especially around Dublin.

It happened with Salesforce's 1,500 jobs two weeks ago and Facebook's 1,000 jobs last week.

But with planners and politicians seemingly hapless, another question looms: should tech companies themselves be building houses?

The idea isn't unprecedented in Dublin. It was pursued by what was once the dominant multinational in Dublin - Guinness. Much of the housing and cottages still standing around the city - from Stoneybatter through the Liberties to Crumlin - stem from Guinness's plan to house workers and the less well-off.

Like today, state authorities back then couldn't, or wouldn't, build enough housing for citizens, so the Guinness family, through the Iveagh Trust and other initiatives, stepped in to take action.

No-one is suggesting that the Dublin of the early 1900s accurately resembles the modern city of today. And Guinness was driven to action partly due to the severe levels of poverty back then which simply don't exist in 2018.

But this basic idea - that booming corporations might directly get involved in housing when they start to dominate a city - still has resonance today.

And tech companies themselves are starting to do it in other cities.

In Seattle, Microsoft is setting aside close to $500m to fund the construction of 'affordable' homes.

But these homes are not just for its own employees. The money is being used to build houses for non-tech workers such as teachers, firefighters and others who don't earn the six-figure salaries which are the norm in the big tech companies.

Google is doing something similar close to San Francisco. It has just spent $1bn developing a huge plot of land for 8,000 residential units near its base in Menlo Park - 20pc of these will be designated as affordable housing. Specifically, these affordable units are to be designed for "low-, moderate- and middle-income individuals and families, including service workers, emergency responders, teachers and nurses", according to Google's planning statement.

Facebook isn't far behind, announcing last week that it is taking part in a $500m fund to expand affordable housing in the San Francisco region.

Notice a pattern? These tech giants are booming. The cities they're based in have skyrocketing rents and house prices. Those two things are connected. So the companies are starting to be part of the solution, directly.

"We believe everybody has a role to play and everybody needs to play their role," said Brad Smith, Microsoft's president, of his company's cash investment.

Back to Dublin - should any of these tech companies be involved in housing here? The case for it goes as follows.

Tech multinationals are, by a long way, the dominant industry in the growth of high-paying jobs. Most are moving, or expanding their bases in the city centre.

Attracted to the high wages, many people are coming from around Ireland and abroad to Dublin. Because they earn more than non-tech peers, higher rents ensue, pushing others out of the market.

Ideally, the State should react to this. It is our country, after all: if there's more demand than supply for affordable housing, isn't it ultimately our responsibility to fix that?

But most of us don't agree on the solutions, ultimately represented by a very minimal response from the Government and planners.

So should the companies themselves intervene?

There are two potential scenarios.

Option one is that a company such as Facebook or Google would build, or commit to buying, a number of units directly themselves. These would be squarely for their own workers.

Option two would be a general investment in affordable housing stock to benefit a wider community base. This would include the likes of teachers, guards and service workers, as well as lower-paid tech workers. This could be by way of a third-party fund, similar to how Facebook is going about it in San Francisco.

Based on conversations I've had with people in these companies, the chances of any of this happening are zero.

There are a number of reasons for this. First, it's hard to compare Seattle or San Francisco with Dublin.

Facebook and Google employ well over 100,000 people between them in the San Francisco area. In Dublin, it's a 10th of that.

It's an even bigger disparity in ratios with Microsoft and Amazon between Seattle and Dublin.

So the effect on rents and home prices in Dublin, while undoubtedly present, can't really be compared by scale.

Even if they could, there's a separate, but equally relevant, point: Dublin is a secondary office location that's a long way down the line from the US headquarters. This matters. Zuckerberg and Smith care about their 'home' towns over and above employment ratios.

They have warm thoughts about Dublin, to be sure. But it's not the same. And neither is the assumed civic responsibility.

Asking big firms to take on some responsibility for the housing of workers here might also establish an odd sort of libertarian principle. It radically reduces the State's responsibility. To me, it resembles the idea that charities might properly be the ones to tend to homeless people or those with severe illnesses, rather than a national health service.

It's true that in the US, this is a brutal reality in many states and cities. So one can see how a Guinness-style Iveagh Trust scenario applies over there.

But Ireland still aspires to be a modern European state that provides more equitable access to infrastructure such as housing as a policy.

Maybe the real choice is to either build more houses or accept what we have.

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