Tech giant’s growth may be turning Silicon Valley city into a company town
The tech industry has brought jobs and unprecedented prosperity to the Mountain View area. This once-small, sleepy agricultural town is now synonymous with progress, wealth and the future. But for people who have lived in Mountain View a long time, the changes are dramatic.
“The only people who have been able to stay here are people who had a family home that they inherited,” said Joseph Coelho, a Silicon Valley resident who frequents Mountain View. “There’s a social-responsibility aspect if you destroy the town you live in. You might still be the biggest name in town, but you might be the biggest name for all the wrong reasons.”
Google is the biggest name in town, accounting for 1 out of every 5 jobs there, and funding more than 10 percent of Mountain View’s total annual budget. But does that make it a company town?
“I’m not sure whether this applies to Google, but one would be a diverse number of employers,” said Hardy Green, author of “The Company Town.” “You know they don’t want to just have all their eggs in one basket. You know, they don’t want to be so dependent on any one source of wealth.”
There are other big-name companies in town, such as Microsoft, Samsung and Intuit. But Google has 10 times more employees in Mountain View than all of these other companies. That does not include the thousands of subcontractors who work on itscampus. What may be more telling is the trajectory: Google has more than doubled its Mountain View staff in the last 10 years. It is, by far, the single largest owner of land, according to Mountain View’s annual financial report.
How does a town end up in this situation — with one big employer? For that answer, head back to the year 2000. The first dot-com bubble is about to burst. Companies are folding, layoffs are accelerating, and there’s a sense of panic in Silicon Valley. Let’s say it is up to you to balance Mountain View’s books. That was a big part of Kevin Duggan’s job, the city manager from 1990 to 2011. When Google came to town in 1999, he was not worried about becoming too dependent on the oddly named startup. He was more focused on keeping the library open, his staff paid and the Fire Department funded.
Property-Tax Boom for City
California is notorious for its cycles of boom and bust. If you’re managing a city, you say yes. A lot. To new buildings. To rezoning. To more jobs. You see your rainy day fund grow and grow. These days, Mountain View collects about $20 million in just property taxes from Google. The company also pays the city more than $10 million each year to rent the land under and around the Googleplex. This is more than 10 percent of Mountain View’s annual budget.
“I think it’s probably in the ballpark of $8 million a year of revenue to the city each year from the lease income,” Duggan said.
There are other ways Google contributes to Mountain View: Just its presence attracts other startups and companies to town. Google also donates millions each year to its hometown for things that residents really want. Better bike paths. Free community shuttles, to name a few. Still, Duggan is a realist about Google.
“They’ve made some very specific investments. You know, some would say relatively minor,” Duggan said. “In fact, one of the challenges for Google is sometimes trying to get them to have more of a local focus, which I think they’ve gotten better on it in the last few years. So, no company is perfect. Google isn’t perfect. Um, is there more traffic because of their presence? Yeah. Have they had an impact on rents in town? Sure.
“I’m not advocating communities should have only one major employer. But having one very successful company is a lot better than the alternative.”
But why did Google choose Mountain View? Companies go where the resources are. “For Google, I think it is talent. There’s been a relocation of talent from all over the world into that area,” Green said.
Company Town Version 2.0
Mountain View seems so different from the 20th century company towns. It is not industrial. There are not workers sweating in mines or over assembly lines. Google and the other big tech companies look like pretty cushy places to work.
“Many people hear the term company town and they immediately think of negative things. We think of the term company town as a kind of Big Brotherish place where the company controls everything. It’s almost like a prison camp,” Green said.
“But there were some places — and don’t say it was half — but there were some places that were built to be paternalistic and nice places to live,” Green said. “So one of the main ones that always comes to mind is Hershey, Pa. There were libraries and schools. There were parks. But you are actually being kind of controlled by the company in many ways. And it would be a more sort of benign dictatorship.”
That seems to be the model adopted by Google and other tech giants. In the last two decades, a kinder, gentler version of corporate control has emerged: Companies compete for talent with luxe campuses and by pampering employees with free organic meals, massages, transportation, haircuts, dance classes, dry cleaning and more. It is like a prison people choose to go to — with cozy nap pods and cold brew on tap.
But what would tell us that all isn’t well?
“One would be: Is there a two-tier structure developing where you have, you know, a group of engineers who are highly paid and bus drivers who are not so well paid?” Green said. “I’m not saying that I think this exists, I’m saying it’s something to watch out for.”
There are two tiers at Google and at most other large tech companies. There are employees, then there are subcontractors. The subcontractors are paid far less, receive fewer perks and less-generous benefits.
These disparities are not going unnoticed or unchallenged. Unions have successfully organized cafe workers at Facebook. Groups are forming to tackle what some are calling “occupational segregation.”
Ben Field leads the South Bay’s AFL-CIO Labor Council, which co-founded Silicon Valley Rising, a grass-roots campaign advocating for higher wages and affordable housing for workers.
Cost-of-Living Issues
“What we’re seeing now is that the benefits of growth are not reaching everyone, those who drive for, serve and protect the Valley’s high-tech giants, which make billions of dollars in profits: Those families are barely getting by,” Field said. “What we need is to expand economic opportunities so that more people who work for a living can actually make a living.”
These opportunities cannot come fast enough for contract workers like Google shuttle driver Roxanne, who preferred to not give her last name. She is one of more than a hundred people in Mountain View living in RVs and trailers because they cannot afford an apartment within a couple of hours of their job.
“And it’s getting worse. And they’re seeing seniors and kids and families — this is what they’re doing because of the rent situation,” Roxanne said.
And that is another symptom of the company town, according to Green.
“That’s true of a lot of these meatpacking towns in the Midwest,” Green said. “People can’t afford real houses so they’re living in trailers. So that’s a bad sign.
“I guess another issue would be ‘Is there an independent press?’” Green said.
For nine years, Dan DeBolt reported on Google’s impact on the city for the Mountain View Voice.
“Covering Google is very difficult as a journalist,” DeBolt said. “They do not like to be open. For a long time I couldn’t figure out how many employees they had in Mountain View. For years, I couldn’t figure that out. It’s still very unclear. Twenty thousand … is the number … that I see still being reported in the news. And you know, it’s a weird thing to not be able to get basic information about things that deeply impact the city,” DeBolt said.
“I think our city council probably really has a really hard time demanding everything that they could get from Google,” he added. “Like, for example, we need affordable housing built and we could, you know, say, well you can’t build any more offices unless you agree to fund this many affordable homes. And they have not been very aggressive at all.”
Company town expert Green agrees that the city council’s greatest leverage is its power to decide what gets built and where.
In 2015, Mountain View used this lever to contain the company’s growth in North Bayshore. The city awarded LinkedIn the right to develop a huge parcel next to Google’s office complex and seriously downsized Google’s expansion plans. Several city council members, including Mike Kasperzak, seemed to be worried that the company was getting too big.
“I personally think that economic diversity is important,” Kasperzak said. “I’ve lived through two corporations in Mountain View that were masters of the universe and are no longer with us. There’s no spells being cast, but you know, you just never know.”
Power Struggle Over Land
A few months later, Google flexed its financial and strategic muscle to get what it wanted. It circumvented the will of the city council by engineering a huge land swap with LinkedIn. Now, Google effectively owns or leases almost every acre of developable land in the neighborhood.
Google’s expansion over the last decade-plus has already had a profound effect on small businesses in the neighborhood. Some owners complain that the intense traffic deters customers. Others feel like it is hard to attract customers when most people in the neighborhood are Googlers with 24/7 access to free food and all those perks. Successful businesses risk being pushed out to make room for development.
That is what happened at Overtime Fitness. The gym was forced to close, and the building was leveled to make space for a 200-room business hotel.
As old businesses die, the local economy leans heavier on Google. What if the company disappears? A big enough catastrophe is hard to imagine. But Google has plans for its largest campus yet, in San Jose. Will it relocate, or just expand? Mountain View awaits the answer.
