Many of us share a bygone era fantasy about wealthy industrialists all being like Henry Ford. Seeing a high turnover in his workforce, the mogul famously doubled his workers’ wages and said it was so everyone who worked for him could afford the cars they built. Ford is remembered as being a champion of the working class.
Today, instead, we have the Walton family, of Walmart fame, which pockets billions while their workers qualify for food stamps. We also have a wealth inequality that is the worst in this country since the Great Depression. Yes, we produce more billionaires than other countries. But there are also more Americans living in poverty (45 million) than there are Canadians (35 million).
You’ve heard the platitude that a rising tide lifts all boats? It’s trickle-down sloganeering—more wealthy people simply means the more people will be wealthy. Nowhere is the reality of the not-trickling-down falsehood hitting harder than in Santa Clara County, California, the cradle of America’s tech industry. According to Forbes’ recently published annual billionaire list, Silicon Valley created 23 new billionaires in 2014.
You’ve heard the platitude that a rising tide lifts all boats? It’s trickle-down sloganeering—more wealthy people simply means the more people will be wealthy.
It’s just one area of the state! You’d think, if you subscribed to the Henry Ford fantasy, that the entire valley would be lifted. And that this fortune would spread across the region, whose wage earners would also enjoy the boom times. Instead it’s become ground zero for wealth inequality and a sobering reminder that working for a living isn’t enough to live on.
Ironically some of these new Silicon Valley billionaires (including three from Uber and three from Airbnb) come from capitalizing on the sharing economy, the foundation of giganomics. It’s a system that treats its labor force like they’re hobbyists, not meant to make a living, just cobbling things together part-time to earn some extra cash. Uber drivers aren’t cabbies. Airbnb hosts aren’t hotel operators. They’re just sharing resources and making a select few ridiculously flush.
“My family’s household income is $250,000 a year, but I promise you I am middle class,” writes student columnist and Palo Alto resident Jesse Klein. “I live in a $2 million dollar house, but I promise you I am still middle class. It has one story, doesn’t have a pool or its own movie theater. It is a modest three-bedroom, two-bath.”
This is Silicon Valley in a nutshell: lots of “middle-class” super-haves and way more have-nothings. According to data from the 2013 American Community Survey crunched by NPR, only 13 percent of families in Silicon Valley make $250,000 a year or more. So perception and private movie theater aside, how does the other 87 percent fare?
Not good and getting worse, according to the data.
“Income disparities persist between racial and ethnic groups. The lowest-earning racial/ethnic group earns 70 percent less than the highest earning group,” notes the 2014 Silicon Valley Index. “The gap between the highest and lowest earners has increased. The share of households in Silicon Valley earning more than $100,000 increased two percentage points to 45 percent in 2012, while the share of households earning $35,000 to $99,000 decreased two percentage points to 35 percent.”
The California Housing Partnership Corporation reports, “Between 2008 and 2013, the cities of Santa Clara County experienced a 62 percent reduction in affordable housing funding.”
This, in a part of the country where the average home price, according to MLSListings, a Sunnyvale-based listings service, is now $1 million. This tide isn’t rising all boats, it’s rising all prices.
Meaning: Silicon Valley is a perfect place to get rich and richer. It’s also a perfect place to be in the ranks of the working poor and working poorer.
Silicon Valley produces billionaires based on sharing in the least egalitarian area of the country. That is very, how do you say—rich.