A Silicon Valley Life Lesson: Money that ‘Clumps’ Crushes

If everything rich people tell us — about prosperity — happened to be true, Silicon Valley would right now be overflowing with exceedingly happy people. Silicon Valley, after all, has everything rich folks say they need to get an economy going and growing: an abundance of “successful” people with plenty of money to invest, spectacularly generous rewards for corporate executive “innovators,” and billions in subsidies from local governments

What more could deep pockets want? How about a largely union-free environment? Silicon Valley has that, too. This mecca for high-tech has hardly any workplaces with pesky unions — and their nasty habit of demanding that companies ought to be sharing wealth with everyone who helps create it.

Movers and shakers in Silicon Valley don’t do sharing. They do getting rich. They do that fabulously well. In Silicon Valley, “money is clumping,” as the president of a top local civic group puts it.

Clumping at the top. Most everywhere else, people are hurting, not happy, and Silicon Valley’s Institute for Regional Studies has a new report out on what’s driving that unhappiness.

The local blues start with housing. The problem: People can’t afford a decent place to live in Silicon Valley, not without devoting some unholy share of their income to rent or mortgage payments. Housing costs in Silicon Valley, the Institute for Regional Studies report notes, “remain the highest in the nation.” The typical local household is shelling out $2,401 monthly on housing, well above the $1,626 median monthly outlay in California and the $1,082 median in the United States.

This housing cost crisis, in turn, creates crises in other facets of daily life. To find affordable housing, people find themselves having to move further and further from where they work. That puts cars on the roads for more miles. That means more traffic. Lots of it.

Any commutes longer than a half-hour, researchers tell us, take a stressful toll. About half of Silicon Valley took over a half-hour to get to work last year. Add that commuting stress to the ongoing anxiety of hustling to meet Silicon Valley’s outsized monthly bills, and you have the basics for a hypertension perfect storm. Living conditions, the new Institute for Regional Studies study points out bluntly, rate as “harsh for the broad peripheries of the population.”

“The necessity for individuals and families to choose between paying for housing and adequately feeding themselves,” the Institute adds, “is becoming a more prominent issue throughout the region, even for those with incomes well above the poverty limit.”

Last year, the average Silicon Valley family of four with a little kid and a baby needed a combined income of $131,600 to get by without public or private assistance. Last year’s federal poverty rate for that family demographic? Just $25,750.

This relentless squeeze on daily life in Silicon Valley seems to be getting even tighter. Local housing prices have about doubled over the last decade. Homelessness has also doubled over recent years. Traffic congestion has quadrupled since 2002. The death rate from hypertension and hypertensive renal disease since 1999 has jumped 270 percent, over twice the hypertension death rate increase in California overall.

Why are these conditions of Silicon Valley life getting worse? One key factor: The distribution of income and wealth in Silicon Valley is becoming ever more skewed and concentrated.

Households with savings under $100,000 — the “non-affluent” in the new Institute for Regional Studies analysis — make up over half of Silicon Valley households, 53 percent to be exact. But these households hold only 2 percent of Silicon Valley’s wealth.

At the other end, “high net worth” households with over $1 million available to invest make up 13 percent of Silicon Valley. They hold a whopping 75 percent of Silicon Valley’s household wealth.

This intense concentration is making Silicon Valley increasingly unlivable for anyone other than the awesomely affluent. Their affluence is poisoning the Silicon Valley well on a number of fronts.

How so? Let’s start again with housing. The rich in Silicon Valley can afford to pay most any price for housing that strikes their fancy. Developers see that — and put their energy into building high-profit luxury units. Over the last four years, 83 percent of the homes granted Silicon Valley building permits have rated, the Institute for Regional Studies relates, as luxury dwellings “unaffordable to most buyers and renters.”

Wealthy people in Silicon Valley can, of course, also afford to pay more in taxes, dollars that could be used to expand affordable housing programs and local options for public transit. But these rich people don’t need affordable housing, and they don’t ride buses. They have little to zilch interest in paying taxes for services they don’t need and will never use.

What the rich, thanks to their enormous wealth, do have: enormous political power — and they use that power to keep their taxes low and the public purse squeezed.

Silicon Valley’s rich pull all this off, most of the time, with aplomb. They glide through life as enlightened stewards of the public trust. They donate to charities. They recycle. They roll their eyes when Donald Trump goes off on one of his nativist rants. They feel noble.

And the rest of us? In Silicon Valley and beyond, we get to feel like feudal peasants.

Sam Pizzigati co-edits Inequality.org. His recent books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.