San Francisco’s Inequality

June 18, 2014

San Francisco’s Inequality

The May 20 edition of Vanity Fair comments on the state of inequality in San Francisco, which is 2nd only to Atlanta in the height of its Gini coefficient at .523.  ( If San Francisco were a country, it would rank with Rwanda in inequality at about the 20th most unequal country in the world.

Here in my favorite city, we have the abundance of wealth growth and what goes with it–a tech boom, which has produced a number of multi-millionaires and billionaires, and has created hundreds of thousands of jobs within an easy commute distance.  We have a growing number of upscale restaurants, merchants, and services catering to the growing number of wealthy. Preferring to live in the city, many of those working south of the city on the Peninsula, at one of the tech companies, have used their newfound wealth to bid up the price of homes in San Francisco. Why not, the city is more fun and the tech giants send busses to bring you and return you from pricey neighborhoods in San Francisco.

A Reuters article of June 9 reports that a UC Berkeley study finds that each tech job creates 5 other jobs in the Bay Area. Indeed, the unemployment rate in the City is down to 4.8 percent, far below the national average.

Yet, the poor segment of the population is being squeezed out of the city by rapidly rising apartment rents and very little new affordable housing being built. Mayor Ed Lee has just introduced legislation to target 30,000 new housing units to be built over the next six years, with half to be affordable–defined in this expensive city as for those whose incomes can be up to $146,000 for a family of four. If history is any guide, there will be very few that end up affordable to families whose incomes are $30,000, $50,000, or even $75,000. Officials offer an example of hope for townhomes to be built in Visitacion Valley, a rehabilitation area 30 minutes by car from toney neighborhoods, for $600,000 each. Most clerks, restaurant workers, and lower level support staff in government and industry cannot touch that price.  Rents for a studio with only 400 square feet are averaging $2,500 per month in Pacific Heights.

San Francisco’s Human Services agency reports that as of 2012, 15 percent of San Franciscans live in poverty. That’s up from 10.5 percent 5 years ago.

Something that can’t be good is also happening to San Francisco’s middle class, defined as those earning from 50 percent to 150 percent of San Francisco’s median income of $72,500. This middle class has declined from 45 percent of San Francisco’s population in 1990 to only 34 percent in 2012, according to the Brookings Institution.

Should we care about this? If we are among those who are at least reasonably secure financially, perhaps already own a home in the city, or have a job with a wage sufficient to live on, and upward potential possible, it’s hard to be concerned about it. After all, career and the family take the bulk of one’s energy and attention, and a little entertainment can take all the rest. That’s been true of my past, as well.

Some say, let’s just look at the good side of all this. Theoretically, we all have the opportunity in San Francisco and in the US to become multi-millionaires, so let’s not disturb a system which offers its citizens that chance.

Others, like me, say the capitalistic system is a good system, far better than any socialist system, but not without its faults and its excesses, and we must rein in certain of those in order to preserve it. Otherwise, given time, we subject our city and our nation to increasing social instability, possibly even revolution, followed by a dramatic redistribution of all wealth.  It has happened before in nations around the world and given time and likely worsening of inequality without policies to address it, it can happen here.

There are other reasons. A little more equality (without destroying incentives) makes the world a more pleasant, more enjoyable, and safer place for all. Furthermore, it’s just not fair–many of the wealthy inherited a good portion of that wealth, didn’t earn it themselves.  Many benefitted from privilege of the wealth or social status of their families or connections with people of power. Many benefitted from their skin color or their gender. Some were just in the right place at the right time.  It’s not all meritocratic!

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