Rampant wealth inequality in Silicon Valley could make San Francisco a ghost town

Are we headed toward a city made up exclusively of millionaires?
Are we headed toward a city made up exclusively of millionaires?
Image: AP Photo/Marcio Jose Sanchez
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In the late 1990s, I was making $12.50 an hour and living in a two-bedroom apartment. Life was pretty good. I could travel occasionally, buy dinner and drinks, and go shopping. I was far from wealthy, but I could afford to live on my salary in part because my rent was just shy of $500 a month.

Those days are long gone. The median cost of rent for a one-bedroom apartment in San Francisco is $3,590, according to a March 2016 report from rental site Zumper. A two-bedroom will put you out $4,870 a month. (So much for getting a roommate to save on expenses.) Meanwhile, minimum wage in the city of San Francisco is $12.25 an hour.

Silicon Valley has played a big role in the Bay Area’s skyrocketing cost of living, while those left out of the tech boom have suffered the consequences. The problem is particularly pronounced for low-earning workers, including the customer service representatives, maintenance workers, drivers and other support staff who have helped make the industry’s explosive growth possible. But even if Silicon Valley’s new money aristocracy doesn’t care about living wages right now, it will have to confront the problem eventually—or else wind up a ghost town.

For years, jobs in technology have been heralded as the brave new frontier for the American economy. There’s even a myth that a STEM focus in schools will guarantee jobs and living wages for everyone. While it’s true that a software engineer at Google can make a six-figure salary, tech companies also need support staff to sell their products and to fix them, to run their offices and to sweep their floors. These workers won’t be around for long if they can’t make rent.

Such was the dilemma laid out by former Yelp employee Talia Jane in her now infamous open letter detailing the low wages and high cost of living so endemic to the Bay Area. Many insisted that it was Jane’s work ethic (or lack thereof) that was the problem. But while it is true that some millennial workers have entitlement issues in the workplace, it seems clear that Jane and her fellow customer support workers at Yelp’s Eat24 service are not being paid a living wage.

But Yelp is not alone in underpaying its support staff. Customer service associates for Uber make approximately $15 an hour, according to Apple’s customer service specialists in its San Francisco store also make around $15 an hour. At Minted, an online design marketplace, customer service representatives earn an average of $15 an hour. Customer service salaries at Amazon hover between $10 and $13 an hour, although Amazon’s customer service centers are located in places including Grand Forks, North Dakota and Kennewick, Washington–places with much lower rents than San Francisco.

Wage stagnation is a problem everywhere. And unions, which typically fight for cost of living increases, are continuously under attack in the tech sector. Prominent anti-union voices in tech include BuzzFeed founder and CEO Jonah Peretti, who has said that while he supports unions in principle, “I don’t think that it’s the right idea for us,” and Paul Graham, cofounder of startup incubator Y Combinator, who tweeted in November 2015 that “industries afflicted by unions are sclerotic and so have left lots undone.” Uber, Amazon, and Apple, among other companies, have also engaged in efforts to squash attempts at unionization, often by claiming that their workers don’t need unions at all. This pushback is dangerous for the laborers who make the tech sector’s profits possible.

Wal-Mart has long been criticized as a kind of evil empire, an expert at finding ways to pay employees less and union-busting where ever possible. But how are supposed to treat tech companies that do the same thing? Anti-union sentiment in Silicon Valley startups might come from a different political place than anti-union sentiment in Missouri, Wisconsin, or other, less liberal states, but the impact on workers is the same. People like Talia Jane and the drivers suing Amazon for withholding wages are all symptoms of a larger disease.

There are alternatives to this scenario. As Gawker’s Hamilton Nolan recently suggested, class-conscious tech workers could unionize, pushing a more socially aware agenda that prioritizes spreading the wealth to support staff and local communities. Or companies could voluntarily scale the pay for support staff to be commensurate with the cost of living in their areas. Gravity Payments chief executive Dan Price took this plunge in 2015, raising his company’s minimum salary to $70,000 a year. It is too soon to know how that experiment will turn out, and some reports have suggested that his motivations may not have been entirely altruistic. But so far, Gravity Payments is still open, still employing approximately 120 people, and still making a profit. The technology industry doesn’t have to sit back and passively contribute to the wealth gap.

If valuing the labor of support workers doesn’t inspire Silicon Valley to address stagnant wages, perhaps pure selfishness will. As venture capitalists and startup CEOs drive up housing prices in tech hubs, it’s become increasingly difficult for the people who make those cities functional to afford to live in them. Living nearby and commuting in is increasingly less viable. Just take a look at the rising cost of living in the once-affordable Oakland.

Should this trend continue, a six-figure salary won’t mean much. Highly paid tech workers will be stuck living in cities with no services available, because the combined costs of transportation and rent will drive out the people who provide those services.

A city populated exclusively by millionaires is one that’s nonfunctional. If we want to avoid that future, it’s time to admit that America’s wealth gap problem is one that coding boot camps and STEM programs alone won’t fix. The tech economy would crumble without service workers. We need to value their labor accordingly.