The state of the Silicon Valley is grim when it comes to equity and equality.
The 2022 Silicon Valley Index report found that while jobs are back to pre-pandemic levels in the region, income inequality widened, inflation skyrocketed and housing prices soared.
Officials from Joint Venture Silicon Valley, a group that analyzes regional issues affecting the economy and quality of life, highlighted these bleak findings on Friday, where it released its report at the annual State of the Valley conference.
The group uses data from a variety of sources to examine last year’s economic trends in Silicon Valley which they define as all of Santa Clara, San Mateo and Santa Cruz counties, and part of Alameda County, including Fremont.
Stratification of wealth
The most shocking statistic to come out of the report is the staggering income inequality – the highest in the nation.
During the conference, Caroline Simard from the VMWare Women’s Leadership Lab at Stanford said if she could give the Silicon Valley a grade on equity, it would be an F-.
Throughout the 39 cities in the valley, there was $1.2 trillion in household wealth, but 92% of that wealth is owned by the top quarter of the population. The lowest quarter only owns 1.4% of the wealth.
“There is no denying and no dancing around the profound inequality that exists here,” Santa Clara County Supervisor Susan Ellenberg, who attended the conference held at Stanford University, told San José Spotlight. “Everyone has to acknowledge how race driven the disparities are.”
For example, Hispanic or Latino residents make an average wage that is 64% less than similarly-educated white residents; for Black and African American residents that figure is 50% less.
About 33% of Silicon Valley households are not self-sufficient – requiring assistance from the government or community to make ends meet for the most basic of needs. For Latino residents, that figure is 61%; for non-citizen Latino residents, it’s 82%; and for Latino families where neither parent speaks English, the figure is 90%.
A two-person household would need to earn close to $100,000 a year to be self-sufficient, “and that does not mean you can afford a Netflix account,” said Russell Hancock, CEO of Joint Venture and president of the Silicon Valley Institute for Regional Studies. This is the third year the organization’s annual report has highlighted deep inequities and the growing wealth gap.
Inflation increases by 5%
Costs in the region have also increased on an average of 5.4% but some basic needs have gone up even more. For example, food and produce went up 15%, household energy prices by 18% and gas prices rose by 36%, according to the report.
Another significant and disproportionate increase was cost of childcare.
“(Childcare) is one of the biggest barriers for women entering or staying in or returning to the workforce,” Ellenberg said. “If we don’t take childcare seriously as a part of the economic infrastructure and make sure that it’s affordable and accessible, we have no hope of closing the gap.”
Hancock said experts predicted that housing costs would trickle down during the pandemic, but Silicon Valley saw the contrary. In the region, the median cost for a home was $1.3 million which means that only 25% of the community could become first time home-buyers.
Last year, the region approved 58,000 permits for housing – a figure Hancock said was “not really a drop in the bucket,” in regards to the housing need and was largely for homes that many people could not afford.
Last year, unemployment dropped to 2.9%, close to pre-pandemic record lows. Hancock said the region regained the 150,000 jobs lost during the pandemic, and added 15,000 jobs.
However, most of those jobs were in the tech sector. Jobs in retail, transportation, nonprofits and other services decreased by 20-30%.
Jim Wunderman, CEO of the Bay Area Council, said it’s not fair to place the blame on tech companies. The real culprit is the institutional and structural racism in the county’s fabric and the solution is to redistribute wealth, he said.
“I think it’s natural to jump and say this is the fault of the people who are doing so well,” Wunderman said. “But we also have all this institutional racism in our history (that we need to dismantle).”
Ellenberg said it’s hard not to feel cynical while looking at the data, but remains hopeful because of the region’s level of available resources.
“When we’re presented with information that feels grim, it really means that we are seeing clearly and specifically where our challenges are, and what opportunities we have to do better,” Ellenberg said.
Contact Jana Kadah at [email protected] or @Jana_Kadah on Twitter.