The Silicon Valley is booming. According to a recent U.S. Census Bureau report, the startup-riddled “techtopia” has the country’s second-highest concentration of wealthy people. Some 16 percent of Santa Clara County households earn at least $191,000 per year, placing them in the nation’s wealthiest 5 percent.
With Bigwigs like Google, Apple and Facebook anchored in the area and a burgeoning legion of venture capital-backed startups angling to be the next “big thing,” the forecast looks favorable for those riding the latest wave of wealth.
But not all those residing in Silicon Valley are sharing these sunny skies. According to the Silicon Valley Index, today there are more people on food stamps than there were 10 years ago, and homelessness has swelled 20 percent since 2011.
“In the midst of a national economic recovery led by Silicon Valley’s resurgence, as measured by corporate profits and record stock prices, something strange is going on in the Valley itself,” Cindy Chavez, executive director of Working Partnerships USA, said in an interview with the Associated Press. “Most people are getting poorer.”
Much of this is due to the rising cost of living in the Silicon Valley. The Insight Center for Community Economic Development says the median price for a home in the area is $550,000, while rent averages a little under $2,000 a month for a two-bedroom apartment. This means a family of four needs to make around $90,000 a year just to cover basic necessities like rent, food, transportation and childcare.
This is not much of an issue for the region’s well-educated (and paid) programmers, techies and business savants, but what about those working minimum or even reasonably-waged gigs? In short: They are being left behind
The average income for Hispanics, who make up some 25 percent of Silicon Valley residents, has fallen to a record low of $19,000 a year, according to the Silicon Valley Index. Conversely, the Silicon Valley elite is worth billions.
“The fact is that we have an economy now that’s working well only for those at the very top,” said Economic Policy Institute President Lawrence Mishel in another AP interview. “Unless we adopt a new approach to economic policy, we’re going to continue going down this path, which means growth that does not really benefit the great majority of people in this country.”
The grim reality is this trend is not exclusive to the Silicon Valley – we are living in one of the starkest eras of economic inequality in history.
Last month, Dan Ariely and Michael Norton’s 2011 study on wealth inequality went viral on YouTube and has attracted more than 5.5 million views to date. The video visualizes survey results showing what Americans believe the ideal wealth distribution to be, contrasted with the actual distribution. According to the video, CEOs now make 380 times the average worker’s pay and the top 1 percent has more wealth than the bottom 90 percent – combined.
This is why unemployment continues to soar even as corporate profits remain at a record high. While the government has been quick to prop up big business when it stumbles, small business is where the solution lies – they have created more than 65 percent of the net new jobs in recent years.
One cannot help but be reminded of the famous Charles Dickens passage: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…”
What good is prosperity if enjoyed only by a select few? We must find a way to reconcile people, planet and profit – to make full use of our cognitive and creative potential as human beings to rise up to the challenges that will define a generation.
As the world shrinks, we continue to grow and our actions will absolutely change the world – for better or worse.