Wednesday November 21, 2018

Silicon Valley Wages Are Shrinking for All Except the Top 90th Percentile

According to a study by UC Santa Cruz's Everett Program for Technology and Social Change, wages for 9 out of 10 Silicon Valley workers have decreased over the last 20 years as the inflation-adjusted numbers show a 12% to 14% decline. In contrast, wages for the top 10% of earners at corporations have increased by 0.7%. The underlying story is that Silicon Valley has been ground zero for "one of the nation's strongest economic booms and historically low unemployment rate that outpaces the national average." Over the past 17 years, the GDP per person in Silicon Valley, or "amount of money generated per Silicon Valley resident," has increased 74% which is 5 times the national average. So where is the money going?

Investors and owners have increased the amount of profits taken from businesses to 40% in 2016 compared to 36% in 2001. This means that $9.6 billion or $8,480 per worker is now going to the select few instead of the majority of employees. These large scale changes in the economic stability of Silicon Valley has driven low and middle income workers out of homes, while also creating more low wage jobs. Workers toiling away at jobs such as teacher, cook, security, and firefighter will no longer be able to pay the bills to live in the area. The employees of these thankless public service jobs and other low wage jobs may have to move to other communities in the future as investors, the top employees, and owners take a larger cut of profits.

"It's incredible the kind of revenues or wealth that's generated in this area, and yet it doesn't work as an economic model for a large majority of the population," said Chris Benner, a UC Santa Cruz professor who led the study. "It's not just a few people being left behind." Benner said big technology companies like Google and Facebook are so dominant in their respective markets that they have been able to direct a larger share of revenues to investors and some top employees. At the same time, the region's increasing cost of living is leading to some of the highest poverty rates in the country, he said. Adjusted for living costs, California has the second-highest poverty rate in the U.S., according to the U.S. Census Bureau. "Do we want to be a community where our firefighters and teachers aren't living with us, they're living separate, in far off communities?" Hancock said.