It’s No Picnic to Park – Homelessness Crisis Silicon Valley Style

From San Francisco to the heart of the Silicon Valley, the closer you get to the centers of employment, the more unaffordable housing becomes. In San Francisco, $1 million buys you, maybe, 800 square feet. According to RentCafe.com, rent for that same space averages $3600/month, rising 5% annually. Rents in Mountain View (Google’s HQ) are over 10% higher, while the average rent in Cupertino (Apple’s HQ) is about 10% less, but still unaffordable.

Work centers in congested cities – places like the Bay Area in California, New York City, Washington, D.C., Seattle, Los Angeles, Miami and Boston – need young, tech-savvy employees, recent graduate or self-taught STEM experts, many recent entrants into the job market. They offer great pay and benefits with a huge catch: younger workers, many slammed with college loans, simply cannot find a place to live.

For some, having lots of roommates is viable (sardine time), but that hardly represents the pledge of independent living normally associated with the pay levels they can generate. Some whose parents are conveniently located, move back to the family nest. Privacy is expendable. Others embrace hours and hours of commute time, trains, busses and cars, to move from affordable rural or small towns to these urban centers. Assuming clear traffic – LOL – the commute time each way from Stockton to Cupertino is an hour and a half, each way. 80 miles.

So, someone with a rich starting pay of $80,000/year paying $3600/month in rent: that’s $43,200/year, grossed up to $60,000 to cover the federal and state taxes on the gross needed to pay that rent. That leaves $20K to cover food, insurance, remaining taxes, clothing, car/Uber/Lyft, utilities, leisure time activities and… drum roll… repayment of student debt. And that assumes they can even find a vacant, average rental. Good luck on that one! If they were earning $60K in a smaller town, where rent on 800 square feet was a more realistic $1000-$1500/month ($12K - $18K, grossed up to $20K-$25K to cover taxes, gives them $35K-$40K to pay for all that other non-rent stuff, and you can bet that local prices for everything else are a whole lot cheaper than what is charged in the Bay Area. Housing is a huge deal in urban California, and homelessness is accelerating fast.

The above numbers are actually pretty elitist when you stop to think about it. $60K, $80K are well-above what most individual Americans earn. Some folks work in grocery stores, shops, or have jobs that will never pay that well (guards, janitors, cooks, waiters, runners, etc.) … just think about how they must live. And they cannot even afford the cost of a long commute!!! “‘If teachers, nurses, trash collectors and other regular workers can’t afford to live in the area, the fabric of society begins to fray, said Alison Hicks, a Mountain View council member… ‘To have a regular functioning town, you need to have occupational diversity,’ she said. ‘You can’t have a town that functions if we only have tech workers living in it.… It won’t be a functioning city as I know it. It wouldn’t be a city I would want to live in.’” Alistair Barr writing for Bloomberg in the May 26^th Los Angeles Times.

The Silicon Valley has evolved another method to cope with the severe cost of housing, one that does not sit will with a lot of local residents: semi-permanently parked RVs on residential or business streets. “Mountain View is a wealthy town that’s home to Alphabet Inc., the world’s fourth most valuable public corporation and Google’s owner. [Local police Sgt. Wahed] Magee spends a lot of his time knocking on the doors of RVs parked on the city’s streets, logging license plates and marking rigs that haven’t moved for several days.

“This is the epicenter of a Silicon Valley tech boom that is minting millionaires but also fueling a homelessness crisis that the United Nations recently deemed a human rights violation. Thousands of people live in RVs across San Francisco and the broader Bay Area because they can’t afford to rent or buy homes.

“In December, Mountain View police logged almost 300 RVs that appeared to be used as primary residences. Palo Alto, Berkeley and other Bay Area towns have similar numbers… Some Silicon Valley towns have cracked down in recent months, creating an even more uncertain future for RV residents. At a March City Council meeting, Mountain View voted to ban RVs from parking overnight on public streets. The ban hasn’t taken effect yet, but soon the town’s van dwellers will need to go elsewhere.

“The City Council also declared a shelter crisis and passed an ordinance to ticket vehicles that ‘discharge domestic sewage on the public right of way.’ At the meeting, some people opposing the ban blamed Google for the housing crisis.

“‘In my neighborhood there are a group of five or six duplexes and a couple that I know lived in one of them for 22 years. When Google moved in next door, their landlord raised the rent by $700 a month,’ resident Susan Barkin said. ‘Preventing parking and throwing more people out of our community is unconscionable. I do not want to live in a town where the only people who can afford to be here are very, very rich techies or very, very old retirees like myself.’… If representatives from Google were in attendance, they didn’t speak up to defend the company or address the housing crisis.

“But the issue has arisen inside the Googleplex. At a staff meeting this year, one Google worker asked why Chief Executive Sundar Pichai was paid hundreds of millions of dollars, while some employees struggle to afford to live in the area. Pichai said the company had little control over the high cost of living, people familiar with the situation told Bloomberg at the time.

“The median rent in Mountain View has almost doubled since late 2010, to $4,151 a month. That’s nearly triple the national average, according to Trulia. The median home value is $1.8 million, up from $750,000 10 years ago, according to Zillow.

“‘We have rising rents. We have gentrification. We have people being displaced,’ said Jennifer Loving, head of Destination: Home, a group that’s trying to reduce homelessness in Santa Clara County, home to Google and Mountain View. ‘All of that together is creating an untenable situation for thousands and thousands of families and individuals who are trying to live and work here.’

“RVs that are used as homes are all over Silicon Valley. They line frontage roads that run alongside highways. There will often be a chain of them on quieter streets in office parks and light industrial areas. But they can also be found on suburban residential streets parked in rows opposite the ranch-style homes common to the area.

“The RVs are often white or beige, and the windows are covered with blinds, sheets or blankets for privacy. Leaves and dust sometimes accumulate on the windshield wipers, and some have generators on the back for extra power. Around Google’s campus there are sometimes multicolored company bikes parked nearby so RV dwellers can ride to work.” Barr. Gee, we feel so bad, but that’s the way it goes!

Some communities are levying a special tax on large local employers to help develop more housing opportunities and support. Some employers have threatened to take their work centers elsewhere in retaliation. “Seattle's city council on Monday [5/14] approved a new tax for the city's biggest companies, including Amazon.com Inc, to combat a housing crisis attributed in part to a local economic boom that has driven up real estate costs at the expense of the working class.

“Amazon, the city's largest employer, said after the vote that it would go ahead with planning for a major downtown office building that it earlier had put on hold over its objections to a much stiffer tax plan originally proposed.

“The tax measure, passed on a 9-0 vote after a boisterous public hearing, would apply to most companies grossing at least $20 million a year, levying a tax of roughly 14 cents per employee per hour worked within the city.” Newsmax.com, May 14^th.

What is abundantly clear is that touting job and wage growth statistics is meaningless without an offsetting analysis of cost increases. And we know that “averages” where the highest earners have never made more in comparison to “most of us” is a deeply distorted measurement of successful policy-making. Of course, those high-earners make the averages go up… but 70% of working America has not seen an increase in inflation-corrected earning power in four decades! Who exactly is looking out for the little guy… most of us?!

              I’m Peter Dekom, and lying with statistics is no longer able to cover up the “average pain of average workers.”