By Sue Wood
November 20, 2018
Despite having 2 of 3 of the state's lowest unemployment numbers, a San Jose advocacy group study claims Silicon Valley jobs don't keep up.
SAN JOSE, CA -- When some of the highest-paid people on the planet can tout the lowest unemployment yet still not make ends meet like they did 20 years ago, there's something wrong with the world's algorithms.
But that's how it goes with California's latest unemployment figures for October declaring a record low of 4.1 percent, with San Mateo, Santa Clara, Sonoma, Marin and San Francisco counties all showing the lowest at less than 2.5 percent, EDD reported Friday. At the same time, 90 percent of the jobs in the Silicon Valley pay less now than when Netflix first launched in 1997, when one factors in the cost of living for a region known for its economic tech boom, according to a two-decade study Working Partnerships USA conducted with University of California, Santa Cruz.
Sure, tech workers in San Mateo County, with its 2.1 unemployment, and Santa Clara, with its 2.5 percent, are working at a higher level compared to many industries and regions. But in some respects it doesn't make much difference if the workers can't afford to live there. A recent Zillow housing report alone declared it takes 22 years for prospective homeowners to save for a down payment to house -- three times that of the U.S. average.
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The median price for a single family home in San Mateo County skyrocketed in two decades from $327,300 to $1.39 million. Santa Clara's surged from $308,100 to $1.29 million, while San Jose's rose from $276,100 to a staggering $1.1 million, Zillow reported Tuesday.
In terms of stagnant wages, middle-income employees were hit the hardest, as wages have declined between 12- to 14 percent, concluded the San Jose organization that researches inequality and poverty.
The Silicon Valley consists of more than just technology workers, who saw a median wage increase of 32 percent over the past 20 years. That's like a century to the tech world.
And granted, the region's economy has been growing at an astronomical rate. But those who work in the region outside the world of technology have seen fairly stagnant wages. These are the people who work in the hotels to house the international visitors coming into town for conferences, along with the restaurant staffers serving up the food and drink.
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"If you have low unemployment, you would tend to see companies raising wages to compete, but we're not," Working Partnerships USA Director of Economic and Workforce Policy Louise Auerhahn told Patch.
The analyst said the group was a little surprised by its findings, which it managed for the 20-year period.
"We knew that wages had already fallen (with the cost-of-living adjustment). We didn't expect that it would be 90 percent," she said. The top and bottom of the income scale didn't drop as much, but the middle-of-the-road workers saw more difficult circumstances through the years.
Auerhahn referred to the trend as a "monopsony," an economic term in which a small number of people and entities have market power and control the market as the major purchaser of goods.
Technology companies clamor over attracting engineering and programming talent, but how do they keep their janitors and subcontractors on board when the median price of a house costs $1.29 million in San Jose alone. It's an inequity that's hard to ignore -- especially when you have tech company shuttle drivers forced to sleep in their rigs to maintain a job in the region.
To put this into perspective, household incomes would need to rise 93.3 percent to keep up with the growing housing demand and pricing, according to a recent Zillow report. Further, U.S. analysts have found most people are spending at least 40 percent of their income on housing as rates go up. And this is just housing. Routinely, an expensive region to reside jacks up prices for other cost of living expenses.
"Everyone recognizes we're in a tight economy right now in every industry. The cost of living isn't what it was 10 years ago or even 5 years ago," Silicon Valley Leadership Group Vice President of Tech & Innovation Peter Leroe Munoz said. "In terms of tech, it's certainly true -- and health care, government, education and others -- it's more expensive regardless of industry."
What appears as deceiving in terms of making a living is a thriving October employment rate for the San Francisco Bay Area's nine county region:
- San Mateo: 2.1 percent
- San Francisco: 2.3 percent
- Marin: 2.3 percent
- Santa Clara: 2.5 percent
- Sonoma: 2.5 percent
- Napa: 2.6 percent
- Alameda: 2.9 percent
- Contra Costa: 3 percent
- Solano: 3.6 percent (tied with Santa Cruz County on the outskirts)
In Southern California, the two largest counties, Los Angeles and Orange, report October's unemployment at 4.7- and 2.9 percent, respectively, per California Employment Development Department.
For more information, visit: https://www.edd.ca.gov/.