Whether you like it or not, tech companies are a major component of the San Francisco and Bay Area landscape. For the most part, these companies continue to supply jobs and make innovations that make our lives better.
However, the massive influx of tech companies in the Bay Area has also contributed to the gentrification of the Bay Area. Silicon Valley communities continue to experience a rising cost of living, with current estimates up by 3.1 percent since August of last year and roughly 10 percent from 4 years ago. This data, which comes from an August report from the U.S. Bureau of Labor Statistics, measured the price of housing, food, and frequently consumed goods. These staggering increases in cost of living, a product of gentrification, have made it nearly impossible for first-time buyers to dream of owning a house and has forced out many long-time renters in these neighborhoods. Gentrification is especially prevalent in tech havens like San Francisco and Palo Alto, but its effects are spreading. For example, in Oakland, now home to Pixar, Uber, and many startups, the median house price now sits at $644,000, nearly $400,000 greater than it was just five years ago.
While there are a litany of benefits that have come from the tech boom, we need to be able to survive the negative effects. Some solutions proposed include an increased tax on technology companies—San Francisco is considering a 1.5% payroll tax specifically on tech companies—to better fund issues like public education, transportation, and housing.
In addition, many communities have set caps on growth to deter future tech expansion. Palo Alto has capped the growth of office space in the city at 1% annually and, according to Thomas Fuller’s article in the August 30, 2016 New York Times, Palo Alto’s mayor Patrick Burt has considered banning new companies “whose primary business is research and development, including software coding.” This radical ban demonstrates the severity of the issues plaguing the city, which is home to some of the wealthiest people and companies in the world.
Mayor Burt has been a vocal leader in protest of the current state of tech companies, issuing a statement slamming big tech companies for “choking off the downtown” of Palo Alto and calling the current state of affairs “unhealthy.” While the unemployment rate in Palo Alto is well below the national average due to the tech boom—a mere 2.7 percent compared to the 5.5 percent national average—many Palo Alto residents are not able to support themselves due to rising rents. A September New York Times article cites the average rent for a one-bedroom apartment in Palo Alto at $2,800 a month, a truly astronomical figure. As in San Francisco, many Palo Alto locals have been forced to leave their homes. Some Palo Alto residents spend as much as 80 percent of their income on their rent, making it very difficult to afford certain necessities and nearly impossible to plan for the long-term. In addition to affecting tenants, the changes have made it difficult for small and local businesses to thrive within the city.
Many tech companies are seeking an image change to improve relations with local cities, hoping to prove that are great contributers to theirlocal communities. In 2015, Mark Zuckerberg, the founder and CEO of Facebook, pledged to donate 99 percent of his Facebook stock (an estimated 45 billion dollars) to his nonprofit charitable organization, and made an especially large donation to SF General Hospital. In addition, many tech companies are partnering with local nonprofits and require their employees to log community service hours, often times fully paid by the company.
Twitter, for example, has annual designated service weeks, in which employees take off work and volunteer at organizations throughout the Bay Area community. Habitat for Humanity is one of the more prominent nonprofits that organizes service weeks and welcomes tech workers as volunteers.
This summer, I interned with Meals on Wheels, a nonprofit committed to feeding San Francisco seniors physically unable to leave their homes, and I saw the prevalence of these partnerships firsthand. Tech companies like Lyft, Pinterest, and Zendesk all have partnerships with Meals on Wheels, and their employees volunteer anywhere from a weekly to quarterly basis.
Another solution tech companies are pursuing is simply offering less jobs in the Bay Area. To combat their own rising costs and to be able to attract new, young talent, many tech companies are opening large offices outside of the Bay Area which employ many entry-level, lower salaried employees. Phoenix, Portland and Seattle, Las Vegas and St. Louis are all emerging tech hubs where tech offices are primarily staffed by lower level employees. Among the tech companies that have launched branch offices in the Phoenix area are Uber, Yelp, Shutterfly, Zenefits, Weebly, Gainsight and BoomTown.
Despite the shift out of the Bay Area for many companies and the negative perception that many locals have of tech companies, tech and its influence are here to stay. Tech companies will need to coexist with the local communities, and the increase of community service partnerships is a good start. However, communities and the companies themselves need to continue to examine solutions that address the growing problems of gentrification and the increased cost of living that forces residents out of the Bay Area and leaves many of those that remain struggling with poverty.
