News

Income inequality in Bay Area exceeds national levels

 

A Silicon Valley economic research institute said today that income inequality in the Bay Area is now more severe than in the rest of the nation, according to a Silicon Valley economic research institute.

The difference between high- and low-income Bay Area households in 2013 was $263,000, compared with a $178,000 difference nationwide, according to information released Wednesday by the Silicon Valley Institute for Regional Studies.

Households with incomes among the top five percent of all households in the Bay Area have average incomes of $473,000, according to the institute.

That is 31.5 times the average income of the households at the bottom 20 percent of all Bay Area households. That's a difference of about $458,000.

The difference between the two groups of households nationwide is $328,000, according to the institute.

— Bay City News Service

Comments

22 people like this
Posted by Crescent Park Dad
a resident of Crescent Park
on Jul 30, 2015 at 12:10 pm

The title and subject of this article is incorrect. Income inequality is a situation where, for example, two people (say a man and a woman) have identical skills, experience, performance ratings and tenure...but are paid significantly different salaries.

The correct term for the described situation should be "income gap". Big difference.


10 people like this
Posted by Todd
a resident of Another Palo Alto neighborhood
on Jul 30, 2015 at 12:20 pm

Thank you, Palo Alto, for doing your part. You may have sold out your childrens' futures and destroyed any chances of them being able to live here, but hey, at least most parts of town can continue to resemble a bucolic suburb.


17 people like this
Posted by YSK
a resident of Community Center
on Jul 30, 2015 at 1:14 pm

The current situation is appalling, distressing and sad for those of us who work hard every day and make money that once would have been just about sufficient and are now finding ourselves broke and scared.


11 people like this
Posted by YSK
a resident of Community Center
on Jul 30, 2015 at 1:16 pm

One question: How do you think it makes those of us barely hanging on to see tour busses filled with speculators and other persons with cash touring our neighborhoods staring at our homes and wondering how they can get their greedy claws on them?


14 people like this
Posted by Slow Down
a resident of Community Center
on Jul 30, 2015 at 1:36 pm

Slow Down is a registered user.

Who cares about the gap if the bottom is also doing better? The report shows the income of the lowest quintile in the bay area is higher than the rest of california, and higher than the rest of the US. One paper billionaire moves into your zipcode and the "gap" increases, but you aren't making any less.


21 people like this
Posted by Not Good w/Words?
a resident of Another Palo Alto neighborhood
on Jul 30, 2015 at 1:42 pm

I think the word the author was searching for was "disparity", not inequality. There is indeed a huge income disparity in the Bay Area, beyond the haves and have-nots--more like the conspicuous over-consumers and the living hand-to-mouthers.

With far too few people anywhere in between.


16 people like this
Posted by Todd
a resident of Another Palo Alto neighborhood
on Jul 30, 2015 at 1:52 pm

"Who cares about the gap if the bottom is also doing better?"

Well the study shows the bottom making an average of 15k a year, you would have to be setting a ridiculously low bar to consider that "better"...


7 people like this
Posted by Sea Reddy
a resident of College Terrace
on Jul 30, 2015 at 2:14 pm

It makes sense to increase minimum wage to $20/hour where the home average prices on the low end are over $1 million.

It is because, 45% of Palo Alto people rent. The owners want high rents averaging $2700 for one bedroom. When the properties are bought and sold the owners pay lot of high value property taxes.

So, let us help increase income for people that work in our town, come all the way here to service us. We want to be nice and they ought to earn $20/hour even if is the bottom of the employment chain.

Yes we can!

We may have to pay another dollar or two for the same food elsewhere. When one has $100K salary or a house worth millions, it is ok to pay a dollar or two.

We all need to live reasonably.

Respectfully


19 people like this
Posted by Not Good w/Words
a resident of Another Palo Alto neighborhood
on Jul 30, 2015 at 2:21 pm

One point that everyone seems to miss I'd that a healthy economy has a large middle class, The gap in the Bay Area between rich and poor is largely unfilled by a very few middle class families. The middle class should be the gross majority on the bell curve, not the tiny monority.


2 people like this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Jul 30, 2015 at 2:23 pm

An article about the Silicon Valley just appeared in The Economist:

Web Link

CALIFORNIA's Silicon Valley, the 50-mile stretch between San Francisco and San Jose, is perhaps the most productive and innovative land mass in the world. The Economist has identified 99 listed technology companies with market values of over $1 billion that call the Valley home. Together, these 99 companies are worth some $2.8 trillion (an increase of 75% over the past 30 months), and account for around 6% of all corporate America's corporate profits.
---
It’s not hard to guess that the high-income earners are responsible for the success of the Silicon Valley. So, what exactly are the low-income earners doing to contribute to the growth, and profitability, of the Valley?


4 people like this
Posted by Slow Down
a resident of Community Center
on Jul 30, 2015 at 3:18 pm

Slow Down is a registered user.

@Not Good w/Words - there is still a large middle class, it's just that you now need to make more to be in it. The nice thing about Palo Alto is you can make 200k and still feel like lower middle class. Keeps us humble.


Like this comment
Posted by Slow Down
a resident of Community Center
on Jul 30, 2015 at 3:22 pm

Slow Down is a registered user.

@Joe - I didn't set a low bar I just pointed out that the lowest quintile in the bay area makes more than the lowest quintile in California, or elsewhere in the US. So you could just as easily write a headline that read "Lowest Quintile in Bay Area doing better than rest of America" or "Growing Bay Area Economy helps lowest quintile surpass rest of California".


20 people like this
Posted by middle person
a resident of Duveneck/St. Francis
on Jul 30, 2015 at 3:46 pm

As to the market values of Silicon Valley companies trumpeted above, to me, anyway, it seems like some are unjustified and/or unsustainable. Bubble, anyone? I guess the trend of social media type companies with the focus on eyeballs and advertising doesn't impress me as much as engineering or medical advancements....

And: Palo Alto is "humble?!" Wow, this poster must not get out much.


6 people like this
Posted by Craig Laughton
a resident of College Terrace
on Jul 30, 2015 at 3:52 pm

I fully support higher incomes for lower end wages. I think about $25/hr. is about right. However, it will never get there, until the border is controlled. Illegal immigrants are killing off higher incomes for the lower class.

With respect to Bay Area issues, I don't think $25/hr. will allow enough to assure rent (foggeta bout buy!)here...they will need to commute, or live and work somewhere else. When the labor market is tight enough, a living wage, as well as increased productivity via technology will come into play.

Palo Alto is an elite opportunity for those with the skills and income to live here. It is useless to fight that notion.


1 person likes this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Jul 30, 2015 at 4:59 pm

> I think about $25/hr. is about right.

And with a benefits package of about 35%, this brings the cost-to-employ a minimum wage worker up to about $33-$35/hour. Obviously, this boost of the wage floor would escalate all wages up 3.5 times ($7.50 to $25.00). Moreover, most minimum wage workers have few, if any, skills. [Portion removed.]
Anyone proposing a $25/hr. wage base really should think about this for a while.


2 people like this
Posted by Craig Laughton
a resident of College Terrace
on Jul 30, 2015 at 5:44 pm

>Anyone proposing a $25/hr. wage base really should think about this for a while.

@Joe: Have you thought about the social costs of a permanent underclass? If the border was controlled, and low end wages were not undercut, $25/hr. might look like a bargain (even with benefits). It wouldn't happen overnight, and some feed-in ramps could be structured, especially for American teenagers and disabled people, but a high floor is essential for social health. We don't need a minimum wage law to bring this about...we need a controlled, and restricted, immigration enforcement...just the opposite of what we now have.


7 people like this
Posted by Tell it like it is
a resident of Green Acres
on Jul 30, 2015 at 5:44 pm

The minimum wage should be tied directly to the area local rent.
A family should be able to live on a single income so that one parent can care for the children while the other works full time. If the average rent for a two bedroom apartment is $3k per month, and using the 1/3 of your income allowed for housing expenses rule that the banks use, requires a minimum wage of $46.00 per hour (ignoring taxes for this discussion) and a full time job.

This community should ensure that a local business (or any employer for that matter) paying a wage less than $46.00 per hour will not be tolerated in Palo Alto.

Only in unity can reduce the disparity and hope to end poverty.


Like this comment
Posted by Craig Laughton
a resident of College Terrace
on Jul 30, 2015 at 6:13 pm

>This community should ensure that a local business (or any employer for that matter) paying a wage less than $46.00 per hour will not be tolerated in Palo Alto.

I would not oppose $46/hr., as long as it reflected market conditions (assuming that it could not be undercut by illegal immigration). If illegal immigration is not shut down, then Ricardo's Iron law of wages will continue to rule the labor market on the lower end. Doesn't matter what "this community" tries to legislate...it will just go underground.


1 person likes this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Jul 30, 2015 at 6:17 pm

> Have you thought about the social costs of a permanent underclass?

And you believe that paying people $25/hr ($35 to employ) is really going to remove the "permanent" underclass? And where are they going to go? Since you have legislated that they don't have to have any skills to become "middle class"--why would these people ever finish school, or seek any kind of training (community college, or even English proficiency)? They simply would come to you and demand more money!

And let's not forget that a lot of money currently earned by immigrants (legal and illegal) is not spent bettering their lives, but is sent home to Mexico, and other countries, in terms of "Remittances":

Web Link

MEXICO CITY — Remittances sent home by Mexicans living abroad rebounded by 7.8 percent last year after falling in 2013, Mexico's central bank said Tuesday.

Mexicans abroad sent home $23.6 billion in 2014, up from about $21.9 billion the year before.

--

Cetainly with base salaries at $25/hr--immigrants/foreign workers would be inclined to send more home to their families, or organized criminals, complaining that $25/hr is simply not enough for their compensation.

It's doubtful that the US will ever impose currency controls on these "Remittances"--making the argument that higher base salaries will eventually erase "poverty" rather hollow--particularly since "poverty" is world wide, and the American economy is only so large.

Sorry--but I doubt that many business owners would seek out counsel on this matter.



1 person likes this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 30, 2015 at 6:30 pm

There are some crazy comments here.

Let's for a minute imagine that there was a $25 minimum wage to enable low income employees to afford to live here. Can you imagine what this would do to the cost of groceries, to the cost of basic clothing, household items, etc. Safeway, Target, Walmart, to begin with would have to increase their prices. Can you imagine how these low income employees could afford to feed and clothe their families. No, there would still be outcry of raise the minimum wage for these poor families.

We are in an area where there are many high salaries with ridiculous amounts of perks and benefits. The difference between the highest paid and the lowest paid makes very little difference. The fact that there are high salaries being paid here means that these people are able to spend big money on high end housing, restaurants, luxury cars, and all sorts of things that help the local economy. The fact is that people are able to afford to get others to clean their homes, maintain their yards, wash their cars, etc. is actually bringing jobs including sometimes second jobs or jobs for the poorly educated. Raise the minimum wage too high and these jobs will go away. We will end up with self checkouts at all the stores and drones delivering our mail because it will soon be cheaper to get machines to do the work that lower income employees are doing at present.

This type of article makes nothing more than hot air.


2 people like this
Posted by Slow Down
a resident of Duveneck/St. Francis
on Jul 30, 2015 at 7:54 pm

@Craig - what makes you think a low minimum wage has anything to so with a permenant underclass? If anything it is unemployment and welfare dependence that creates a permenant underclass, and an increased minimum wage will block low skilled low education workers from ever having the opportunity to enter the workforce. We need to close the border, then eliminate the minimum wage if we want to get rid of the underclass.


1 person likes this
Posted by Craig Laughton
a resident of College Terrace
on Jul 30, 2015 at 8:09 pm

>We will end up with self checkouts at all the stores and drones delivering our mail because it will soon be cheaper to get machines to do the work that lower income employees are doing at present.

What's wrong with that? I worked many summers in the fields doing manual labor in the agricultural sector. I don't think humans should be employed in stoop labor, period! The machines should do it! I also think technology can replace many manual labor jobs in the non-ag sector. The remaining jobs, which require manual labor, should be well paid. But it won't happen, until immigration is controlled (and enforced).


2 people like this
Posted by Neighbor
a resident of Old Palo Alto
on Jul 30, 2015 at 8:25 pm

@ Resident

It is kind of funny that you think $25 an hour is a lot of money.Think about it.What is the take home pay, at $25 an hour? About $750 a week? $3000 a month? I would like to see you live off that.Now, think about living off $10 an hour.


Like this comment
Posted by Slow Down
a resident of Community Center
on Jul 30, 2015 at 9:24 pm

Slow Down is a registered user.

@ Neighbor - I'd ask why someone making so little money has to pay 25% of their income in taxes. If they kept the money they earned it would be the equivalent of getting a ~6/hr raise.


5 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Jul 31, 2015 at 6:13 am

mauricio is a registered user.

The fact that the lower quintile in the bay area makes more than the lower quintile in the rest of California and the nation is meaningless. Since housing prices and rents, as well as almost any other living necessity are so expensive and keep increasing, it's just a statistic. Foreign buyers are buying up every available property, especially in Palo Alto and San Francisco, and by outbidding everybody, keep setting record heights for house prices and rents, which keep moving up at a much higher rate than any regular salary could keep up with. Only millionaires can afford to buy housing in several bay area communities, and sky rocketing went precludes many middle class earners from even renting in the better parts of the bay area.

We can have full employment and still have the same problems. Look at Brazil as an example of what happens when an oligarchy is allowed to get entrenched and the middle class is fragile. About half of favela dwellers in Rio are middle class earners because they can't afford to live anywhere elseWe are getting alarmingly close in the bay area to favelas, which will be the only housing option for those not making huge salaries and owning stock options.


Like this comment
Posted by Progressive
a resident of Old Palo Alto
on Jul 31, 2015 at 7:24 am

I think that the problem is corporations. They should be abolished and we should return to the days where every good or service was produced by someone that you knew and lived close by. Artist, shoemaker,grocer, carpenter, doctor, farmer all lived as part of the community. Why should one skill be valued above all others? We are all workers and have equal value in the eyes of our mother Gaia. She does not value one life form over another, it is only man, and yes I mean MAN not woman who tries to dominate the earth and every living thing on our mother Gaia. For those who build monstrous homes that use excessive resources while smugly tooling away in their giant cars looking past people living in parks shame on you! We need to eliminate the money system to make money worthless so no one has more than another. We should use barter and trade for locally produced goods that are environmentally friendly and we should reduce the world population to roughly 2% of what is is today. That is what it was before the white european male started to spread his disgusting filthy dominance over the planet. We can start by carefully selecting who can reproduce so we can evolve into a higher form of less greedy, less aggressive, less competitive species that is one with the earth and other species who share with us equally. Even the bacteria and microorganisms share life equally. We should also stop exploring space because we will infect the universe like a virus if not stopped.


30 people like this
Posted by Another
a resident of Adobe-Meadow
on Jul 31, 2015 at 7:59 am

"Thank you, Palo Alto, for doing your part. You may have sold out your childrens' futures and destroyed any chances of them being able to live here, but hey, at least most parts of town can continue to resemble a bucolic suburb."

You see a lot of posts like this on various internet message boards, complaining about how high house prices in Palo Alto are unjust. I read one hysterical post on Facebook recently saying that our town has lost all of its old charm and that only greedy, amoral people now live here. The two most frequent complaints: house prices are too high, and too many Asian immigrants are moving in, displacing "native" (read "white") Palo Altans.

I don't quite get what people like this believe is a proper solution to this supposed problem. From what I gather, they would like it if there were enforced limits on both house prices and the immigrant population.

So I guess the government should impose a price ceilings and racial quotas on the Palo Alto housing market. That big 5-bedroom house in Professorville that you fondly remember from your youth would thus sell for no more than, say, $800,000. The lucky buyer would be chosen by lottery. The hordes of people wanting to buy at that price would have to submit an application indicating their race and national origin, and those with the preferred background--belonging to the white race, born in the US--would be granted preferential treatment in the lottery. In order to maintain the charm of Palo Alto, Chinese immigrants and other Asians would be banned from the lottery or pushed to the back of the queue.

It all sounds pretty ridiculous, but that's where these folks seem to be going with their complaints. They seem to forget that we live in a democracy with a market economy. It's not a fundamental human right to live in Palo Alto, nor is Palo Alto the only decent place a family in the Bay Area can live. I wouldn't mind living in a mansion in Atherton, but I can't afford it, so I live somewhere else.











Like this comment
Posted by Jerry Underdal
a resident of Barron Park
on Jul 31, 2015 at 4:51 pm

Jerry Underdal is a registered user.

@Mauricio
"We are getting alarmingly close in the bay area to favelas, which will be the only housing option for those not making huge salaries and owning stock options."

Another housing option is permanently affordable housing, owned by non-profit entities like Palo Alto Housing Corporation. Their rental properties don't get sold, much to the chagrin of corporations that would like to own them and charge what the market will bear. And profits from sales of homes purchased through Below Market Rate programs are shared by the sponsoring non-profit and the home owner. The non-profit's share goes to funds available for creating additional affordable housing.

As economically homogeneous as Palo Alto already is, imagine how exclusive it would be without the permanent presence of hundreds (anyone got a number for this?) of housing units that are required to keep rents affordable to specific household income categories.

@Another
"From what I gather, they would like it if there were enforced limits on both house prices and the immigrant population."

I agree that these are wrong-headed reactions to the current state of the housing market. Construction of more affordable housing would be a small but positive step to cushion the community somewhat against the negative effects of the heated real estate market.


Sorry, but further commenting on this topic has been closed.

He said – she said – who is lying? Justice Brett Kavanaugh or PA resident Christine Ford
By Diana Diamond | 71 comments | 2,579 views

Global Warming Diet
By Laura Stec | 6 comments | 1,296 views

Couples: "Taming Your Gremlin" by Richard Carson
By Chandrama Anderson | 0 comments | 1,171 views

Preparing for kindergarten
By Cheryl Bac | 0 comments | 647 views

 

Pre-registration ends today!

​On Friday, September 21, join us at the Palo Alto Baylands for a 5K walk, 5K run, 10K run, or—for the first time—half marathon! All proceeds benefit local nonprofits serving children and families.

Learn More