The Economic Gap is Now a Canyon

Findex2015-coverolks in Tallahassee or Saint Paul or Topeka often assume that everyone living in Silicon Valley drives around in a BMW. That’s why, when I’ve traveled, I’ve tried to share the truth…and it’s shocking to many: One in four families in “wealthy” Silicon Valley cannot simultaneously afford food, clothing, shelter and medical care.

But not anymore.

As alarming as this fact sounds, I learned yesterday at the “State of the Valley” Conference that it’s no longer true.

It’s worse.

The number, according to Joint Venture Silicon Valley who compiles the “Silicon Valley Index” every year, is now 30%. That’s how many households don’t meet what they call “minimum self-sufficiency standards”. Working families, typically, whose incomes cannot make ends meet. They rely on Second Harvest Food Bank, or Homefirst or other shelters, or Valley Medical Center for their most basic of needs.

We’re not talking about the Federal Poverty Level here; that number is a joke—and a not-funny one. That’s because it’s not adjusted for region. In the most expensive housing/rental market anywhere, your family of three is considered above the Federal Poverty Rate if you earn $21,000 a year. Try living on twice that in Silicon Valley. Three times that.

Know this about Joint Venture: They’re not some lefty-liberal group; They are an inclusive team of leaders in tech, development, banking, government, academia and more…and what they really do is gather the data, report on it, and then allow you and I to have conversations about what it means.

Sometimes, like in the statistics I just mentioned, they’re shocked by their findings. This year they discovered a frightening gender/wage gap that I think caught a lot of Silicon Valley leaders off-guard…but there it is, staring us in the face.

We have to deal with these issues. Think of it: 30% of families in the richest region of the richest nation on earth struggle to get by every day, every month. And yes, I understand that you don’t have to live in Bangor, Maine to be surprised by this economic chasm…it surprises people who live in San Jose and Sunnyvale too.

It’s also why Valley Medical Center is here, and why I’m proud to serve its Foundation. Not only do we offer this crucial part of the safety net to the 30% who need us, the care is as excellent (or better) than anywhere else.  More and more families with coverage and good incomes are choosing us for that reason. This is a good thing.

But let’s not forget VMC’s mission, which based on Joint Venture’s findings this year, has never been more important for the health of our entire community.

Learn more about the Silicon Valley Index here, and thanks to Russell Hancock, Joint Venture CEO, for asking me to participate as an Index Advisor.

1 reply
  1. Jon D. Kelley
    Jon D. Kelley says:

    To be honest – given what I see every day, I’m surprised it’s not higher.

    My wife and I are two of those people who are struggling – and have become “displaced” as a result. Calfresh provides our food, we got lucky to find a motorhome (we’re working on finding housing through HUD/VASH – I’m an Air Force/Gulf I vet) and were it not for VMC, our multiple comorbidities would have done us both in.

    Being disabled and therefore unemployed (I came up in trades,) I have noted two major underlying economic factors that seem to have driven prices upward, making this the “Minimum Self-Sufficiency Standards,” as you put it, so high:
    1) Fuel costs. Whether it’s raw petroleum or finished fuel (Diesel or gasoline,) fuel is a “base commodity.” This drives costs of transportation, energy for production, and even raw materials for many industries. (What industry does NOT use petrochemistry in some fashion? I can’t think of any – if you can, please let me know.)
    2) Housing/real estate costs. Think of this as being related to the subprime mortgage crisis – this empowered people to buy “more house than they could afford,” but it also had the side effect of rapidly driving up property “values” all over the region. Of course, driving up one parcel hauled the values of parcels around it up (for no good reason I can fathom,) and I know people who feel trapped because they’ve been in their home for 20-30 years, haven’t made any improvements, but feel that they can’t sell out because they’ll get rammed on cap gains taxes because the value of their home has been hauled up because the homes /around/ /them/ have been flipped and inflated. False inflation.

    (Of course, local governments don’t want to fix the latter problem – they depend on property tax revenue, and correcting property values will /decrease/ their tax revenues. Ever know a government to want to decrease income? Neither have I.)

    Given that VA out here is underfunded and overloaded, I am grateful for SCVMC (even though you guys are getting overloaded as well – thanks to Obamacare. Seriously – let’s add 18,000 IRS agents, but make no provisions for educating practitioners? Even /I/ can see the problem with that!

    It will take both prices coming back down to reality to shrink the “wealth chasm” (fuel < $1.75/gallon, median home price < $100k) in order to restore some normality – and I just don't see that happening anytime soon. (Raising FMW or LMW is a stopgap at best, and it about as useful as putting a Band-Aid on a sucking chest wound. It makes the First Aider feel better, but it's ultimately useless. Putting more money in circulation will only harm most the people it's purported to help, and the only people who will win are the people who collect taxes…)

    Reply

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