Silicon Valley's Dangerous Disconnect
March 31, 2023
"Silicon Valley" conjures up images of advancement, such as advanced technology developed by advanced minds. In terms of inequality, however, the "advanced" area might resemble pre-revolutionary France to many. In wealthy areas like Saratoga or Los Gatos, the poverty rate is nonexistent, and streets are lined with luxury cars parked in front of multi-million dollar homes. In stark contrast, The Mercury News cites Berkeley's 94704 zip code as the poorest in the Silicon Valley region, with a poverty rate of 67%. Most telling, Joint Venture reports that 92% of the region's wealth lies in the hands of the most well-off 25%.
While a connection to pre-revolutionary France may be an exaggeration, the underlying concerns are legitimate. With only 29% of Americans feeling that the American economic system "…is generally fair to most Americans," according to Pew Research Center, dissatisfaction is becoming increasingly evident. Though part of the discontent may be America's increasingly materialistic attitudes, which I expand upon in "The Destruction of Priorities," there is much more behind it. The 94704 zipcode's poverty rate is a significant part of the equation; Saratoga's Porsches and BMWs go from dissatisfying to "beyond frustrating" when one comes from an area full of families struggling to stay afloat.
Even more concerning is how this might play out with a prolonged suffering economy. During the mortgage crisis, Americans energized against bankers with the Occupy Wall Street movement, and a parallel is not unforeseeable for Silicon Valley. Technology and automation have already been under heavy criticism for taking jobs, but with a recession looming, anger might understandably be exacerbated. When such a large portion of a community is forced to live around an unaffected, affluent minority, relations are bound to sour when economic pain starts being felt.
Thankfully, the anger towards inequality hasn't been expressed with the guillotine in SV; many have rejected the wealth gap differently: by leaving. The region lost 40,000 residents, just in 2021, according to Marketwatch's Levi Sumagaysay. It is also worth noting that, in that same year, only 5,560 moved into the area, less than half the number in 2020.
There will always be doomsday predictors, like The Hill's Harlan Ullman, who referred to American wealth inequality as a "domestic IED." While these are likely exaggerations, the problem is real, especially in the world's technology capital, where a city like Saratoga has a median home value of around $3.7 million, according to Zillow. Nobody can say for certain what the future holds, but drastic inequality in a small area is bound to cause shakeups; whether that shakeup occurs through an even greater exodus or through heightened demands for rebalancing economic policy remains to be seen.