Can Pioneering Policy Result from Bay Area Wealth Gap?

There’s a stretch of SoMa that resembles less an American city and more of a refugee camp. Tents line the sidewalks along with various personal belongings, junked bicycles, and heaps of trash. Just steps from the epicenter of the tech boom, one comes face to face with abject poverty and a population of individuals left behind by the recent economic boom. With income inequality at rates not seen since the late 1920s, will this become the new norm in most American cities?

Just since 2005, there has been a recorded 7% increase in the San Francisco’s homeless population. This figure has risen in conjunction with widening income disparity throughout the years of the most recent tech boom. From 2000- 2012, San Francisco saw a 5% increase in lower income populations, a 6% decrease in middle income populations, and a 2% increase in high income. Census data from 2012 indicates that the top 5% earns more than 20% of total Bay Area income and that wealth in the Bay Area is becoming further concentrated at the higher ends and lower ends of the spectrum, with growth being mostly concentrated at the higher end.

These figures illuminate a growing national trend regarding the widening wealth gap. While a widespread discussion on income inequality seems to be gaining further traction in the national political arena one rarely sees as dramatic illustration as there is in San Francisco. There are few cities in the world where two luxury car dealerships share the same stretch of street as a homeless encampment; where trains of commuters heading to six figure, Silicon Valley jobs pass by modern-day Hoovervilles and veritable cities composed of ramshackle tents and rundown RVs; where high-income workers wait for private shuttles at bus stops shared by lower-income commuters waiting for their city buses to arrive.

While a certain amount of income inequality is inevitable, such widespread, extreme, and rising inequality have problematic implications. A report recently published by Marin Economic Consulting indicates that extreme income inequality could very well result in “reduced overall consumption, slowing economic growth, reduced income mobility, reduced resources to societal well being, inequalities in health outcomes, education [opportunities], criminal behavior, and civil unrest.” Though the report is speculative in nature, there is already mounting data suggesting such predictions may not be so far off. Though the American economy has shown considerable rates of growth, census date indicates that shares of income for the bottom 80% of Americans has been in decline since 2000, comparatively, the upper 20% has seen an increase in their share of aggregate income. Middle class purchasing power has been in decline, due to the combination of rising housing, healthcare, and basic goods costs yet stagnating middle class wages. This is a troubling indicator of a potential economic slowdown and, according to recent World Bank forecasts, GDP growth will stagnate in 2016 and may very well begin to decline in 2017.

Could we be heading towards an economic and humanitarian disaster? Possibly and as one bears witness to the huge disparity in San Francisco, it’s difficult to be optimistic. Yet, given the scores of data that indicate these potentialities, what steps are being made to address and counteract these trends? While, ultimately, aggressive legislative and executive action will be needed, the increase in public consciousness of these trends is a positive indicator.

Many prominent economists, most notably Robert Reich argue that expanded redistribution policies, social services, and enhanced educational opportunities geared towards lower income populations could have a resultant affect in averting a potential economic disaster brought on by a stark reduction of the middle class. The Bay Area, as suggested Marin Economic Consultants, has “many policy instruments available that will address the joint problems associated with high levels of income inequality and poverty.”

While San Francisco might be an excellent example of the potential affects that widespread income inequality have on the urban landscape, it also has the opportunity to reinvent itself as a laboratory for policy change that attempts to address and avoid further perpetuation of these trends. Booming industry, a huge influx in capital, as well as a rising millennial population gives the city an opportunity to seek out policies that not only allow for further economic growth, but for a prosperous and sustainable society in which all residents have the opportunity to share in the region’s continued prosperity.