Myers-Lipton: Wealth, poverty and inequality in Silicon Valley

The fifth annual Silicon Valley Pain Index, an easily understandable, statistical overview of the structured inequalities in Silicon Valley, was recently released and features new data that highlight the region’s persistent inequalities. There are almost 200 statistics in the pain index, which can be organized around the ideas of wealth, poverty and inequality.

The U.S. is one of the wealthiest nations in the world, and Silicon Valley is one of the wealthiest areas in the country. But the question must be asked, who owns the wealth? The pain index shows 0.001% of Silicon Valley households — nine households each with more than $12 billion — hold 12 times more wealth than the bottom 50%, or 440,000 households. The total household wealth in Silicon Valley is almost $2 trillion, and if divided up equally, each resident in the valley would receive $2 million. However, the reality is one-quarter of the people in Silicon Valley have less than $5,000.

However, even though there is almost $2 trillion of wealth in Silicon Valley, 30% of all households are not self-sufficient, which means these folks cannot provide the basics without government aid or non-profit assistance. The main reason households can’t provide the basics for their families is due to the amount people earn compared to how much things cost. The pain index reports the average per capita income is $36,000 for Latino workers, $49,000 for African Americans, $82,000 for Asian Americans and $101,000 for white workers.

Now $36,000 before taxes means a person makes $3,000 a month. The average rent in San Jose for a 2-bedroom apartment is $2,911. In addition to rent, the other essentials cost $3,500 a month to live in San Jose. As you can see the numbers don’t add up, and that is why one-third of our people are not self-sufficient.

So what are the implications of this inequality between the ultra-wealthy and the poor and working for our valley? Russell Hancock, CEO of Joint Venture Silicon Valley, put it this way: “If Silicon Valley was a country, that type of wealth disparity would be considered politically unstable.”

Let’s talk specifics.

First, this inequality makes it difficult for many to provide food for their families. That is why Second Harvest of Silicon Valley provided groceries for 500,000 households each month this past year, an increase of 40,000 households from the previous year.

Second, this inequality makes it difficult to afford housing. With all the tech money in Silicon Valley, the pain index shows a median-priced, single-family home is $2 million in Santa Clara County. That means you need to make nearly $500,000 to buy a home, which is difficult for many to afford. Today, the pain index shows 7% of Black residents can afford to buy a median-priced home, compared to 9% for Latinos, 18% for whites and 27% for Asians.

The price of a home in the San Jose metro area makes the region the No. 1 least affordable area to buy a home in the United States, while the rent for a 2-bedroom apartment of $2,911 makes the region the No. 1 highest area to rent in the country. And when people cannot afford the price of housing, they sometimes become homeless.

The pain index reports Santa Clara County is ranked No. 1 in the nation for unsheltered homelessness, and ranked No. 1 in homeless youth who are the unsheltered and unaccompanied. Things are getting worse, not better.

This past year, the pain index reports that homelessness is up 24% in Santa Clara County. Incredibly, student homelessness has jumped almost threefold at Alum Rock School District since 2021, increasing from 105 to 246 homeless students, while East Side Union High School District jumped from 300 to 900 homeless students.

It is my belief that unless significant change occurs, we will not make real Dr. Martin Luther King Jr.’s vision of a beloved community, where there is enough sharing of the wealth so that “peoples everywhere can have three meals a day for their bodies, education and culture for their minds, and dignity, equality, and freedom for their spirits.” To make King’s vision a reality, fundamental change is needed.

Scott Myers-Lipton is co-author of the Silicon Valley Pain Index and a San Jose State University sociology professor emeritus.