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Silicon Valley's Gentrification Problem

Last year, Twitter’s IPO created 1,600 new millionaires. 1,600. Think about it; imagine most of the people on your street won the lottery overnight. How would that affect your neighbourhood? Silicon Valley wages are generally far higher than the US average anyway, but inject a few thousand extra tech types with seven-figure bank accounts and the local landscape is bound to change, with some unhappy consequences for the locals.

Hyper-Gentrification

“Housing is totally out-of-control expensive now and the kind of hyper gentrification of San Francisco is gathering steam,” Gabriel Metcalf, executive director of the San Francisco Planning and Urban Research Association told Bloomberg.

Gentrification isn’t anything new, it’s happening all the time across hundreds of cities. But on the West coast of the US the problem is being accelerated at a pace that’s rarely been seen before, and it’s all technology’s fault. There’s more money in Silicon Valley than at any point since the Dotcom bubble, you only have to look at the amount Dropbox recently raised to achieve a $10 billion valuation. But this has had a major knock-on effect. As the second most densely populated city in the US [New York being the first], space in San Francisco is already at a premium, but when you have tech types paying a huge amount for even the tiniest abodes, you get a problem.

House prices have jumped by around 20% in just a few months, renting is becoming nigh on impossible for many regular workers. Eviction rates in Frisco have jumped a mind boggling 170% as landlords force out people using the Ellis act in order to cash in the money that’s floating around. “We’ve become two valleys: a valley of haves and a valley of have-nots,” the NY Times reported recently. And when the poor start getting pushed out in place of the rich, resentment starts to build.

When Gentrification gets Ugly

‘Silicon Valley Is Now Public Enemy No. 1’ ran the headline on TechCrunch, and for many this rings true. Many people are missing out on this tech boom; they see a lot of money floating around, but most people just aren’t getting to enjoy any of the benefits it brings. Whole communities are being left out, and the frustration is spilling over.

Locals recently decided they’d had enough of Google’s corporate buses stopping at public bus stops. While it may seem an innocuous crime, it was just too much for some, who decided to block buses, unfurl anti-tech banners and handout flyers. A window was even smashed at one demonstration.  The protests rattled Google so much that security guards have been called in, a move bound just to increase divisions.  And although a deal was struck with the city where companies would pay $1 every time one of their commuter shuttles uses a public bus stop [amounting to around $100,000 per company and $1.5 million in total] it hasn’t settled down the locals. Perhaps more telecommuting could work?

A lot of this is nothing new; Silicon Valley has been a hotbed of tech money for years. But the rise of social media means the animosity can get very personal very quickly, with some tech types not bothering to hide their disdain for people not in the same wage bracket. Valleywag isn’t shy about pointing out the guilty, who post things like “Why the heart of our city has to be overrun by crazy, homeless, drug dealers, dropouts, and trash I have no clue.” But worst of all perhaps, were the comments made by venture capitalist Tom Perkin, who claimed the backlash was as bad as Nazi persecution of the Jews. In a WSJ piece entitled "Progressive Kristallnacht Coming?” he wrote:

I would call attention to the parallels of Nazi Germany to its war on its "one percent," namely its Jews, to the progressive war on the American one percent, namely the "rich."

It obviously didn’t go down well and he tried to apologise, but not very hard. Does the first lesson of public relations school need to be, “Don’t compare people to Nazis”?

Another, and possibly most extreme example, is another investor’s idea to split California into six separate states, including a Silicon Valley state. Tim Draper imagines a “a society of Inverse Amish that lives nearby, peacefully, in the future.”

A place where Google Glass wearers are normal, where self-driving cars and delivery drones aren't restricted by law, and where we can experiment with new technologies *without* causing undue disruption to others.

Draper’s plan would make the Valley the richest state in the US [and Central Cali the poorest], and while it probably won’t happen, it shows just how self-important and isolated some of these tech-types can be.

The Good News

But there are a few leading lights. In a recent interview with the WSJ, Salesforce CEO Marc Benioff said that these tech companies need to give more back, give their time and money to local charities and causes, and generally embrace philanthropy a bit more. Take Google’s Sergey Brin. He’s reportedly buying up property and then renting them to people for well below what he could charge. If more companies are seen doing that kind of thing it could go a long way to easing the frustration people are feeling and helping integration.

And the money that these companies bring in can have a good effect. As Kenneth Rosen of the University of California told Bloomberg, “They’ve [Twitter] single-handedly helped revive a depressed area of San Francisco by moving their headquarters to Mid-Market.” And new homes are being built, but demand is still far outstripping supply. If tech companies do more to help fund affordable housing everyone would be a lot happier.

Unless the tech bubble we seem to be in bursts, it seems this kind of problem will only become more prevalent, both in the Valley and elsewhere. Tech companies both large and small need to keep this in mind if they want a peaceful life. Be seen making an effort to help your community and the people will like you. Be seen flaunting your newfound millionaire status and you get bricks through windows. Which would you prefer?

Experiencing the effects of Gentrification in Silicon Valley or anywhere else? Comment below!

 

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Dan Swinhoe

Dan is a journalist at CSO Online. Previously he was Senior Staff Writer at IDG Connect.

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