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How High-Earners Increase the Disparity Between Rich and Poor

Updated on March 7, 2014

There is no better place to see the disparity of incomes than in the San Francisco and San Jose area of California. There is nothing wrong with making a lot of money per se, and those who do, probably deserve it. But what IS wrong is how when a majority of population within a urban area all are wealthy, everything seems to scale to their income levels and not the many who earn far, far less. This makes living in that area very difficult. What happens is that soon the area is only occupied by the wealthy.

Take San Jose and its Silicone Valley. It is home to all of the big players, Google, Paypal, Cisco, Facebook and many more. All of these companies pay their employees well but in this city, the median income (that is, half of all income) is $90,000. These wages are those belonging to engineers, medical professionals and others. Your average, standard home there sells for one million dollars. Its airport is spending $82 million for a private jet airport section for those who own or use non-commercial aircraft. From SF to SJ, is about 1800 square miles of area and in the last five years, buying a home has doubled. It is boom time in this area but only if you work in the tech industry.

For those who cannot afford to live in SJ, SF, they live in the fringe areas and take their hourly commute one way. Atherton is a suburb of SJ, home to many CEO's and America's most expensive place to live. Those earning a meager $25 to $65,000 a year are beginning to protest outside some tech firms. Most of America earns around $50K a year, in the bay area, that is being poor and just getting by. In some places, earning $23 an hour is a decent wage, but in SJ, it is an equivalent to $10 hr. Everything is more expensive because of the influx of tech firms and their salaries. The market forces simply adjust because they can and while everyone seems to make more, wages remain stagnate for those in the middle class. In SJ, the middle class is more like $55-80K a year, anything less is considered the poor class.

Since 1980, the income of the rich has grown higher, while the income of about 30% who earn low wages has not. In a recent study, the bay area from 2007 to now has increased its disparity of incomes between the rich and middle class. The poorest actually had a $4000 drop in income due to the cost of living. In comparison, if you made $50K a year in Dallas, you would need $80K in San Jose to get the same things.

The wealth of the area acerbates the housing market. In SF, a one bedroom can cost $3000 a month and a two bedroom place in SJ runs $1700 a month. The same unit in Dallas runs $800. Everything is more expensive because of the wealth in the area. Charities in SJ are now serving 70,000 families in some way allowing them to just get by. These are not only the poor but the former middle class and earned $50K a year. These places are mere miles from tech campuses earning billions.

Google and others have donated millions but they usually only support new education facilities on campuses and nothing that directly helps those earning less than $50K. SJ did raise the min. wage to $10 hr, that is token. In SJ, there is no excuse not to make it $15 hr.The city should increase taxation on these firms and use the money to support charities and employment. When a tech company earns over a billion in a year, even one million of that is a drop in their bucket. If everyone in the area earning less than $50K a year moved to Texas, where everything is cheaper, I am sure SJ would address the income disparity in a serious manner because all of the services these people provide would be gone.


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