San Francisco Inequality

San Francisco's Wealth Gap

Over the past decade or so San Francisco has become one of America's success stories. The city is known as a hotspot for technology companies such as Facebook, Yahoo and Google. These large companies have brought countless high-wealth jobs and opportunities to the Bay Area. It is easy to just focus on the success of the city, but the newfound wealth of the area has brought many challenges as well. The price increases that have come along with high-wage earners have begun to price out long time residents of the city, which is creating a strong divide between the rich and poor in the city.

In 2003 the average rent in San Francisco was around $1,700 but today is has risen all the way to $2,800. That is nearly double in ten years. That isn't a problem is you happen to have a high paying job in the technology industry, but it presents problems for San Francisco's long-time population of artists and small business owners. These groups may have seen their incomes rise slightly over the last ten years, but not fast enough to keep up with rising housing costs. Rather than feeling wealthier over time, many long time San Francisco residents have slipped down the lifestyle ladder.

Over the past several years, GDP has increased in San Francisco while median income levels have dropped. This is a sure sign of rising inequality. Despite the rising tide, food stamps are at a ten year high and homelessness is increasing at a dramatic rate. All the while, luxury coaches bus technology workers from the city to nearby Silicon Valley every day for work, ignoring the realities of the world outside. Right now the San Francisco area is home to record levels of both millionaires and impoverished households. 

Can You Live Where You Work?

Cost of Living vs. Income

Americans often complain about their long commutes as traveling 45 minutes or more to and from work each day has become the norm. The natural response to this is to suggest moving closer to work. It is certainly true that moving closer to work would alleviate some of the stresses of commuting, but often times it is not economically possible to do so. 

To give a quick example, this graph shows the change in income and rent prices in the New York City area. As you can see, rents have risen while incomes have fallen slightly. For the "average" person in this circumstance, they have had less and less money available to pay their ever increasing rent payment. At some point, this "average" person will experience a drop in lifestyle if they remain in New York City or they will have to move away from the city to live in a cheaper apartment while maintaining their lifestyle. 

According to a study by the Manhattan Rental Market, the average price to rent an apartment in Manhattan is now $3,822 per month, or  $45,864 per year. The common rule is that you should not spent more than 30% of your annual income on housing. So in order to afford living in Manhattan, you would need an average of $152,880 per year in income. Most professions averages do not make the cut. For example, the average Manager makes about $108,000, Professors make around $73,000 and Judges make an average of $126,000. We think of all of these occupations as high-wealth and respected, but you need to be better than average in order to make it in Manhattan. One of the only people who could live comfortably here is an anesthesiologist who makes an average of $232,000. 

Interestingly enough, 1.6 million people actually live in Manhattan. These people must either be quite wealthy, work several jobs or live in more dangerous sections of the city.