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Silicon Valley Leads in Income, Lags in Poverty

About 11.3 percent of Bay Area residents are living at or below the poverty level, according to a Joint Venture Silicon Valley Institute analysis entitled, “Poverty in the Bay Area.” Despite low unemployment in Santa Clara County, the heart of the Silicon Valley, which fell to 5.2 percent in February, more than 800,000 people live below the poverty line in the San Francisco Bay Area.

“The Bay Area has a fast-growing frontier economy that is the starting point for much of the technology created nationwide,” said Jon Haveman, a San Rafael-based economist who prepared the report for Joint Venture Silicon Valley. His analysis revealed: “Despite being one of the world’s wealthiest regions, there were 829,547 people living in poverty in the Bay Area in 2013.” The study used federal poverty thresholds that ranged from annual income of $11,490 for a one-person household to $23,550 for a family of four.

Governor Jerry Brown has been touting a story in Bloomberg that California is the Best State for Business, because “California-based companies surpass their competitors in the U.S. by most measures of performance favored by investors.” Brown is correct that over the last 4 years, California companies in the S&P 500 delivered returns of 134 percent, beating the average of other states by 23 percent.

However, most employers do not consider stock investing the same thing as “building a business.” That explains why California has a 16.8 percent statewide unemployment rate.

When Chief Executive.net recently completed its 10th annual survey of 500 CEOs from across America on CEO views of the best and worst states for business, California was rated “The Worst.” CEOs commented that despite Brown’s achieving a budget surplus, the state has the highest personal income tax rates and that it “regulates with a very heavy hand.” Corporate leaders emphasized that California is like France, in that both create a “bias against savings, slows economic growth and harms competitiveness.”

Governor Brown likes to talk about how he is moving job creation forward. It is true that Brown’s so-called “job spike” has allowed California to streak past Mississippi to tie with Georgia for the second worst unemployment rate in America, at 7.2 percent.

That has created some dislocation between those who are riding the innovation-fueled surge of job creation and wage growth, and those who don’t have the skills to keep up. And all of this is happening in a region with runaway housing and rental prices.

Economist Haveman summed up his impression of the area. “The Bay Area does have something of a have and have-not economy.” Haveman said.

Most people perceive San Francisco as an elite town, with its stunning new buildings and financial prowess. But the study found it also had the highest poverty level in the Bay Area for 2013, at 13.8 percent. Alameda County’s poverty rate was a close second, with a poverty rate at 12.9 percent.

The Bay Area’s double-digit poverty rates are in stark contrast to Santa Clara County experiencing a nation high 5.4 percent job growth last year. The county is also the nation’s average wage leader, at $93,500, according to the U.S. Conference of Mayors.

Yet that statistic is misleading, because income in Santa Clara County is concentrated at the top. About 45.4 percent of households earn $100,000 or more; 11.9 percent are in the $75,000 to $99,999 range; 13.3 percent are in the $50,000 to $74,999 category; 15.4 percent earn in the $25,000 to $49,999 range, and 13.9 percent struggle below $25,000.

Rachel Massaro, senior research associate with Joint Venture, told the Business Journal that “Poverty is an integral part of our persistent growth issues like high housing costs and income inequality.”

 

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