Silicon Valley’s vanishing middle class

When you read the biographies of Steve Jobs, Steve Wozniak and other early Silicon Valley entrepreneurs, one thing to note is their middle-class origins. Jobs’ father, Paul, was a mechanic and carpenter. Wozniak’s father was an engineer. They went to the local public schools, back in the Golden Age of California education, the 1960s and 1970s.

Jobs’ modest family home, where he and Woz started Apple in the garage, now is a kind of shrine to techies and in 2013 was designated a historical site by the Los Altos Historical Commission. (Picture above.)

California, especially Silicon Valley, has become so expensive the middle class is being squeezed out. KQED reported:

The nonprofit Joint Venture Silicon Valley has tracked local economic trends for the last 20 years. This year’s Silicon Valley Index reported the income gap is wider than ever, and wider in Silicon Valley than elsewhere in the San Francisco Bay Area or California.

Joint Venture divides the workforce into three different “tiers.” For high-skilled, high-wage jobs, Tier 1 in Silicon Valley, the median wage is $119,000 a year. For low-skilled, low-wage jobs, or Tier 3, the median is $27,000.

“Thirty percent of our population is living below the self-sufficiency standard,” says Joint Venture Vice President Rachel Massaro. “That means they can’t survive without public or informal private assistance.”

The main problem is that state policies severely restrict building adequate new housing. It’s simple supply and demand: Demand rises faster than supply, so prices go up.

In particular, the California Coastal Commission now limits construction in coastal areas, which has a ripple effect inland for at least 50 miles, raising the price of everything.

Then there are the LAFCOs: local area formation commissions, that also limit construction.