Showing posts with label Santa Clara County. Show all posts
Showing posts with label Santa Clara County. Show all posts

Saturday, December 23, 2017

Silicon Valley Obscenity - 1 In 4 People Are "Food Insecure"

In the years since the first dot-com bubble burst, Silicon Valley has become emblematic of the intensifying wealth inequality that’s making life increasingly unaffordable for millions of working- and middle-class Americans.


And while the unprecedented wealth creation in the region has helped enrich hundreds of thousands of tech workers and entrepreneurs, virtually everybody else in the region – from college students to the cafeteria workers and janitors who service the headquarters of storied tech firms like Google and Facebook – has suffered from rising rents and a cost of living that’s far outstripped wage inflation.


Now, a study has found that more than one in four Silicon Valley residents is food insecure – meaning they go without at least one meal or rely on food pantries due to lack of financial resources, according to researchers at the Second Harvest food bank.


Using hundreds of community interviews and data modeling, a new study suggests that 26.8% of the population – almost 720,000 people – meet this ignominious designation. Furthermore, nearly a quarter are families with children.



“We call it the Silicon Valley paradox,” says Steve Brennan, the food bank’s marketing director. “As the economy gets better we seem to be serving more people.” Since the recession, Second Harvest has seen demand spike by 46%.


The Guardian interviewed local residents who qualify as food insecure for a story about the worsening wealth gap in one of the wealthiest regions in the US.


Karla Peralta is surrounded by food. As a line cook in Facebook’s cafeteria, she spends her days preparing free meals for the tech firm’s staff. She’s worked in kitchens for most of her 30 years in the US, building a life in Silicon Valley as a single mother raising two daughters.


 


But at home, food is a different story. The region’s soaring rents and high cost-of-living means that even with a full-time job, putting food on the table hasn’t been simple. Over the years she has struggled to afford groceries – at one point feeding her family of three with food stamps that amounted to $75 a week, about half what the government describes as a “thrifty” food budget. “I was thinking, when am I going to get through this?” she said.


 


In a region famed for its foodie culture, where the well-heeled can dine on gold-flecked steaks, $500 tasting menus and $29 loaves of bread, hunger is alarmingly widespread, according to a new study shared exclusively with the Guardian.



According to the Guardian, the food bank is literally at the center of the Silicon Valley boom – both literally and figuratively. It sits just half a mile from Cisco’s headquarters and counts Facebook’s Sheryl Sandberg among its major donors. But the need it serves is exacerbated by this industry’s wealth; as high-paying tech firms move in, the cost of living rises for everyone else.


As we’ve pointed out, faced with some of the most expensive rental housing in the nation, some Bay Area residents are feeling priced out and are seeking low-cost alternatives like living in their cars, or commuting nearly two hours to work each way.



All of this is happening as the Nasdaq – which includes many of the tech behemoths like Facebook, Google and Apple that are based in the region – reached an all-time high above 7,000 on Monday.


Food insecurity often accompanies other poverty indicators, such as homelessness. San Jose, Silicon Valley’s largest city, had a homeless population of more than 4,000 people during a recent count.


For workers like Karla Peralta – the Facebook cafeteria worker who shared the story of her daily struggles with the Guardian – there’s a stark division between well-heeled salaried tech workers at Facebook, and others like herself who work under contract.


What’s worse, many workers like Peralta are finding themselves mired in an uncomfortable gray area: they make too much to qualify for government assistance, but not enough to get by.


These days Peralta earns too much to qualify for food stamps, but not enough not to worry. She pays $2,000 a month – or three-quarters of her paycheck – to rent the small apartment she shares with her youngest daughter. “Even just the two of us, it’s still a struggle.” So once a month, she picks up supplies at the food bank to supplement what she buys at the store.


 


She isn’t one to complain, but acknowledges the vast gulf between the needs of Facebook employees and contract workers such as herself. “The first thing they do [for Facebook employees] is buy you an iPhone and an Apple computer, and all these other benefits,” she laughs. “It’s like, wow."



Second Harvest is the only food bank serving Silicon Valley. It’s also one of the largest in the country. In any given month, it provides meals for 257,000 people. It served 66 million pounds of food last year. When the Guardian visited its cavernous, 75,000 square foot main warehouse space, boxes of produce stretched to the ceiling. Strip lights illuminated crates of cucumbers and pallets of sweet potatoes with a chilly glow. Volunteers in PayPal T-shirts packed cabbages and apples that arrived in boxes as big as paddling pools, while in the walk-in freezer turkeys waited to defrost.


To Silicon Valley’s wealthy tech workers, the struggles of the hundreds of thousands of working poor in the region are often invisible.


“Often we think of somebody visibly hungry, the traditional homeless person,” Brennan said. “But this study is putting light on the non-traditional homeless: people living in their car or a garage, working people who have to choose between rent and food, people without access to a kitchen."


He added, “you’re not thinking when you pick up your shirts from dry cleaning, or getting your landscaping done, or going to a restaurant, or getting your child cared for, ‘is that person hungry?’ It’s very easy to assume they are fine."


The cost of housing is one of the biggest contributor to inequality – and the main reason many workers in the region are forced to go hungry. In Santa Clara County, the median price of a family home has reached a new high of $1.125 million, while the supply of homes continues to shrink. A family of four earning less than $85,000 is now considered low income. Meanwhile, the median income in the US is less than $60,000.


These realities mean food insecurity cuts across lines of race, age and employment status.


Minority communities in the Bay Area have been hit the hardest.


The Latino community is “passing through a hard time”, says Vicky Avila-Medrano, a food connection specialist. She runs a program that sends current and former food bank users out into the community, which has been disproportionately affected by the cost-of-living crisis.


 


“Here in Silicon Valley, we have a big problem. This is a beautiful place to live for people in the tech industry, but we are not working in that industry."



Of course, the problems posed by rising rents aren’t unique to the San Francisco Bay Area. As we noted back in October, rental costs growing faster than disposable income for 22 consecutive months. In September, rent ate up more disposable income than at any prior time in history.


All of this underscores the hypocrisy of the ultra-liberal Bay Area. While well-heeled tech workers spurn anybody who disagrees with their narrow-minded worldview in the name of progress, many of these same workers drift through their daily routines largely ignorant of the dire circumstances of the people who handle their dry cleaning and prepare their food.


Google famously fired former engineer James Damore for publishing an open letter pointing out flaws in the company’s diversity hiring program.


Meanwhile, the more than 10,000 employees who work at the Googleplex in Mountain View, Calif. are some of the biggest contributors to wealth inequality in the region.


While we"re sure the Bay Area"s insistence on social equality in the workplace is well intentioned, progress won"t feed the working poor.









Sunday, July 30, 2017

Facebook Employee Lives Out Of Car, Can't Afford Housing

Google employees aren’t the only tech workers struggling to afford Silicon Valley rents. One (alleged) Facebook employee recently confessed to a local TV station that she cannot afford the Bay Area’s $2,000 a month rents, forcing her to live out of her car. Unique Parsha, the employee in question, opened up about her situation to local Fox affiliate KTVU, hoping to start “a real dialogue about the high cost of living in the Silicon Valley” (although as readers will quickly realize, there is a very real chance that either KTVU, or everyone else has been part of an elaborate trolling scheme).





“Parsha"s nickname is "Pinky"- she has pink hair, a pink car, and even a pink dog. But she says, things aren"t always as rosy as they appear.



Parsha says, "I tell people all the time, stop looking at what somebody got and what you see on the outside".



On the outside, Parsha is a model Facebook worker, who runs a non-profit in her spare time. But she"s been living out of her car since April.”



Well, at least we now know why Americans spent so much money on RVs in the first quarter, it was the biggest source of GDP growth in the first three months of 2017.



Parsha says her coworkers would be “shocked” to discover her living situation. However, her student loans and medical debt have made paying for an apartment impossible. Rents in the Bay Area have risen too quickly, while wages for technology workers have failed to keep up, she said.



When she’s desperate for a good night’s sleep, Parsha spends the night at a hotel.





“Parsha decided that now is the time to start talking about her situation, in the hopes of opening a real dialogue about the high cost of living in the Silicon Valley. "I think that companies need to look at the salaries. Are we paying employees enough to survive?"



Tonight, Parsha broke down, renting a hotel room so she can get a real night"s sleep.”



Allegedly, Parsha has been "working at Facebook for only two months" but she says she’s already contemplating taking a second job. KTVU didn’t disclose her title, the nature of her work at Facebook, or the model and make of her vehicle.





“She says she"s trying to stay positive and that a home is just around the corner - and the security that comes with it.”



While liberals have dismissed President Trump’s calls to restrict the number of H1-B visas supplied to American tech firms as xenophobic, even the New York Times admits that many tech firms abuse the program to help keep labor costs low. More than any other industry in the US, tech companies depend on the 85,000 H1-B visas awarded by the US government every year.



Tech companies say there’s a shortage of American workers with the skills necessary to do the work. What they really mean is that there’s a shortage of American workers willing to work for the wages being offered. Parsha’s case is one such example.


America’s tech companies have demonstrated that they’re willing to do almost anything to keep wages low, even if it means engaging in blatantly anti-competitive practices. Back in 2015, Amazon, Apple and a few other tech companies agreed to pay nearly half a billion dollars to settle a class-action lawsuit alleging that the companies colluded to leep wages low by creating “no poach” lists of senior engineers.



Luckily for the remaining members of San Francisco’s long-suffering middle class who’ve managed to hang on despite spending well over half their income on rent, relief may be on its way in the form of an incipient housing bust. Data released by the Federal Housing Agency show that, after five years of posting some of the highest YoY pricing growth of any market in the country, single-family home prices in San Francisco and San Mateo counties dropped 2.5% YoY in Q1 2017, making it the worst-performing market of the 100 largest US metropolitan areas.

Sunday, May 7, 2017

Silicon Valley 'Tech-Slaves' Forced To Live In Their Cars

Faced with some of the most expensive rental housing in the nation, some Bay Area residents are feeling priced out and are seeking low-cost alternatives.



As the Nasdaq soars to record highs on the back of Silicon Valley"s hub of computer and technology companies, some people are even turning to cars, vans and RVs for housing...



NewsHour Weekend Special Correspondent Joanne Elgart Jennings exposes the stunning reality hiding just behind the facade of America"s unicorn factory...


Sunday, March 19, 2017

Signs That The Silicon Valley Tech Bubble Is About To Burst

18 months ago there was a seemingly limitless number of Silicon Valley future billionaires buying up multi-million dollar homes and renting out lavish pads.  But if demand for excessively priced real estate is any indication of the health of Silicon Valley"s tech industry then all the venture capitalists who have tripped over themselves to invest in the next "decacorn", or startups worth $10s of billions pre-IPO despite burning billions of cash quarterly, should be getting pretty worried right about now.


As the following chart from Zillow points out, home prices in San Francisco stalled about a year ago and rents have followed a similar path.


San Fran



But home prices aren"t the only thing stalling, according to a note from The Guardian, resumes are also starting to flood into Silicon Valley headhunters from recently unemployed software engineers who were let go after their companies failed to attract its required latest round of financing at a ridiculous valuation.





“We’re starting to get a lot of résumés from [software engineers at] companies where the business model isn’t working and they can’t get funding, so they are closing down or cutting back,” said Mark Dinan, a software recruiter based in the Bay Area, who keeps track of companies’ hirings and firings.



These startups are running out of money because VCs are being more discerning about where they place their money, making fewer, bigger bets.



“The number of investments [in the private market] has fallen by about a third, but the amount of capital is around the same,” said Tomasz Tunguz, a venture capitalist at Redpoint, adding that some of the “fast money” from hedge funds and mutual funds had shifted away from the sector.



“It’s been happening for a couple of years. It’s not as easy to raise capital and VCs are demanding better terms,” added Aswath Damodaran, a professor of finance at the Stern School of Business.



Despite the meteoric rise in the stock market over the past several years, venture capitalists have been forced to pull back on new investments partly because of a slowdown in companies going public. Last year was the slowest for US IPOs since the recession, with the amount raised by technology companies falling 60% from 2015.


Tech IPOs



Meanwhile, if SNAP"s IPO is any indicator of how other potential tech IPOs might be expected to perform, then we wouldn"t hold out hope for public investors to save the venture market from their valuation sins.


SNAP



But, a series of “down rounds” – when a company raises funds by selling shares that are valued lower than the last time they raised funds, leading its overall valuation to fall – may imply that there just isn"t a healthy backlog of companies that are IPO-worthy. CB Insights has tracked more than 100 of these down rounds and exits since 2015, including software company Zenefits, mobile app Foursquare and online music streaming service Rdio.





“It used to be that 95% of [investment] rounds were up, now 20% are down,” Tunguz said.



Then there are the so-called “decacorns” – unicorn startups valued at tens of billions of dollars – such as Airbnb, Uber and Palantir – which some believe are overvalued, but it’s hard to tell until they go public and are forced to reveal details of their underlying finances.



Ride-sharing app Uber, for example, has raised more than $16bn and is valued at more than $69bn. That’s more than automotive giants such as General Motors and Ford, despite the company losing $2.2bn last year.



“The interesting question with Uber is how long they can keep as a private company. They are raising capital like a public company without any of the disclosure and consequences of being a public company,” said Damodaran, who believes the company’s value is overinflated and it’s really worth $23bn.



So, how does this moment compare with the time leading up to the dotcom crash?  Here is the take of one Silicon Valley software recruiter:





“I got here in 97 and it was like it is now – incredibly packed, impossible to commute, high apartment costs,” Dinan said.



"We’re seeing overvalued companies, funded based on hopes and dreams and aspirations and not good business models. Companies counting users and eyeballs rather than profits. There are a lot of similarities.”



Another echo of the dotcom era is what Dinan calls “bad habits” such as the allegations of sexual harassment at Uber and human resources startup Zenefits cheating on mandatory compliance training.



“There was a lot of crazy behaviour in the late 1990s, including sexual harassment. It’s a result of there not being discipline,” Dinan said.



“The [dotcom crash] happened very suddenly and without any warning,” Damodaran said. “When it does happen everyone says they saw it coming. If you saw it coming then why didn’t you get out of it?”



Well, when all else fails there"s always the "negging" option to drive valuation...