Monday 11 December 2017

Warning + Call To Action For Tech

The tech industry has become the cornerstone of the Bay Area economy and the envy of the world. There have been many triumphs – new innovations, new jobs, and new millionaires – but with peaks, come valleys, as Silicon Valley’s growth has also exacerbated underlying inequalities and fostered negative externalities far beyond their headquarters. While the situation is most pronounced in the San Francisco Bay Area, home of Silicon Valley, Californians statewide report that average families are not reaping the benefits of tech’s success, but feel the pains nonetheless (unaffordable housing and traffic, among others). We see this tension echoed in our national politics – many argue that the system hasn’t been working for regular Americans, and the calls to action are growing louder.

In our Edelman Intelligence survey of Californians, we found that all is not well in the Golden State. By more than 2-to-1 (53% to 20%), Californians say it is harder to get ahead now than it was 5 years ago, rather than easier. The situation is even more dire in the Bay Area, where the margin rises to 3-to-1 (54% harder, 16% easier).

Californians see a system stacked against them. More than 6 in 10 (61%) Californians argue “the system” is not working for them. But, they assert that tech workers are benefiting, with 75% believing “the system” is working for people who work in tech (Bay Area: 57% not working for them, 79% working for tech workers).

When asked what issue is most likely to hold back California’s economy and hamper growth, Californians identify high housing costs as the top threat by nearly 3 times the next threat (health care). In the Bay Area, housing costs are seen as the biggest barrier to growth by more than 4 times the next highest threat. One third (34%) of Californians cite tech’s upward pressure on housing costs as one of their top concerns about the tech industry, while in the Bay Area, the effects are more acute, with a 52% majority calling it one of their top concerns about the industry.

Half of the state’s households are unable to afford the cost of housing in their local market, and the struggle is even more challenging in the Bay Area. In the San Francisco metro area, households need an income of over $180,000 per year to afford the median priced home, which equates to more than $87 per hour, a far cry from San Francisco’s $14 minimum wage. Average Americans are being priced out – according to Trulia, less than 1% of teachers can afford a single house listed on the market in San Francisco.

It is not surprising, therefore, that nearly half of Californians (45%) and the majority of millennials (51%) are considering moving away from California because of the high cost of living.

We’re nearing the precipice. There is growing discontent with tech, which 70% say is part of “corporate America.” 59% of Californians and Bay Area residents agree that the tech industry makes the wealthy even wealthier, but doesn’t really help the rest of California. Job creation isn’t enough: There is an expectation that businesses, including tech, do more than simply create growth. More than 7 in 10 Californians say that the tech industry has obligation to improve societal (73%) and local issues (80%).

The tech industry has an opportunity to step up. Despite these issues, technology remains the most trusted industry in California, with nearly two-thirds of residents (63%) trusting it to do what is right. The tech industry can preserve and even expand that trust by working to solve the problems facing California, particularly those they are perceived to perpetuate, such as skyrocketing housing prices, income inequality, and re-training for those facing job loss due to technological shifts.

As we’re seeing nationally, failure to address a system that is benefiting the few at the expense of everyday Americans can lead to volatility. The tech industry is facing more scrutiny than ever, with murmurs of regulation as a public utility percolating in Washington. (In our survey, conducted before questions around Russia’s involvement with social media were raised), 56% of Californians and 59% of Bay Area residents considered the tech industry “under-regulated.”) In these turbulent times, it is critical that tech has an advocate in its own backyard, but without some corrective actions, that support may evaporate.

About the survey
The survey of California adults was conducted by Edelman Intelligence. Interviews were conducted online January 20-31, 2017 with 1,614 California residents, including 495 in the Bay Area. The results were weighted to be representative in line with the U.S. Census. The margin of error statewide is ±2.4% and ±4.4% in the Bay Area. For more information, visit https://www.edelman.com/post/golden-state-mind/

Julie Dorshkind is a Director on our West Coast team, based in Silicon Valley. 

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