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Hotel 22: The Dark Side of Silicon Valley (businessinsider.com)
149 points by ghosh on Nov 28, 2014 | hide | past | web | favorite | 120 comments

I don't think it is fair to contrast every problems in the Bay Area against the backdrop of the tech industry. I do concede that population growth and housing is a direct result of the tech boom. However, to say every socio-economic problem existed in this area is a result of the tech industry is dubious.

Homelessness is a problem with or without the tech backdrop.

I just wish the media didn't make this an "us" vs. "them" situation. This approach is so destructive: it improves the situation for nobody but only fuels class hate.

I remember reading a very long, well-researched, and balanced post from TechCrunch [1] about the housing shortage in SF. Media: more posts like that, please. Help identify underlying issues, flawed policies, or missed opportunities, instead of simply blaming the engineers.

[1] http://techcrunch.com/2014/04/14/sf-housing/

It's really ridiculous to say the tech industry is creating more of a problem than it does in helping the population. Before the tech explosion, let's say 1989, San Jose, and in particular, San Francisco, were dumps. The sort of looked like Fresno does today. Downtown San Jose was not a place most people from San Jose would ever venture to. Market St in San Francisco was scary. Maybe people think Fresno, as it is today, is what we'd like the SF bay area to look like. I prefer that it not look like that.

Yes, gentrification does have some impact on people on the periphery, and we can't discount that, but on average, the population as a whole is better off. Back in the early '90s, SF's real estate was in a depression. RE agents were moving out, due to the RE market depression. What we have now needs addressing, but it's more of a governmental intervention which is necessary. Intervention to address the housing stock shortage.

We need an organization like ABAG to have some executive power. Someone who can say, these will be green areas, these areas we can build up, and we need to bring mass transit here. We need regional governmental integration. Piece-meal works too slowly to adapt to the changes brought on by economic development.

It's because the SF bay area is such an economic engine that we have so many people come here and find jobs they cannot find in their home states or counties. If we were in stagnation like Fresno/Bakersfield, we'd have people fleeing trying to find the economic magnet.

"Before the tech explosion, let's say 1989, San Jose, and in particular, San Francisco, were dumps. The sort of looked like Fresno does today."

Oh, come on. At least in SF, that's obvious exaggeration: San Francisco had been the west-coast center of the financial industry since before the 1980s, and most of what you see on Market street was built decades (if not a century) earlier. It looked nothing like Fresno.

If you're referring to the economic status of the people living at mid-Market, it's equally wrong to use it as an example where "tech" is making things better: The Tenderloin was a blue-collar neighborhood before the war. It gradually descended into property as the rest of the city gentrified around it, leaving few places for working-class people to go. Gentrification absolutely made things worse in the Tenderloin.

Mid-Market's decline came as part of the larger Tenderloin decline, but also as the result of BART construction, which killed business on the road in the 60s. SOMA was light industrial in the 1960s and 1970s, but by the late 1980s, this area was beginning to gentrify as well. For example, entire blocks of SRO housing were eliminated during the 1980s to build Moscone Center.

About the only thing you can say regarding the "tech industry" is that it's the latest gentrifying wave of many, all of which have undoubtedly made things nicer for rich people, and worse for poor people. It's therefore completely unsurprising that someone in the tech industry would believe that gentrification makes things "better", but it doesn't reflect a lot of empathy.

Yes, before the tech industry, the main source of commuters into the city was the financial industry[1]. My point is that if it were not for the tech boom, SF would be finance and tourism and that economically speaking, the city would be as depressed as Fresno is without the capital provided by tech. Blue collar jobs were moving out --the bedding industry, furniture, etc. had begun moving out a long time ago. Basically people want the economic vitality progress without the gentrifiers --but that's not how it works. Yes, some people will lose out --but overall, you have a stronger more economically stable workforce. Now, in SF we have a problem where even with a good job you can hardly afford new rents. But that's not an issue created by the tech industry, it's an issue borne from bad city planning and NIMBYs --oh, oh, don't build in front of my building, I'll lose sight of the bridge when it's not fogged over. What, no, I don't want shadows from high rises cast over my park[2].

My overarching point is that without tech, the Bay Area would not be the place people come to find good paying jobs --it would be more of a retirement destination and a tourist destination. Let's look at North Dakota, yes, there are homeless despite the boom, but if it were not the for the boom, the state would be in the dull-drums but with shale, whatever you think of it, you have a vibrant economy which attracts all people looking for a way to make a decent living -not everyone will be lucky. That's not to say we should not try to provide for those not lucky (I think we should), but to say that industry creates the "luckless" to me, is disingenuous.

Look at the population trends for SF as a proxy for economic vitality in the 70's and 80's:

  1970	715,674	−3.3%
  1980	678,974	−5.1%
  1990	723,959	+6.6%
  2000	776,733	+7.3%
  2010	805,235	+3.7%
  2013	837,442	+4.0%
People were moving out --there was no new work to be had in the city.

[1]When white collar was basically finance, people used to commute _into_ the city. Whereas now, SF is a place people have a desire to live --it was not always that way. [2]http://sfist.com/2013/07/18/enemies_of_the_tall_four_seasons...

>> "...descended into property..."

Do you mean "into poverty..."? Genuine question, not being snarky.

Yeah. I must have made a typo, and got auto-corrected to "property"...or it was a Freudian slip!

Or we just need to allow more housing to be built, and soon.

Anti-gentrification activists make it even worse since they oppose pretty much every new development. "We don't want luxury condos in our neightbourhood". Then you will have old tiny studios at the price of luxury condos.

People don't move to SF because because they look for a luxury condo here. They move to SF because there are jobs.

Buried in what I said, was precisely this point. Allow housing stock to be created. Allow higher density in SF and in the El Camino corridor in SV. It's the activist and old timers who want to keep the area curated to look like it did in 1989 --it's deleterious.

Is it possible for the california state legislature to create that sort of executive department for the greater bay area to resolve the deadlock? Or is there something constitutional that prevents it?

Good question --I don't know. I think mostly it's people in government, and to some extent, residents, who desire 'local' control over their locales. If we look at NYC, as they grew, they incorporated different areas into the city and eventually grew into the five boroughs there are today. I think something like that might allow better government coordination, better planning for the region.

Agree. I actually grew up in the south bay when there were orchards and fields of wild mustard and all. There is this assumption that high tech workers are foreigners or newcomers displacing the locals. It simply isn't true, there are many local residence who work in the industry. We contributed and benefited as much as anyone else.

As I see it, we should focus on solving these issues as residence of the Bay Area as a whole. Pitting one group against another will just deplete the political will necessary to make vital policy changes to allow high density housing, mass public transit, raising minimum wage, improving education, etc.

That was a horrible article. Cutler wrote a lot of words, and presented a lot of (dubiously researched) "facts" (interspersed with bald assertions), but I defy you to find a coherent thesis in the piece, other than "it's complicated...but it's wrong to blame my industry, because it's complicated."

The thing read like a bad undergraduate essay, wherein the student decided the thesis ("tech isn't really responsible for the bay area housing crisis!") before doing the research, discovered that the data didn't support her conclusion, then simply chose to overwhelm the reader with disconnected facts in an attempt to distract from the self-evident conclusion that, yes, we really are responsible for the latest spike in housing costs.

A more sophisticated analysis acknowledges that foregone conclusion, but then separates culpability from cause: the tech industry is certainly the cause of the latest housing crisis, but that doesn't mean growth in tech is automatically bad (or good, for that matter). Only once you have acknowledged those truths can you proceed forward with a rational discussion on what to do about the problem.

The article wasn't horrible. While it doesn't have any takeaways as far as next steps, it does introduce the idea that things actually are complicated. It's the start of a dialogue beyond just pointing at tech companies. It brings up points that need to be considered in what actually is a complicated situation, and that's better than pretty much everything else that has been written about the subject.

The article doesn't go "beyond just pointing at tech companies" -- it tries to paint a picture where the obvious, principle causative agent (the tech boom) isn't responsible for the housing problems in San Francisco. Instead, it must be NIMBYs, or zoning, or owls, or...anything but just acknowledging that we've crammed a bunch of very wealthy tech people into a very small city in a very short time (circa 2007).

Once you acknowledge that this is an acute crisis caused by a single industry, you have to consider that one reasonable solution might be to discourage tech companies from coming to the city via taxes, zoning and so on. There is, after all, no inalienable right for startups to have offices in live/work lofts in SOMA.

Again, the whole thing was written to appeal to an audience of tech people who want to believe that they're not the problem and shouldn't have to sacrifice, even though the facts clearly point in the other direction. Why should the fabric of a city change instantaneously because a group of relatively entitled new arrivals believe that they somehow "belong" more than the people who arrived before?

We can't have a useful conversation that doesn't start from the acknowledgement that tech is a big part of the problem.

The media have been fueling class and racial divides in society since the 1960s, and particularly since Watergate, when journalists started thinking that they were crusaders for social justice rather than reporters of factual events.

Do you think this article is guilty of blaming the engineers? I thought nuanced views like this were actually quite well represented here:

>“It’s not necessarily their fault, but they are stakeholders in the homelessness problem and have the power and brains to change it.”

Where are you detecting notes of "us" vs. "them"?

“Growing up here it was all ranches and orchids, I was a cowgirl. You had everything you could want, and great weather all year round. I don’t blame them all for coming here, but they offer the people who live here nothing,”

the author isn't nourishing the concept of 'us vs. them' it with what they wrote, just with the reports from others.

It reads to me like she's simply sharing her own experience.

>I just wish the media didn't make this an "us" vs. "them" situation. This approach is so destructive: it improves the situation for nobody but only fuels class hate.

I agree. And yet, this place is set aflame every time a financial or banking article is posted, questioning when "we" are going to do something about "those people".

It isn't constructive, at all.

Just because it's not your fault doesn't mean it's not your responsibility to fix it. Homelessness is an issue to correct by the people who live near it.

Yes and no. I think it's more a federal responsibility and here is why. When you have an economic magnet such as NYC, SV, north Dakota shale fields, etc., these places bring a disproportionate amount of economic immigrants (people from outside the metro area). You can't honestly put that oversized burden on the local working population. Unfortunately, we don't have a good structure to deal with that. That's a political shortcoming I wish were fixed.

>Homelessness is a problem with or without the tech backdrop.

Agreed. But is there something about the tech industry as practiced in Silicon Valley (the sheer concentration; how VC money might prevent the Schumpeterian forces of creative destruction from regulating the local economic cycle; the exercise of political clout) that has made homelessness there particularly bad? Has anywhere else in the country experience this kind of sustained housing boom, of this magnitude?

Maybe not, but I think it's perfectly fair to have an article that looks into it. Too bad this article fell way short.

I would point out:

* Software companies, specifically, are more likely to be freeloaders than non-software companies. Tax avoidance schemes such as the Double Irish + Dutch Sandwich allow companies that make revenues primarily from intellectual property laws to skirt US and California taxation[1], and are therefore freeloading on the local governments by taking advantage of the talent from public schools (UC Berkeley), the local government infrastructure (roads, bridges, highways and freeways; a standardized electrical grid with a [somewhat] regulated utility company; financial regulations that keep [some] public faith in the banks and the US Dollar fiat currency; police system to keep the peace; fire systems to prevent runaway fires and catch arsonists; an intellectual property system that protects patents, copyrights, and trademarks [if you see the system as "protecting" these things]; a judicial system that allows persons and companies some say in how the law is applied to them and some opportunities to use litigation to enforce contracts; and national defense to prevent national instability and potential loss of private property or lives).

* For whatever reasons, tech companies want to be located within miles of each other, all challenging each other for talent and office space in a small geographic area, and all of the secondary effects of those things.

* Software allows companies to scale up without expensive upfront capital investments and allow fewer employees to generate more revenue than traditional types of brick-and-mortar businesses (although maybe not scale the way financial products scale). This provides for concentration of wealth in the hands of fewer people.

I would argue that the article and a handful of other SV articles miss some key issues related to costs for housing and other living expenses in California:

* Prop 13 limits the rate at which property taxes can rise up to market values. I observe 3 side-effects of Prop 13: (1) Properties have less turnover since Prop 13 in 1978 because property taxes reset to market rates if the property changes hands (except for a few exceptions) (2) Property taxes are kept low, thereby starving local governments of tax money needed for typical local government services (3) Property values are inflated because it's now more valuable to own a property since you aren't being taxed at the full rate

* Land is simply not in a large supply. Water surrounds the peninsula and is VERY expensive to build on (anything that alters the SF Bay ecosystem is expensive to develop). Much of the undeveloped land is owned and managed by the Open Space Preserve which is not develop-able. Many tracts of land owned by the farmers / orchard owners of pre-tech Santa Clara County have left their land to the county and state with the express wishes that the land be kept undeveloped.[2]

* What little land is able to be developed, dense development is prevented by "Not in My Back Yard" organizations ("NIMBY"s).[3] NIMBYs typically prevent high-rise construction (like SF waterfront).[4][5] This is the same with the BART transit system, which had tentative plans to run down the peninsula to San Jose, but was prevented by NIMBYism in the affluent peninsula neighborhoods.

* Good-intentioned but bad-implementation policies such as SF "rent control" and San Jose's newly proposed "low-income rental fee"[6]. Short of increasing supply or lowering demand, these are stop-gap policies that have some serious blowback effects.

> “We are trying to get tech billionaires involved in what we’re doing. They donate millions to good causes, but almost nothing to the local community they are helping destroy." Other related issues about how the rich/wealthy spend their charitable donations compared to the less rich/wealthy:

* I immediately thought of this article from Robert Reich, "When Charity Begins at Home (Particularly the Homes of the Wealthy)"[7] which basically says that the very wealthy overwhelmingly give to large university endowments and operas as their non-profit donations rather than community organizations that address homelessness or other poverty issues.

* Of course there are "non-profit" PAC contributions which effectively route "donations" to political campaigns to re-shape politics (such as the Waltons pushing anti-Union politics, the Waltons and the Kochs pushing anti-science and environment-negative policies ... none of which help local communities [but are also not directly related to the tech industry in the SF Bay Area]).

* You could argue that even when tech Billionaires donate to a charity, it could get squandered like Zuckerberg's $100 Million "donation" to New Jersey's Newark public school system, which some have argued didn't make any difference/change.[8]

* Tech companies are able to scale up better than traditional brick-and-mortars, so the wealth generated by tech companies is more concentrated in fewer hands. Stats show that the very wealthy donate a much smaller percentage of their income/wealth to charitable causes[9]. This means that local charities need to compete harder for fewer dollars and it's already less likely to go to a local organization than to a university endowment or some other more selfish charitable donation (an opera or a local environmental cause that serves to benefit the donator as much as anyone else).

[1] http://en.wikipedia.org/wiki/Double_Irish_arrangement [2] http://www.mercurynews.com/obituaries/ci_25043508/silicon-va... [3] http://en.wikipedia.org/wiki/NIMBY [4] http://techcrunch.com/2014/04/14/sf-housing/ [5] http://techcrunch.com/2014/11/02/so-you-want-to-fix-the-hous... [6] http://www.bizjournals.com/sanjose/news/2014/10/06/san-jose-... [7] http://robertreich.org/post/69833627613 [8] http://www.newyorker.com/magazine/2014/05/19/schooled [9] http://www.theatlantic.com/magazine/archive/2013/04/why-the-...

Yes-- don't pretty much all major American cities have both millionaires and homeless?

I recently moved to San Francisco for a software engineering position. So I am clearly "part of the problem" more than I am "part of the solution". I lived in Philadelphia previously and the homelessness in San Francisco has been absolutely shocking to me. I don't live in a great area (near 6th street) so I really see some of the least fortunate people in the city.

If I had real problem-solving money (think Bill Gates) I'd go for homelessness first. I think that as a nation we have a fundamental duty to make sure that everyone gets basic comforts like shelter, heat, food, and water. I hate that I am paid a high salary to flip bits on a computer while there are people a block from my house sleeping on the sidewalk in the rain.

That said, I don't really understand why this all has to be portrayed as a phenomenon caused by the influx of tech workers into SF and the Bay Area. Tens of thousands of people move in and get jobs paying $80-200k. They all pay very high taxes. Why can't the local government take that revenue and help those who need it? Why can't the expanded tax base be part of the solution for the problem? It seems crazy to me that it's a "problem" that so many people are moving to one area for high paying jobs. That sounds like high economic production and many cities would love to have that "problem".

As an individual I am horrified by my inability to help the homeless while people like me are portrayed as villains in the media. I wish there was something I can do. I donate to youth services and homelessness-centered charities but I know that's not going to fix things (it never has). I don't see anything that can be done but the local government stepping up and making serious changes that will stabilize the housing market and help those who are already on the streets get into a better situation. I'm not an expert on the topic so I don't have specific suggestions here.

That was a bit of a rant and I don't have much advice to offer. I just think we are looking at this all in the wrong way. There is now a lot of money in the area and huge economic growth. Let's use this to improve the lives of everyone, not just people like me who learned JavaScript at the right time.

It makes much more sense if you read this story as a salvo in a class war not between homeless and billionaires but between two different groups in the Valley middle class. In this reading, the homeless are a convenient prop to demonstrate why an engineer who wants to rent an apartment is doing something morally evil, to whit, taking an apartment that One Of Us could rent.

Lost me at "Where once a robust middle-class thrived, there exists only the super-rich and the extreme poor."

Yes, that's exactly what it's like here. Either you live in a 10,000 SF+ megamansion or you're on the street. Hyperbole much?


"SF Developers are by most definitions filthy rich."

So you're implying that it's unfair for a highly skilled SF developer making 2-3x the median wage across all professions (having dedicated years to decades of their life to attain that level of skill) to make that money in the first place?

Besides the $100-150K such a developer makes is less than half what the bottom of the 1% makes in 2014: $390K, source: http://money.cnn.com/2014/04/04/pf/taxes/top-1-taxes/. You're talking something closer to the top 3-5% here, source: http://politicalcalculations.blogspot.com/2014/09/what-is-yo...

And even then, most of the people I know who make that kind of money worked their butts off and sacrificed a lot to get to that income level. To be fair, I know some idle trustafarians too, but they are a tiny minority of the group it seems like you're demonizing for their hard work.

My unsolicited advice to people who can't afford to live in SF is DON'T LIVE IN SF! For what it's worth, I don't and for exactly that reason. That and my definition of filthy rich is a lot stricter: the top 0.1% and their $1M+ a year income.

Your definition of rich isn't really something I can argue with. But I would encourage you to take a look at salaries for various jobs in high paid areas, and use that as the bases for comparison. One source I've used is US News Best Jobs.

The median salary for an application developer in San Jose is 116k. For a registered nurse in San Jose, it is 122K. Dental hygienists in San Francisco earn about 109k a year (median), developers in SF, about 110K. Lawyers and Physicians, of course, earn considerably more.

Devs do alright by standards of skilled workers, but they're not really outliers. The widely held notion that devs are wildly overpaid and privileged workers has to go down as one of the great victories of silicon valley PR.

Now, I will agree that tech has create these salaries on a scale that didn't exist before, which may be part of why the resentment occurs. Dental hygienists at 109k a year simply can't exist in numbers sufficient to cause displacement, because they draw their salaries largely from the local population. That limits the ratio. Tech, on the other hand, sells outside the region, so 100k+ salaried tech workers really aren't limited in number by a local population they serve (and they can remain aloof or detached from that population). Again, I'm not saying this is bad (or good), I'm just suggesting it as one possible explanation for why people resent tech salaries so much more than dental hygienist salaries.

Sure, and what I'm saying is that resenting professionals like tech workers is like a guy with a single slice of bread resenting any guy who manages to get two slices of bread whilst completely ignoring that the root problem is another guy down the street with an entire truck full of loaves of bread whose hoarding created the bread shortage in the first place.

And IMO that's exactly how the guy with the truck prefers you think. Or to quote Stewie Griffin: "Dance! Puppets! Dance!"

Who said it was unfair? He just said they're rich, which they are by most standards. That's not necessarily a bad thing.

Let's try this another way:

The entire national household wealth of the United States is 83.7 trillion dollars this year, source: http://en.wikipedia.org/wiki/National_wealth

This makes us the richest nation on the planet.

There are 117.5 million households in the United States, source: http://en.wikipedia.org/wiki/List_of_countries_by_number_of_...

That's roughly $712,340 per household. I am happy to consider anyone with that or more household wealth as rich. And anyone with that plus 2 sigma as filthy rich.

Instead, what we have is all the wealth concentrated at the very top, and it gets worse and worse every year. I am in no way suggesting any form of wealth redistribution here, but it's hard for me to consider some poor sap making borderline 6 figures in SF with less than $100K life savings "filthy rich."

Sure, by 3rd world standards they're loaded, but what does that say about the 0.01% and up?

I can see your point, but:

a) You did seem to conflate wealth with unfairness.

b) I'm unsure that a simple mean is the best criterion. The median household income is about $50,000, for example. If an individual earns about $150,000, they're in the top decile of the US. I think being in the top decile is also pretty rich.

c) If an SF developer is earning $100k, it's not even that fair to compare it to household income distribution. If they don't have a family, they don't need to support children -- unlike many households with lower income. If they do have a family, it's reasonably likely they have a high-earning partner who'll boost their household income even higher. Rich people tend to marry rich people.

(I used household income rather than household wealth here, which is a weakness compared to what you wrote. But you get the idea...)

You don't think making more than 97% of the population qualifies as "rich"?

No, I don't.

I think these are the ones that work the hardest* and because of that they'll be the last to sink into the muck created by the top 0.01% and up as they freely fund elections, buy politicians, and write their own laws.

Oh, and they'll also be the scapegoats who take one for team 0.01% when the income gap #$%^ finally hits the inequality fan.

*And if working hard didn't usually lead to them making more, there'd be no incentive for them to do so, no?

San Francisco's homeless problem has little to do with the tech industry.

1) Are we shocked that a temperate city that offers a wealth of social programs for the homeless sees an influx of homeless from elsewhere in the nation?

2) In the 1970s California closed many mental institutions and made it harder for people to be admitted involuntarily. Guess where mentally ill Californians end up?

3) The San Franciscan government has spent decades fighting development to keep the city's beautiful, famous and in many cases historic housing intact. And now we are shocked when housing prices skyrocket after we deny development of new high density housing.

SF's housing and homeless debate is infuriating.

Affordable housing in a desirable neighborhood in one of the most expensive cities on earth is not a basic human right.

The article was about Santa Clara County, not SF.

You're ruining this man's beautiful rant with logic and reason. :P

> Where once a robust middle-class thrived, there exists only the super-rich and the extreme poor.

How is someone like me who lives in a tiny studio "super-rich"? Most of us in Silicon Valley live in shared apartments or tiny studios. If we were super-rich we would live at least in McMansions like you see everywhere else.

Yet another smear-SV article.

Yeah, that's a false dichotomy. That being said...

> How is someone like me who lives in a tiny studio "super-rich"?

In many parts of the country, fitting your lifestyle in one room sounds like being poor. Even Abraham Lincoln's childhood log cabin had a big yard. Just because you're making six figures doesn't mean you're making enough to comfortably support a family while still being home in time for dinner.

Agreed. I suggest to my friends that if nobody could afford to live here I would expect less traffic on city streets.

Folks don't always appreciate how large an area we're talking about when we talk about the 'bay area' we're talking about 3 large cities (San Francisco, San Jose, and Oakland) and a bunch of smaller cities, in an area that is larger than all of New York city (which is nominally 490 sq miles according to Rand McNally).

And according to HUD New York has a higher per capita homeless population than California does[1].

I'm sure BI gets good rage views though.

[1] http://www.washingtonpost.com/news/storyline/wp/2014/08/08/w...

> I suggest to my friends that if nobody could afford to live here I would expect less traffic on city streets.

Perversely, it's the exact opposite that's true. If nobody can afford to live here, they commute in from farther and farther away. And they do. They do it in Manhattan too.

If you read the article: "And the irony is, not even [Sergey Brin's] engineers get paid enough to live here." If "SV" was perfect, it wouldn't need critical articles. It isn't so I welcome them to remind us what we should address.

These articles make it sound like homelessness is the fault of Google and Facebook. Homelessness has existed in Silicon Valley for decades and it has gotten worse because the laws prevent sufficient housing to be built.

The wrong thing about this kind of articles is how they try to link tech and social problems like they were cause and effect. It's similar to other smears like "immigrants are taking our jobs", etc.

Work remotely. Or if your company won't let you, leave and work for a company that does.

Easier said than done. Very few employers permit remote work, particularly top ones. And several are openly hostile to it.

In the article, Chris Richardson of the homeless organization Downtown Streets complains:

> We are trying to get tech billionaires involved in what we’re doing. They donate millions to good causes, but almost nothing to the local community they are helping destroy.

Here's a tip for anyone with a good idea or a worthy cause: If you want to enlist the support of a group of people, making them out to be the villain is unlikely to help you.

How much would it really cost to feed and house a person for a year? In real terms I can't imagine it's that much. But I suppose it's been tried before probably with little success. (Destroyed projects and bloated government contracts come to mind.) It seems that something should absolutely be done but I sure don't know what.

An elderly lady told me once that we are supposed to help the less fortunate, and she tried her best, but it would make it a lot easier for her if some of the less fortunate would help themselves a little. This comment has really stuck with me and kind of illustrates what I see as the problem. However certainly misfortune can happen to anyone, and we should be civilized enough at this point to not allow this kind of suffering to occur in our society. It's a problem that does need a real solution.

An interesting question. In some cases it seems to be cheaper to house the homeless than pay for emergency medical and police services.

The Robert Wood Johnson Foundation spent some money researching housing of homeless alcoholics in Seattle and found a monthly per-month savings of $2,500, a reduction of 53 percent compared to previous spending: http://www.rwjf.org/en/about-rwjf/newsroom/newsroom-content/... In Seattle I guess it costs about $13,000 to house a homeless person for a year.

In Florida it apparently costs about $10,000/year to house a homeless person and provide some job services; it cost about $31,000 a year to leave them homeless and provide emergency police and medical responses at the current rate. http://thinkprogress.org/economy/2014/05/27/3441772/florida-...

Here's an article from Fox (?!): http://www.foxbusiness.com/economy-policy/2014/07/07/how-hou...

> How much would it really cost to feed and house a person for a year?

It depends. What kind of mental health issues (including substance abuse) does that person have?

Keep in mind that people also need security. Food and shelter aren't enough. They also need their belongings to be secure for long enough to build up a minimal amount of personal equity. You can't make it out of poverty if you're perpetually under the threat of robbery, abuse, and worse.

Food stamps are about 4 usd/person and some people have completed the challenge to live only on food stamps, so it would presumably be easier to do so in bulk.

Then you need a place to sleep, but that doesn't mean an appartment or room, it could as easily be a disused shipping container with bunk beds. Lets assume that we put 4 rows of bunkbeds into each 40 row shipping container (that leaves space for a small closet next to the beds, assuming the beds are 4 feet wide, with space at the other end to get in/out of the bed). I have no idea what a used shipping container cost or what a bunk bed costs.

There is a huge variety in land cost, so lets just take the cheapest possible option: not currently used government land. We can assume that we can get this for free, since this will either be a government project or payed for entirely by the government.

Heating costs can likely wise be minimized by putting the camp near some place that is neither going to become very warm or very cold.

We are going to need toilets and baths, probably something like a toilet for every 5 to 6 people and a shower for every 10 to 20. I have no idea what a toilet costs, but a shipping container with a drain in the bottom and 30 shower heads would be largely dominated by the cost of the shipping container and the cost of the water.

You will need somebody to cook the food and some place to cook it, but it could easily be eaten in tents - these would be cheaper than the shipping containers. The tents could also be used as a place to hang out when food is not served and could provide a variety of improvement activities, such as reading/storytelling. You will want to have a library attached which could be made of, that is right, shipping containers and you may want to have a small school or else a school bus (there is going to be kids there).

The cost of a shipping container (according to a handy, 11 steps wikihow guide http://www.wikihow.com/Buy-a-Used-Shipping-Container) runs from 1000 to 8000 usd, lets call it 4000, a quick google search suggest a bunk bed runs a little over 200 usd, which would give us a capital cost of sleeping areas of 1200 for the beds, say 1000 for the closets and 4000 for the container for 12 people, i.e about 520 usd/person.

Lets assume the bathrooms, toilets and tents cost the same, so that is about 1000 usd.

We assumed the food was 4 usd/person/day, but that does not include deoderants, tampoons, showgel, toothbrushes, etc. so lets make this 12 usd/day.

Adding everything up with have capital costs of a bit more than 1000 usd/person in the best case and 360 usd running cost/person/month.

That is strictly warehousing them, though for most I doubt it makes sense to retrain them.

Ya, that's what it seems it should be...

But then you have to hire contractors to do all that. And managers to manage them. And managers to manage the managers. And pensions for all the inspectors and managers. Or the government could try to do it directly. Either way... the real cost gets significant additions. Along with a higher probability of failure.

You need security. Some of these people aren't safe for others to be with. Liability. So you need insurance. And lawyers. Lots of lawyers so you don't get sued as much when someone cuts themselves on a shipping container.

So you can probably 5-10x the real cost and still run into budget problems. So people keep suffering. That's why I don't know what the answer is but I wish I did.

I assumed, although I didn't state it, that we could deny people who were a danger to others access. This also doesn't include medical care because these people almost certainly already have it through other the government programs.

And yeah I didn't include managers or other employees salaries. We could save much of that by requiring that the people there worked a few hours a week or by running some traning program in the kitchen and get cheap labour that way.

I also assumed non-stupidty by the government as we were trying to find out what it cost to house them, not what they could drive the price up to.

Give them jobs, not housing, handouts or charity.

Stupid Question: It is this a business opportunity? How about a few parked buses? I know this goes nowhere (like the hypothetical buses), but if somebody starts renting parked-bus seats for $5 a night: is this a better situation than the actual one? It is something "good" to be done?

Not to discount intentions, but I cringed when I read "Is this a business opportunity?" I feel it's a bit uncouth to say something like that in regards to taking money from homeless people. Maybe an opportunity for a non-profit or social services to do something, but a for-profit business? I hope not.

The bus line is now "taking money". When you're for-profit, the homeless it is a paying customer and keeps his dignity. The hidden cost of non-profit or social services is dignity.

If the service wouldn't otherwise exist, is it really so bad that a business makes money off of it? The homeless still have a choice to use it or not, and a non-profit can come along and 'compete' if they are able to provide the service for a lower cost.

That said, I do agree that it 'feels' a little weird to try and make money off of the homeless.

I've been on many late night Hotel 22s as a passenger-its depressing to see that in the midst of so much wealth, people have to resort to riding on a bus all night. The homeless in Santa Clara County are much more invisible to the average tech worker who lives there, much more so than SF.

Why are tents such a bad thing? If it comes down to a choice between waxing lyrical about hopelessness or buying some tents in bulk then it really seems like a no brainer. It's a band-aid for sure but it's better than this, no?

Also I see the minimum wage as harmful in this situation - you can tell yourself and the world that an hours worth of human time is always worth at least x USD, but it will never make it true. Policymakers do not set minimum wages with someone struggling to get off the streets in mind, but rather with someone in an altogether much less dire situation, and in doing so they raise the barrier too high. Hiring a homeless person for $5/hr would in many cases bring great utility to both parties: outlawing such transactions seems absurd.

Because tents alone are not enough. You need to account for sewage and sanitation, power, and all the rest of dealing with a large number of homo sapiens crammed into a small space.

The thing is as a society we have plenty of resources and could enable most people to live with at least a minimal level of stability and security. But we don't want to. We've decided that our greatest economic centers work best when they're seething rat piles with the King Rat being pulled down and replaced every so often.

Your comment about tents is a bit much. There is a better point to be made about innovating on lower cost housing situations (building and design codes usually drive up cost). Can we make safe buildings with shared recreational and common areas to cut down on square footage and lower rent? Can we save on space and costs in the long run by improving noise insulation? Why couldn't there be a WalMart (or whatever your preferred alternatives are) on the bottom floors of a high rise apartment?

Though I fully agree about minimum wage laws. It's a big risk to hire someone off the street if you can't even start her at a lower introductory wage that ramps up aggressively with proven performance. Governments that mandate high wages must logically assume responsibility for figuring out a way to make sure everyone can do something worth $12/hour (or whatever the wage is). Alternately, an aggressive guaranteed income or earned income tax credit can help with this sort of scenario. But it needs to be paired with a drop in the minimum wage to work.

Of course tents are not a long term solution, but vagrancy has been a problem for centuries and we still haven't solved it despite much chatter just like this. My point is that assuming we can't do anything substantial/long-run now then surely tents are better than nothing while we take another 50 years trying to figure this stuff out? They're functional, they're cheap, and they're leagues better than sleeping behind a dumpster. Siting them might be a headscratcher, and one I can't really comment on being several thousand miles away from SF.

>> Why are tents such a bad thing?

Fire hazards, mold and mildew, there's no real security, they are probably left behind creating a garbage problem...

Right. It's substandard, but the government isn't building or subsidizing alternatives, so just banning tents doesn't really help.

There are ways of building structures better than tents relatively cheaply, but it would almost certainly be illegal. And even tents require land to put them on. And no one wants homeless people living near them.

Minimum wage screws the people whose labor isn't worth $7 an hour, but it does help the minimum wage workers whose employers can afford it. So it can be a net benefit. Arguably, since those people now have to compete against all the new unemployed people who want their job, on things other than wage.

This may be a stupid question, but: If Silicon Valley is such a horrible place to live, compared to some place else, why don't they move away?

Answers may include family ties or high moving costs, or the uncertainty of finding a better living somewhere else. But I really don't know for sure.

Considering the weather for the Valley and Bay Area I'd say it's a pretty good area to be homeless. Being homeless in the Northeast or Pac West in the winter is going to be extremely hard on you.

They can't afford to sleep under a roof and you wonder why they can't move?

If they're all that poor, they don't have many possessions. How about they get off Hotel 22 at the far end and be homeless there? Or further, if that's suffering from liberal dystopia too.

I don't understand your comment as it appears a bad attempt at sarcasm but falls very short of that aim. "He gets on the bus at midnight and rides the same 35-mile journey between San Jose and Palo Alto, California, until sunrise." If you are homeless (assuming without a job, as is not the case with all homeless interviewed in this article), is there a big difference to you between Palo Alto, CA and San Jose, CA? Each is equally unaffordable to pay rent and probably equally easy to panhandle (if that's what you choose to do).

I think this is a valid question for so many lower-middleclass and slightly above that live in SF, LA and NYC. I would never want to live there unless my job specifically made it worthwhile. Being the working poor in a major city and having to endure traffic, people everywhere and high costs of living, without being able to enjoy the perks of the big city, seems perplexing.

Search for interviews with homeless people. In the Bay Area they get more money begging than anywhere else, and the police leaves them alone.

This isn't new. The 22 bus line has always been the cheap motel for the homeless and/or crazies of San Jose. When I was riding this bus line regularly, in high school (a decade and a half ago), we used to hop on late night just for the lulz. Most of the companies that are popular to blame for things like this weren't even around when it started.

This article is crap.

I have been planning to move to SV in December. But every time I read an article like this, it makes me not want to live there.

Should I get a job in somewhere else like Boulder, CO? I'm a senior CS major living in Iowa.

Homelessness is only a problem in San Francisco itself, which is quite a ways away from SV.

Not true. The largest homeless camp in the entire continental US is in San Jose.


Well, could've fooled me. Born and raised in the US, can only remember ever seeing homeless people in SF, Berkeley/Oaklandish...

The pseudo-libertarian drivel is becoming too easy to predict for every education/poverty/human welfare article posted to HN. Scroll to the bottom to see non-defensive, compassionate comments...

Just part of our industry from what I have seen over the years. It always seems to me that I am working with mostly technically competent people who know very little about anything beyond technology or their own personal experience in life.

Maybe this is true of most people (limited ability to empathize) but I think the intelligence and ego that many engineers exhibit to drive their performance impedes the ability to absorb information sometimes.

What did you expect in a forum where a lot of people think they are a hero of an Ayn Rand novel?

Ahhh thanks for the laugh :)

That technique doesn't seem to work for this thread...

>“What these techies don’t realise though is that we’re no different to them - they’re just one misstep, one paycheck away from being us.”

This is what happens when you have a runaway cost of living.

Real problem.

Terrible article.

> “What these techies don’t realise though is that we’re no different to them - they’re just one misstep, one paycheck away from being us.”

I don't presume to know Jimmy's life, and everyone goes through hard times. However, unless it's your first job out of poverty, if you are one paycheck away form being homeless, you are doing something considerably wrong with your life.

More atrocious quotes: > “You see camps of people sleeping rough just two miles from Sergey Brin’s (Google co-founder) house,” he says. “And the irony is, not even his engineers get paid enough to live here."

Yes, the employees of large companies do not tend to live in the same neighborhood as the CEO of those companies. And?

> “We are trying to get tech billionaires involved in what we’re doing. They donate millions to good causes, but almost nothing to the local community they are helping destroy."

We really can't accept these kinds of statements without pushback. Just how are tech billionaires "destroying" communities? Is it their fault they have come up with ideas that are worth millions and billions of dollars so they can afford to pay a lot of money to the best and the brightest to work for them, who then want to live in these neighborhoods? Blame the landlords who giddily raise the rent and drive people out of their homes. Blame the Government for not spending the billions of additional tax revenue they get from these companies on better social programs. Blame the republicans for equating "social programs" with "socialism" and therefore "communism" and therefore "evil". Blaming the "techies" is moronic.

> "At their weekly meeting, the team leader makes an announcement to the some-100 guests gathered - Google is hiring. The company is holding a jobs fair in a few weeks’ time and they are looking for chefs, cooks and cleaners. Some groan, but most are keenly listening and a group stay behind after to sign up. In desperate times you cannot be too proud to “make a deal with the devil”, one guest says."

Oh, cry me a river.

>> “What these techies don’t realise though is that we’re no different to them - they’re just one misstep, one paycheck away from being us.”

> I don't presume to know Jimmy's life, and everyone goes through hard times. However, unless it's your first job out of poverty, if you are one paycheck away form being homeless, you are doing something considerably wrong with your life.

Privileged much? If you are one paycheck away from being utterly destitute, living on the streets and foraging in trash cans for food, then yeah, there's a problem. The problem being a lack of social programs by your government.

"Techies" may be more than one paycheck away from destitution, but unless they've won the startup-IPO/acquisition lottery, they're not that many more paychecks from homeless, especially in the case of life-altering disease or accident.

I quit my job 8 months ago and I'm still many many months away from homeless. If you're frugal it's not difficult to save up a year's worth of living on the money from a couple years of programming.

100-paychecks from destitution is certainly better than one, but only by 99 paychecks.

The older I get the more it seems that empathy is only derived from a person being able to understand their own humanity and the inherent vulnerability. The rest think they are supermen (or women). Trying to communicate with them is rather draining :P

> However, unless it's your first job out of poverty, if you are one paycheck away form being homeless, you are doing something considerably wrong with your life.<

It is exceedingly easy to be one paycheck away from being homeless in America, even for some holding two or three jobs. This doesn't mean they're doing anything wrong with their life.

As a HS drop out, yes. As a tech guy gainfully employed in the valley? You are doing something wrong if one missed paycheck could kill you.

One missed paycheck can turn into multiple missed paychecks, which can fuck over even the people with a rainy day fund.

I'm a tech gal in SF, but there was a period of ~6 months or so where I had back to back to back upper respiratory infections from hell and I was so fatigued and ill that I wasn't taking up any new contracts. Lucky for me I'm my own boss, and lucky for me I'm a cheapskate with a big rainy day fund. Not that many employers would put up with someone not working for 6 months at a time. "Doing something wrong" doesn't just mean "incompetent developer" or "person spending beyond their means". It could be something as simple as me being out of commission this entire past week because sinusitis (seriously, fuck these infections) plus nausea/period cramps. It could be something as awful as being terminally ill.

That's just myself too... my husband and I just started trying for kids, so that's an additional layer of responsibility we're preparing ourselves for. Then I don't know what might happen to either of our parents, just in case. The list goes on. One paycheck can absolutely make a difference, and not just of the "you must be stupid" variety.

I agree with you, but many people are doing something wrong. I've known plenty of people in tech who do not seem to be able to live below their means. I've had coworkers/managers/friends look at me like I had an extra head when I balk at the cost of things that don't even seem to register for them, especially when I mention I save 40-50% of my net income (and my pay isn't particularly impressive by silicon valley standards).

It's easy to save with no debt, no family and an income that is even 50% of the typical entry-level SV income. Most--as in the majority--of people who "work in tech" especially of they're younger than 40 had to take on significant student loan debt to get degrees, certifications and what have you to get those jobs. Your savings rate is extraordinarily unusual, and it doesn't necessarily mean you're smarter about money matters, or that everybody else is dumb about them.

How many people are making enough money to have a home, but little enough money that they would literally have no options if their paycheck was 5-10% smaller?

I expect that group to be very small. Everyone else can put away a few percent and quickly get out of the situation of being a paycheck away from homeless.

Yes, it's hard to scrimp more than is strictly necessary, but that's part of being responsible.

Now the problem of being one medical issue away from bankruptcy is a lot harder to solve by yourself...

I mostly agree with your thoughts, if not your tone. However:

> Just how are tech billionaires "destroying" communities?

The bottom line is that CEOs could be tracking things like the average cost of living and average commute times of their employees. Keeping both of those as low as possible is, I would argue, an ethical issue if not a moral one. How can you pay $10/hour to the breadwinner of a family in San Fransisco? Aren't you asking for an inhumane lifestyle (yes, insane commutes times count against a sensible lifestyle)?

So can we pay $10 in a safe area with an ultra-low cost of living? Or can we pay a living wage so people can live a reasonable commute from work?

> Blame the republicans for equating "social programs" with "socialism" and therefore "communism" and therefore "evil".

Left or right, white collar workers that aren't giving a significant portion of their income to charity (as in, measured by percentage points) are not living ethically and sustainably. Things like hospitals, orphanages, shelters, and soup kitchens used to be funded by voluntary donations from middle class professionals to service organizations (unions, Lions Club, Episcopal Church, etc.). At some point (probably about the time neighborhoods disintegrated), people stopped taking responsibility for each other. Right, left, or middle, people can keep pointing fingers and voting the same way or they can leverage their passions into helping real people for a change.

> Left or right, white collar workers that aren't giving a significant portion of their income to charity (as in, measured by percentage points) are not living ethically and sustainably.

By this logic I don't see how anyone not giving away everything they don't need to live can be considered "ethical".

This is not to say I don't feel I should be contributing to these things - I would just prefer that it be dealt with via taxes. People have a very hard time being generous to people outside of their communities, and as you said neighborhoods are no longer communities.

It's not worth unpacking the ethics here, but I think there's common ground. I would suggest that if someone has an income greater than the median and expects someone else to pay to support the poor, his math is off.

I do not expect "someone else" to pay for it. As best as I can figure at least 20% of my gross income is going towards social programs already via compulsory contributions (income taxes). Required contributions to these programs based on peoples' ability to pay seems like a good solution to me, though the allocation of those funds could be done a lot better.

As far as voluntary contributions go, I do make some, but a big issue is finding and vetting charities where donations would do the most good. Psychology plays a bit into it too - "We currently have W and need X to meet demand for services. Every Y above X lets us also do Z" is more appealing than "Every dollar helps!" with no transparency.

> I don't presume to know Jimmy's life, and everyone goes through hard times. However, unless it's your first job out of poverty, if you are one paycheck away form being homeless, you are doing something considerably wrong with your life.

I thought that was the default state of being an American. Always essentially one paycheck away from being homeless due to various debts and other interesting things.

And god forbid you get sick ...

Debt is something that you sign up for, so it is your fault. Sometimes it is the best choice, but most of the debt cases in the US were not a good idea when they signed that credit card.

And yes in general you don't want to be ill, ever.

It's a rough job propping up the economy of the world through consumer spending fueled by massive debt, but Americans are always up for a challenge.

I mean.. if it weren't for my GF's credit card, how would that Bangladeshi clothing sewer buy rice?

But ya, it's a messed up system that seems to work mostly for the credit card company.

Someone down voted that comment, and understandably so as it probably came off a bit flippant...

So here are some numbers. The US, with ~320 million people is nearly 25% of world GDP. The US has public/private debt of ~146 trillion dollars. Consumption fueled by this debt contributes greatly to economic activity around the globe.

So yes, debt should be avoided. But if everyone avoided debt at all turns it would not be good scenario for the global economy. And, there has to be losers for the system to keep working as it is. Back on topic, there are no shortage of homeless who became so because of assumption of debt and inability to service it.

America is not set up on a pay cash and live within-your means basis. Sure, you can try to do this, but it will be hard, you will be the exception, and you definitely won't be emulating your neighbors nor your government.

I feel it's a bit of a messed up system that causes problems and is not infinitely sustainable. But for right now, it is what it is.

>But if everyone avoided debt at all turns it would not be good scenario for the global economy

With the government debt over 100% GDP and unsustainable personal debt levels in the US, it is not going to end well, no matter what. In an ideal world, governments should be required to run 1-2% budget surplus, to be spent in cyclical recessions (which was the original Keynes' idea, completely hijacked by supposedly Keynesian economists (like Krugman), who insist on more government spending, despite being in debt to the eyeballs - complete lunacy.

Is this like freelancers saving money to compensate for the feast/famine cycle, but for governments?

An why not? The economic cycle has been known since biblical times (7 years of prosperity, 7 years of famine). The preaches of "saving for the rainy day" have been present in most fables/folk stories in many cultures. BTW, the US is not in a cyclical recession, but a structural one and it may take years to get things fixed (see Japan).

> America is not set up on a pay cash and live within-your means basis.

To be fair, neither is Europe. But from what I'm seeing younger generations (all of us currently in our 20's) are almost pathologically afraid of taking on debt. People avoid it at all cost. Yes, I understand Americans normally start life with student debt, but it doesn't seem like they're in any hurry to take on additional debt after that. Completely unlike our parents and our parents' parents generations.

I wonder what that will do to the economy at large.

When me and my partner were working full time jobs at well above minimum wage, we were never more than one paycheck away from trouble, our income just covered our outgoings on bills and food, if anything had broken down we would have been screwed.

It is astoundingly easy to end up one step away from being on the street. From when I helped out at shelters, a lot of the time the story is similar to "Lose job, find difficulty getting new job, lack of success at job hunting causes stress in relationship, trouble paying bills, relationship and house go, end up on street"

> Blame the Government for not spending the billions of additional tax revenue they get from these companies on better social programs

The government collects way less than it should, since the IT giants have become really good at avoiding taxes recently.

If they're breaking the law, throw the book at them. If the law is messed up, we should fix the law. If you hate the game, fix the rules.

A tax code as complex as ours is really a justice issue. If the tax code weren't the issue, we could have a (relatively) simpler conversation about whether taxes are too low to meet our goals.

We should fix the law. But that is quite difficult when the political system has been largely bought and paid for.

Perhaps a terrible article, but also a terrible reply. Moving my reply to the top level because you don't seem like you want to hear any facts.

> Blaming the "techies" is moronic.

Not quite - it's certainly the techies' fault for centralising on an area that, plain and simple, can't cope with the demand. You can't point to any particular person who gets that blame, but the CEOs of major companies situated there, and the VCs that fund the startups with the requirement that they move to Silicon Valley, probably shoulder it more than others.

Absolutely, I do not understand the obsession with tech companies centralizing in a few major cities. There are many beautiful, walkable cities in decline around the country. Each of these cities would make excellent places to live with significantly lower costs of living.

I think one factor encouraging centralization in SV is that average tech job tenure is so short--if I quit, get fired, or my company folds, I want to be confident that I can get a (good) new job without having to move.

The population growth rate is roughly the same as most other cities in the country


It's SF's fault that it cannot deal with demand growth, not everyone else's

If you use a SaaS that can't deal with demand growth, you use another SaaS or build your own system. If you use a city that can't deal with demand growth for whatever reason... you try to grow demand further?

Anyway - what's income inequality like in those other cities? Similar?

> If you use a SaaS that can't deal with demand growth, you use another SaaS or build your own system.

Obviously that's not similar. You can't "switch" cities like you switch your phone company. You can't build your own city. You aren't arguing that it would be bad for the SaaS for it to be used too much so everyone should try to stop using it to stop hurting it. You are not a city's "client".

Are you saying it would be in their best interest to move away and they're behaving irrationally against their own best interest for not doing so, or that it's a moral thing and they should all choose to uproot themselves according to moral imperatives?

> If you use a city that can't deal with demand growth for whatever reason... you try to grow demand further?

It would be ridiculous to say they are "trying" to grow real estate demand, as if that's something they collectively would or could try to do. Note almost all of these companies started out tiny and slowly grew locally over time and never decided to move in en masse.

> Anyway - what's income inequality like in those other cities? Similar?

I don't know, what would that indicate?

It's an interesting angle on an important story -- and it therefore pains me that much more that the reporter has made a dunderheaded mistake:

It was once known for its orchids...

"Growing up here it was all ranches and orchids, I was a cowgirl..."

Silicon Valley was known for its orchards, not its orchids. Hopefully they get it corrected; it's an otherwise well-written story on an important issue.

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