The Bay Area’s economy, one of the hottest in the country, has helped fuel higher wages, but those benefits haven’t been felt evenly: Low-income households, already hit hard by rising housing costs, have seen the smallest gains.
Incomes among the poorest fifth of households in the nine-county Bay Area and Santa Cruz rose 29 percent from 2010 to 2018 — to an average of $21,600 a year, according to data from the U.S. Census Bureau. In contrast, the wealthiest fifth of households got a 48 percent bump during that time, to an average of $375,200.
And the gap between rich and poor keeps growing. In 2010, the average household in the wealthiest 5 percent made 26 times as much as the average household in the bottom fifth of incomes. By 2018, those top earners were making, on average, 30 times more.
Why is the Bay Area’s wage gap so large? Mostly because the richest and poorest workers are employed in very different labor markets with different opportunities for growth, said Chris Benner, a sociology professor and director of the Santa Cruz Institute for Social Transformation at UC Santa Cruz.
High-wage earners in the technology industry work for companies with large profit margins in a global market. Those companies all are trying to hire from a pool of workers with relatively rare skills, so competition is high. Plus, those workers are more likely to get bonuses or earn dividends from investments in the stock market, all of which boost their household incomes.
“Technology companies can afford to pay more, and (even) when there’s low unemployment, they can pay more,” Benner said. “There’s a very different set of dynamics in the lower end of the market.”
There, workers in retail, education or service jobs are employed by companies with single-digit profit margins that can only raise wages so much.
At all levels, incomes in the Bay Area grew faster than California and national averages. But even within the Bay Area, growth was not distributed evenly.
In Alameda County, for example, the bottom fifth of earners — about 115,100 households — make, on average, $20,000 a year. That’s despite a 42 percent increase since 2010, the fastest growth among the poorest households in any Bay Area county.
Jonathan Fisher, a researcher at the Stanford Center on Poverty and Inequality, said that those rising wages are little help to households at the bottom, considering the Bay Area’s high housing costs.
“That’s still a minor silver lining to a really hard situation where it’s just hard to get by, even with that higher income,” Fisher said. “It’s not erasing the challenges.”
The median rent in Alameda County, for example, is now about $2,970 a month, according to RentCafe. So if those poor households spent money on nothing but rent — no food, gas, car payments or utilities — they’d still be able only to afford housing for about seven months.
At the other end of the ladder, the richest fifth of households in San Francisco County saw their incomes go up 67 percent, the fastest growth among top earners in any Bay Area county. Those households now make about $453,900 a year.