Back in the 1800’s when James Marshall found a chunk of gold at Sutter’s Mill California it started a wave of people who wanted to get rich quick flooding into the state to make their millions. Sound a bit familiar?
San Francisco was the landing place for a lot of the people who were heading out to get rich during the Gold Rush. We were a big port that had lots of food and supplies for the get rich quick people and because the demand was so high we could raise the price. San Franciscan’s back then didn’t have to head to the hills to get rich. They could do it by sitting on their butts selling goods to the newcomers at inflated rates.
Well since then things haven’t changed too much. I realized this while talking to a friend of mine who came here about 18 years ago from Italy following another gold rush — the gold rush of Silicon Valley. This time the gold rush was a little different. He was a computer programmer and was lured here by an offer of big money. Sure, you had to work long hours to get it, but it was big money and he was single like many of the original people to gold rush. There difference was that he was coming here to be handed the money. It was guaranteed up front for at least a significant amount of time all due to venture capital.
Like many of the gold rush people of the 1800’s he came to San Francisco first and then he slowly moved on to parts outside the city. Luckily he didn’t have to go far up into the Northern hills, but only had to move a little bit south to Brisbane. Brisbane is nice town. It has an old city feel to it which is a funny contrast to the eastern side of town which is all high rise office buildings gleaming in the sunlight. These campuses [or should that be campi?] bring in tech workers from all over the San Francisco Bay Area. You notice that we call it the San Francisco Bay Area right? While not the most populous city in the Bay Area, it’s the best known. I know people who live in Alameda, or San Bruno who tell people they live in San Francisco because it’s easier for people to identify the location if they don’t live here.
San Francisco has many tech companies such as Adobe, Yelp, Square and Twitter that help keep us on the tech map. The problem is how to keep them here. Our minimum wage is higher which isn’t too much of a problem for tech workers, but our costs are higher. Rent is high here and the City of San Francisco is one of the few cities that tax employers. Things like this make the people who come from San Francisco leave San Francisco if they want to start a company. This is also another reason why housing rental is so high. We have a high turnover rate in rentals which gives the owners incentive to raise rates when people leave. Remember what I said earlier about how we sold goods at an inflated price during the first gold rush? The same is true today. We’ll still keep people coming, but we may not keep them here for more than a few years unless we take a look at how we deal with the people and the businesses in our city.
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Ah the (un?)intended consequences… We have controlled low rent, subsidized by those newcomers who must pay dearly for many years before even newercomers shoulder the burden. And with low condo conversion rates, the supply of individual-controlled housing keeps ownership prices high along with the property tax receipts. All of it feeds the nation’s largest per-capita public sector job rolls. Not that this is a bad thing, but it is a distorted economy, built by political expediency.