A new study of Silicon Valley wealth, income and other economic measures shows vast disparities in one of the country’s wealthiest regions, with the top 10% of households holding 66% of the investable assets in the region last year.
In Santa Clara and San Mateo counties, just eight households held more wealth than the bottom 50% (nearly half a million households), according to the Silicon Valley Index, an annual report by the Silicon Valley Institute for Regional Studies, the research arm of Joint Venture Silicon Valley.
“We live in a capitalist system that is based on markets,” said Russell Hancock, chief executive of the San Jose-based think tank. “There’s rules to the game; the rules are fair. In Silicon Valley, we have some of the world’s biggest winners.”
Hancock added that the report highlights the need for more investments in education and “equipping people for success.”
The institute defines Silicon Valley as Santa Clara and San Mateo counties, as well as parts of Santa Cruz and southern Alameda counties. The think tank also includes San Francisco in some of its metrics. The report focused solely on data from Santa Clara and San Mateo counties for its wealth analyses.
Wealth inequality in Silicon Valley is more pronounced than in the U.S. overall, or globally, with the top 1% of households holding 48 times more of the total wealth than the bottom 50%, according to the report. That compares to 23 times nationally and globally, the report said.
The report also noted that while income inequality was lessening statewide, down 1%, as well as nationally, down 3%, income inequality rose in Silicon Valley by 5% in 2021. Generally, the pace of income inequality growth since the 2009 recession has been twice that of the nation, the report said.
The disparities in Silicon Valley began in earnest in the 1990s, when the internet economy first took off, and grew more pronounced after 2010, following the Great Recession. The first two years of the pandemic exacerbated the inequality, the report said.
The report estimates Silicon Valley’s aggregate household wealth is nearly $1.1 trillion, when it counts ultra high net worth individuals.
The report marks the first time the think tank published wealth estimates that include data on these ultra high net worth individuals, whom the institute defined as those with net investable assets of $30 million or more.
Such assets are those that are held in cash, or can easily and quickly be converted into cash, including checking accounts, certificates of deposits and retirement accounts. The group did not count houses, cars or other non-liquid financial holdings as investable assets.
Santa Clara and San Mateo counties had 163,000 millionaire households in 2022, which the report defined as households that had more than $1 million in investable assets. That translates to less than 1% of the region’s population holding about 36% of its wealth.
And an estimated 8,300 households held more than $10 million in investable assets, according to the report.
Conversely there were about 220,000 Silicon Valley households with fewer than $5,000 in total assets.
About 23% of Silicon Valley residents lived below the poverty threshold in 2021, a 3 percentage point increase from 2019. Two percent of Silicon Valley households, or about 22,000 households, did not hold bank accounts.
Alejandro Lazo is a reporter with CalMatters.
Will the author of this article please pass me a tissue, I’m weeping incessantly.
David S. Wall
From the article: “We live in a capitalist system that is based on markets,” said Russell Hancock, chief executive of the San Jose-based think tank. “There’s rules to the game; the rules are fair. In Silicon Valley, we have some of the world’s biggest winners.”
This is scurrilous nonsense. The rules have not been fair.
Our local government decreed certain lines of work “non-essential” and shut them down during the Covid emergency decrees (which are still in effect three years on). Small retail businesses were shuttered and their owners and employees left without livelihoods, while the laptop class and government employees never missed a paycheck. Working class communities were predictably hit hardest.
Not only was this unfair, it was massive human rights violation of unprecedented scale. the Covid lockdown, among other things, was a war by the wealthy against the poor. Those who waged it need to be brought to justice.
Russell Hancock gave an interview to the Mercury News a year ago, published January 28, 2022, in which among other questions he was asked and answered:
“Q. Do areas of concern remain, even considering the strong economy and job market?
“A [by Hancock] . As an economist, I have to speak with both hands. On one hand, the economy is strong. On the other hand, the pandemic introduced pain and suffering, displacement, evictions, hunger. All those took place on the same landscape as that strong economy.
“Q. What are some of the lessons from the pandemic?
“A. It laid bare the injustice of our society. The world is not fair. The people who were most vulnerable were the most likely to lose their jobs, to be furloughed, or to be exposed to the disease.”
Perhaps San Jose Inside reporters can follow up with Hancock to get his explanation why a year ago he admitted the “world is unfair” in the wake of Covid lockdown decrees but now ways everything is completely fair.
The creation and accumulation of wealth in the U.S., in California and locally has been a more or less continuous and unbroken process originating in the mid-17th century. The founders of the republic–nearly every one of them, the child of the wealthiest colonial slave owners, landowners, shipowners, merchants and bankers–concocted a regime designed to protect and preserve that wealth from all threats, foreign and domestic.
The principal foreign threat was the capricious London-based monarchy that could tax or impound wealth and property and impede trade, including the trans-Atlantic slave trade. The principal domestic threats were rebellious African slaves; rebellious subsistence and small-holding farmers, restive indentured servants and exploited “free” laboring classes; and Native Americans increasingly resisting encroachments on their lands and resources by settler colonialists (https://www.secondratedemocracy.com/its-undemocratic-origins/; http://www.historyisaweapon.com/defcon1/zinntyr4.html; http://www.historyisaweapon.com/defcon1/zinnkin5.html; https://www.zinnedproject.org/materials/we-the-elites/).
Property and wealth were already highly concentrated in the colonial period. In 1774–prior to the war of independence–it has been estimated that the wealthiest 1% of households in the 13 colonies owned about 16% of net wealth (defined as the value of assets minus the value of liabilities) with the wealthiest 10% owning about 60% of that wealth. Wealth disparities were even higher in urban areas like Boston, Philadelphia and New York. Wealth concentration became even more pronounced in the first century of the independent U.S. republic as the propertied class institutionalized and deepened its rule and expanded its geographic reach across the North American continent and beyond (see https://www.nber.org/system/files/chapters/c7443/c7443.pdf, p. 37).
The Federal Reserve Bank estimates that by mid-2022, the wealthiest percentile of the U.S. population owned about 30% of total net worth, about twice the share owned by the colonial elites in 1774 with the top 10% owning about 69% (https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:132;series:Net%20worth;demographic:networth;population:all;units:shares). In the Silicon Valley, as indicated by the Joint Venture Silicon Valley report that is the subject of Mr. Lazo’s piece, wealth distribution is even more radically lopsided, a phenomenon that I have attributed to the “Stanford Effect.” That effect, when you examine it closely, comes down to the capture and control of the government apparatus and the use of public resources to enhance, protect and maintain private wealth accumulations.(https://sanjosespotlight.com/joint-venture-report-highlights-silicon-valley-wealth-gaps-and-tech-booms-san-jose-santa-clara-county/#comment-85924). All of this, of course, required the regular and robust use of state violence against native peoples, the Mexican army and striking workers over the centuries but that’s the formula used by the founding fathers and the one they passed on to their propertied settler colonial progeny.
“About 23% of Silicon Valley residents lived below the poverty threshold in 2021, a 3 percentage point increase from 2019. ” I actually thought the increase would be a lot higher given the number of small businesses that employed service workers that were destroyed by the health directors, mayors, city councils and the governor because of phobias about covid. This shows how strong people really are that even while facing a government that appears to be out to destroy their livelihoods, they’re still able to remain above the poverty thresholds. Good work Silicon Valley. Now start voting differently so this doesn’t happen to us again.
“We live in a capitalist system that is based on markets,” said Russell Hancock, chief executive of the San Jose-based think tank. “There’s rules to the game; the rules are fair. In Silicon Valley, we have some of the world’s biggest winners.” Maybe this is a misprint. The rules are fair? Maybe they could be, but it doesn’t seem quite fair when schools are not equal, access to housing and healthcare are not close to equal, good food is not affordable for all, and taxes on capital gains (vs gains from actual work) are lower than taxes regualr income. I guess it’s all fair if you think not all humans deserve a decent, basic standard of living.
Trying to control a disease that killed a million Americans seems an odd form of “phobia”.