I love living in San Francisco. I love living in California. It’s sunny most of the time and seldom too hot or too cold. I love being near the water and the mountains. I love the quiet majesty of the redwoods. I love the chaos and unpredictability of the people on city busses. I love the fact that people come from all over the world to be here – to see what I get to see every day. I love that this is a global city. On any given day, I might hear five or six different languages being spoken. I love that SF has many of the cultural advantages that other world-class cities have (good food, art, music, theater, museums, etc.) and yet remains very accessible (a compact city, not overly congested). It has no shortage of parks and outdoor activities. Its neighborhoods are unique and diverse (though becoming less diverse). Perhaps most importantly, aside from the steep hills, it’s very walkable. My grocery store, barber, mechanic, coffee shop, and neighborhood bar are all within a 10 minute walk from where I live – as are over two dozen restaurants. We have lots of neighborhoods that are like that.
All of that said, no love is perfect. For all that it boasts, San Francisco (and California as a whole) is extremely expensive and getting more so. The average cost of a one-bedroom apartment in the city is currently running between $3200 and $3500 a month. Two-bedrooms typically cost over $5k. The median home sale price in San Francisco is $1.1M. As such, approximately 65% of San Francisco residents are renters placing us in the top 5 cities with the most renters. Living here, much less owning here, is out of reach for most people. That doesn’t seem fair or right. ConsumerAffairs recently published data showing that the income needed to comfortably afford a home in San Francisco is $358,090. (Comfortably afford means spending no more than 28% of income on housing.) Interestingly, only 4 of the 200 cities they looked at have a median income higher than the recommended income needed for home ownership. Housing in America is unaffordable, especially in California which claims 9 out of 10 spots on the ConsumerAffairs least affordable list.
In San Francisco, wealth coupled with housing demand drives the cost of living up. In a city surrounded by water on three sides, there is a premium on physical land. A considerable chunk of that land is occupied by single family homes and more than a few mansions. And yet, because of the extreme wealth that exists in the city, we get reports from The Chronicle suggesting that there is a shortage of mansions, with one luxury real estate broker saying, “We’ve always had a mansion shortage in San Francisco.” If you want to feel a little sick to your stomach about wealth inequality read the Chronicle article (one renter of a luxury home was paying $20k per month and instead of buying it when that option became available agreed to a $7k per month increase). $27k per month!
To say wealth disparity is high here, is an understatement. In a city of approx 825k residents, San Francisco boasts 58 billionaires – compared to New York (population 8.4M) with 123 billionaires or Los Angeles (population 3.8M) with 58 billionaires. The Bay Area has over 750 centi-millionaires (people with over $100M in liquid investable assets) placing it just behind New York. But those numbers are only for the extremely wealthy. The Bay Area is also home to over 340,000 millionaires.
I am not one of those millionaires. Neither are any of my friends or the people I serve through my work at a food pantry. As such, I think about wealth and wealth inequality a lot. I don’t have wealth, but am surrounded by it. If there’s one thing that would fracture my love affair with San Francisco it’s the gross and excessive disparity between regular folks like myself and my friends (teachers, bartenders, servers, etc.) and our affluent neighbors (tech overlords, venture capitalists, wealth managers). The divide is inescapable here. Compare the mansions to the mission, the luxury cars to the beaters being driven by delivery drivers. Everywhere you look you see it – the private black-tinted SUVs, the expensive dinners and exclusive events, the politics, and even the conversations overheard in public spaces.
I’ve been thinking about wealth inequality a lot lately because we have an election coming up with a few millionaire and billionaire candidates on the ballot (and I’m a little tired of millionaires and billionaires being our only choices). Also on the ballot are measures to tax wealth. I’ve also been thinking about wealth inequality a lot as I’ve been doing a deep-ish dive into the affordable housing situation in the city.
In doing so, I’m reminded of one of those overheard conversations. One day, not long ago, after drinking my second cup of coffee for the morning, I decided to take a walk to Crissy Field (the beach by the Bay about a mile from my apartment). It was lovely out. The sun was shining. A cool breeze caressed my face. Hummingbirds buzzed in and out of the bushes and flowers. The grand bridge at the Golden Gate stood tall and stately. I’m pretty sure I saw a care bear, a rainbow, a unicorn, and few birds carrying party balloons and a “life is great” banner. As I walked, two men passed by on bicycles heading in the same direction as me. They looked about my age, maybe a little older – grey stubble beards, more fit than I am. They rode nice bikes. They wore biking gear from boutique clothing stores. One of them was talking about a house. It sounded like a house he was about to buy (or already owned) and the renovations he would be doing. As he described the house to his friend he said it had two wings. One wing was bedrooms and bathrooms and the other was kitchen, living room, dining room and all that stuff.
That was the extent of what I heard: a house with two wings, bedrooms (plural) bathrooms (plural). My immediate thought was I will never have a house with two wings. My second thought was, at no point in my life was I ever going to have a house with two wings. My self-effacing humor said, at this rate, if I’m lucky, I won’t die destitute in a hovel with no windows and a hole in the floor for a toilet. If I play my cards right, I won’t die destitute… And that was the thing. For some, if they play their cards right, they end up in a house with two wings and for others, playing their cards right means living in the thin margin between needing public assistance and just getting by. Nearly 40% of Americans have less than $500 in savings. The top 1% (household wealth in excess of approximately $10M) hold 31% of all household wealth in America – which roughly matches what the bottom 90% has. Squarely in that bottom 90% and fortunate to have more than $500 in savings, it’s clear that I am not playing the same card game as my house with two wings neighbors are. I’m playing go fish and they’re playing high stakes baccarat in Monte Carlo. Moreover, I’m guessing we’ve been dealt different cards.
Towards the end of my walk just before turning around to go home, I sat down to think about this… to contemplate where jealousy ends and where fairness (or unfairness) begins. One of the first things that struck me was how casually this man talked about owning a house with two wings. I imagine in his circles, it might be common. I began to wonder if he or his friend had any idea of how other people live – commoners like me or my bar friends or people in much worse financial shape like the ones who show up to the food pantry every week. I wondered if they’re aware that less than two miles away there are entire families living in single room occupancy units (think small hotel room with a hot pot for a stove and a shared bathroom in the hotel hallway). Moreover, do they care? [Side note: there is an excellent documentary about single room occupancy units in San Francisco called Home Is a Hotel.]
Admittedly, I was uncomfortable with what I felt bordered on jealousy – though I’m not sure that’s the right word. The truth is, I don’t want a house with two wings (though I probably wouldn’t turn it down) and I’ve never been interested in accumulating vast sums of money/wealth. I’m quite happy in my one-bedroom apartment that thankfully does not cost $3500 a month. Moreover I’m acutely aware of how well-off I am compared to many many other people. But if it’s not the big house or excessive wealth, I asked myself what is it that I would like? On a personal level, the answer seems to boil down to a combination of safety, freedom, and time. As best as I can tell, these are the three things of greatest value that considerable wealth provides (though ironically pursuit of wealth often becomes the primary occupation for extremely wealthy people – it’s like an addiction). Safety in the form of long-term stability (oh to have that multi-million dollar golden parachute). When needs to work for a living, one is always afraid of losing work. Freedom from financial worry (and maybe work), but also in the ability to travel, pursue hobbies, take risks. Time to think, to pause, to plan, to enjoy.
I hesitate to call it jealousy because, I want those things at a societal level too. I want greater fairness. I want everyone to have at least some of the safety, freedom, and time that wealth makes possible. Moreover, I would like to see some sort of restitution made to those who have been intentionally denied access to wealth and generational wealth building (redlining, denying women access to cred pre-1974, and other discriminatory financial policies). To be clear, wealth in America, especially excessive wealth (meaning having far more than what one could possibly spend in a lifetime) has very little to do with work, and almost everything to do with a financial and tax system that allows people to accumulate said wealth – coupled with laws that allow them to spend their wealth to ensure they remain wealthy.
I don’t know how we remedy this. I don’t know how we get to something that is more fair and equitable. Here in California, there are several proposals aimed at taxing wealth as a way to bolster the public good. In San Francisco, there is a proposal to increase the taxes on corporations whose top executive makes 100 times or more of the median employee pay. The worst culprit that would be subject to this tax is GAP, with a CEO to median worker pay ratio of 1,690 to 1 (quite a gap). To date, $4.1 million has been spent trying to defeat this ballot measure. Statewide, there is a proposal to enact a one-time 5% wealth tax on individuals whose wealth exceeds $1 billion. This tax is intended as an emergency fix so that our state-funded healthcare system doesn’t collapse. Nearly 15 million people are enrolled in Medi-Cal. It’s reported that the billionaires opposed to this tax have spent over $70M in trying to defeat it, and several have threatened to move out of the state. Of to have the luxury to pick up one’s toys and leave when things don’t go your way.
To put these numbers in context – that $70M spent on fighting a ballot proposal would cover a year’s worth of SF rent (1 bedroom at $3500/month) for over 1,600 people. As for a billion dollars, one would have to spend $1000 per day for over 2,700 years to reach $1 billion. 2,700 years! Sergey Brin (Google co-founder) is one of the billionaires fighting the tax. He’s reported to have a net worth of about $300 billion. Let’s assume we taxed the full $300 billion. 5% of that would be $15 billion. That would leave Mr. Brin with a paltry $285 billion – barely above the GDP of New Zealand. It’s estimated that California has 186 billionaires. That’s 186 people who could spend $1000 per day and not run out of money in 27 lifetimes. Meanwhile half of the world’s population lives below the $6.85 per day poverty threshold.
I am, not surprisingly, very much in favor of taxing wealthy individuals at higher rates. I have never believed in trickle-down economics, and I’ve always thought that the argument that higher taxes will stifle innovation is, and has been, bunk. Some of America’s most prosperous and innovative years (for middle class people) were during the post-war years when taxes on the wealthy were at their highest rate (over 80%). However, since the 80s and Reaganomics, wealth has increasingly become concentrated at the top.
This concentration was supercharged during the recent economic downturns of the 2008 financial crisis and the pandemic. The simplified version of how this works is that when markets are bad, people with considerable wealth (those who can ride out the rough patches) aren’t just safe, but they actually see it as an opportunity to buy low. They scoop up properties and stocks during downturns, while most of us either lose our jobs or our savings or both. We’re selling to stay afloat, and they’re buying for pennies on the dollar. Over 6 million American households lost their homes to foreclosure in the 2008 crisis while investment banks scooped up assets on the cheap. Similarly, the near zero percent interest rates during the pandemic became a feeding frenzy for the wealthy who leverage their untaxed wealth to borrow money (at near zero rates) to buy more assets (it’s called buy, borrow, die). As reported by the BBC, “The number of ultra-high net worth individuals, usually defined as those having investable assets of more than $30m, grew by 24% worldwide in 2020, the fastest rate of increase since 2003.”
The questions I often grapple with are: how much is too much? what constitutes value in society? what would a more fair and just system look like?
An individual whose wealth is greater than the GDP of an entire country seems excessive. I don’t think billionaires should exist (I mean the people can exist, but nobody should be able to accumulate that much wealth). Some would argue that those wealthy people give back to society through their charitable giving. This is problematic because it gives them undue influence over how society functions and what societal problems get addressed. It’s the antithesis to democracy. As Supreme Court Justice Louis D. Brandeis said, “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” We are witnessing, in real time, the strains being put on our democracy by the concentration of wealth.
As for what constitutes value? I had hoped we might have learned a lesson from the pandemic when grocery store employees were all considered essential. Sanitation workers, grocery store clerks, teachers, nurses, doctors – these are the people who keep society running. For me, this is the definition of value. Yet, we repeatedly heap sums of money on to celebrities, sports stars, tech gurus, and wealth managers. The very investors who seem to crash our system every few years (banking bubble, tech bubble, housing bubble) may add value for a select few, but on the whole seem detrimental to society.
As for a more just system, at the very least, we need to tax unrealized gains if they are being used as collateral. We could do things like increase luxury taxes or disallow write-offs for things like yachts and private jets. In New York, they’re looking to tax luxury second homes which seems like a reasonable idea. I grew up believing that you don’t go up for second helpings until everyone has had a chance to eat – what if we applied that philosophy to things like housing? In 2021, it was estimated that there are over 60,000 vacant units in San Francisco (over 10,000 of which were classified as seasonal, recreational, or occasional use). It’s hard to talk about a housing crisis in a system that treats housing as an investment and not a basic human right.
Circling back to the discomfort I felt while sitting on a bench contemplating the fine line between fairness and jealousy, I’m still unsure. I’d be dishonest if I said I wouldn’t like more financial freedom and security. I’d love to travel more, I’d love to be able to go out to dinner more often, I’d love to be in a position where I could spend more time pursuing passions instead of paychecks. I have plenty of days when I wish I could sock away a few million dollars (and live off of the investment income). If I’m ever tempted to play the game that I despise, it’s because it seems to be the only game in town. Given the option to be a millionaire, I’d take it in a heartbeat… but I like to think that I would also stop, that any excess would be given away or used to benefit others. I’m not opposed to wealth in as much as I’m opposed to excessive wealth. I’m not necessarily opposed to second homes, but I do believe there are moral complications with “investment” properties. My stick a thumb in the eye of capitalism side sometimes wishes a billionaire would buy up one of the mansions up on the hill known as billionaire’s row and convert it to low-to-moderate-income housing. And as I walked home surrounded by beauty and sunshine, I kept thinking I love the city, I hate the inequality.