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Wealth disparity in Silicon Valley deepens as poverty rises

Wealth disparity in Silicon Valley deepens as poverty rises

By Alejandro Lazo. CalMatters. Bay City News.

A new study of income and other economic measures shows stark wealth disparity in Silicon Valley in one of the country's wealthiest regions, with the top 10 percent of households holding 66 percent of investable assets in the region on last year.

In Santa Clara and San Mateo counties, just eight households had more wealth than the bottom 50 percent -- nearly half a million households -- according to the Silicon Valley Index, an annual report by the Silicon Valley Institute for Regional Studies.

"We live in a capitalist system that is based on markets," said Russell Hancock, executive director of the San Jose-based think tank. ¬ęThere are rules in the game; the rules are fair. In Silicon Valley, we have some of the biggest earners in the world."

Hancock added that the report highlights the need for more investment 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 steeper than in the US overall, or globally, with the top 1 percent of households owning 48 times more total wealth than the bottom 50 percent, according to The report. That compares to 23 times nationally and globally, according to the report.

super rich

The report estimates the total wealth of Silicon Valley households to be nearly $1.1 trillion, when very high net worth individuals are counted.

The report marks the first time the think tank has published wealth estimates that include data on these very high net worth individuals, which the institute defined as those with net investment assets of $30 million or more.  

Such assets are those that are held in cash or that can be easily and quickly converted to cash, including checking accounts, certificates of deposit, and retirement accounts. The group did not count houses, cars or other illiquid financial holdings as investment assets.

Santa Clara and San Mateo counties had 163,000 millionaire households in 2022, which the report defined as households having more than $1TP4Q1 million in investable assets. That translates to less than 1 percent of the region's population owning about 36 percent of its wealth.

And an estimated 8,300 households had more than $10 million in investable assets, according to the report.

By contrast, there were about 220,000 Silicon Valley households with less than $5,000 in total assets.

About 23 percent of Silicon Valley residents lived below the poverty line in 2021, an increase of 3 percentage points from 2019. Two percent of Silicon Valley households, or about 22,000 households They did not have bank accounts.

The report also noted that while income inequality was declining statewide, down 1.0 percent, as well as nationally, down 3.0 percent, income inequality increased in Silicon Valley by 5.0 percent in 2021. Overall, the rate of growth in income inequality since the 2009 recession has been twice that of the nation, according to the report.

The disparities in Silicon Valley began in earnest in the 1990s, when the internet economy first took off, and became more pronounced after 2010, following the Great Recession. The first two years of the pandemic exacerbated inequality, according to the report.

This article was originally published by CalMatters. You can read the original note at the following link: https://calmatters.org/california-divide/2023/02/silicon-valley-inequality/

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