California Dreamin’: Too Many Jobs, Not Enough Houses

Jeff Berger —

Why do people choose to remain in California in spite of its problems? Some people do it because they don’t want to leave their friends and family. Others love the climate, the environment, and the culture. Nature is readily accessible to everyone 365 days out of the year, even to those living in the heart of a big city. But, Californians pay a steep price for living in paradise.

prop_13_275_shutterstockI live in San Jose, and every day The Mercury News features an article on its front page about the most pressing issues in the Bay Area. Usually it’s about the housing and transportation crises, which are intimately tied to the problems of homeless people. Renters push for more rent control, while others complain that depressing rents will only decrease the supply of rental housing. Young people struggle to purchase homes in the Bay Area while bidding wars are pushing housing prices higher and higher. It seems that there is no limit to the amount of money available to purchase homes. There is no end in sight to the demand for more housing. This demand will continue as long as long as the hi-tech corporations who are based here continue to thrive and refuse to leave the area.

The definition of “middle class” has taken on a new meaning in the Bay Area. Workers with salaries that would be considered upper class in many sections of the country can’t afford to live near their workplace. But this is where the jobs are. For many ordinary workers, the only solution is to live far away from where they work. Some people spend two, three or four hours on the road each day. Others get on the road long before sunrise in order to beat the traffic.

Silicon Valley is not entirely unique with respect to housing and transportation problems, but it is home to Google, Amazon, Facebook, Netflix, Apple, Tesla, Adobe, Cisco, and many other successful hi-tech companies. Hi-tech jobs are not in short supply, to say the least. The problem is that hi-tech workers need to be served by non-hi-tech workers.

03rfd-image1-custom1Bay Area residents are resigned to paying the highest taxes in the state, because without high taxes there would be no teachers and the roads would be in even worse shape than they are. Teachers in California are not going out on strike, and there is no shortage of nurses. They are by no means rich, but they can afford to live here. However, most “unskilled” service workers are paid poorly, even with a minimum wage that is higher than most places. Food prices continue to rise, but not nearly enough to enable workers in the food services industry to live comfortably. They can’t sustain themselves in the Bay Area unless they live with their parents or have a spouse with a good salary.

In spite of the fact that people are leaving the Bay Area in record numbers, the total number of jobs in the Bay Area continues to grow. Where are the workers living? The density of people per household is increasing, but the majority of the increase is coming from commuters who live outside the Bay Area. Most of these commuters come from the east beyond Livermore, from cities such as Tracy, Stockton and Modesto. Stockton is 74 miles from downtown San Jose and Modesto is 90 miles away. The eastern terminus of the BART (Bay Area Rapid Transit) train system is Livermore.

Another set of commuters drive into San Jose from the south along Highway 101. Some live as far away as Los Banos in the Central Valley, which is 80 miles from downtown San Jose. Housing in Los Banos is even less expensive than Stockton. For example, in Los Banos you can purchase a 1500 square foot house for the bargain price of $300,000. $400,000 will buy you a large house in Los Banos. That will buy you a closet in San Jose.

Diridon Station

Diridon Station is the largest transportation hub. Diridon is next to the SAP Center (where the Sharks play ice hockey) in downtown San Jose. Caltrain runs from San Francisco, down the south peninsula to Diridon, and on to suburban cities south of San Jose. In addition to Caltrain, BART serves San Francisco and the East Bay as far as Pleasanton. In 2019 BART will extend from the East Bay southward to East San Jose. Construction will also begin in 2019 to extend BART underground for 6.1 miles from East San Jose to Diridon and the city of Santa Clara, with 4 stops along the way. This extension is expected to cost $4.8 billion, of which the state recently anted up $730 million out of the money that the state is collecting from recently added controversial taxes on gasoline. However, BART is still $500 million short of its $4.8 billion goal. It plans to ask for that money from the Trump administration. (Of course, we know how much Donald Trump loves California.) The target completion date is 2026. Hopefully connecting BART to Diridon will encourage people to use it to commute from the East Bay to Mountain View or Palo Alto.

In conjunction with BART plans, Google is in the process of purchasing large amounts of land around Diridon in preparation to build another large corporate development site (in addition to the one they have today in Mountain View). Furthermore, Adobe, which already owns three buildings in downtown San Jose, is planning an expansion.

So where are all the new Google workers going to live? And why is California spending so much money to extend BART to Diridon? There are basically two alternatives. Build upwards along these rail lines (and also extend BART at least to Stockton). Or else, create more suburban sprawl, using up more and more of the undeveloped land and taking it away from farms and from wildlife who live in the undeveloped land. The politicians in Sacramento recently squashed a proposal to create more high density housing along these rail lines, but the proposal is not dead.

But, where are the people currently living who are going to occupy the new housing? Are the people who currently live in Stockton and Los Banos going to sell their homes and move closer to Silicon Valley? Or will the new purchasers come from young people who currently live with their parents? Will the homeless be offered cheap housing? Or will the new purchasers come from out-of-state? Whatever the answers are, if the population of the Bay Area and its surrounding cities increases, it is destined to become a worse place to live.

Water is already in short supply in California and water prices are the highest in the nation. There is talk of expanding water storage facilities, but the periods of drought are expected to worsen. There is little talk about utilizing brown water or desalination in the Bay Area and there seems to be no connection between corporate expansion plans and state water planning. After all, corporate developers build neither dams nor roads. They know how to build toll roads, but costly tolls don’t much help the poor workers who live in the distant suburbs.

Do you live in a place that needs more jobs? If you do, then you don’t live in California.

Saphire, a collie, eating out Jeffrey Berger's hand
Jeff Berger and Saphire

Jeff Berger (Author) – Tech writer, public speaker, and engineer. He earned Masters degrees in statistics and operations research from the University of California, Berkeley, and was employed by IBM for more than 30 years. He developed an interest in history and economics during the 1990’s and now wonders if he might have chosen the wrong career.

4 thoughts on “California Dreamin’: Too Many Jobs, Not Enough Houses

  1. Most informative. I enjoyed your article. Can the water shortage in California eventuate in social conflict between the Haves (those with water) and the Have Nots (those without)?


  2. Social conflicts over water have existed in California ever since it became a state, but global warming, global free trade, and population growth are all increasing the conflicts.

    Governor Jerry Brown has been pushing to build two tunnels under the Sacramento delta to divert more water southward, but for many years the larger battle has mostly pitted farmers against fisherman and conservationists. Some farms in the Central Valley have been allowed to go fallow due to water shortages, but at the same time the local salmon industry has collapsed. I will be giving away my own bias by saying that I favor fish over almonds and rice, especially when the fish are being eaten locally while the almonds and rice are going to China. For reasons that escape me, those farmers blame the Democrats for their water shortages.


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