Amid an ongoing repudiation of the Twitter tax break by San Francisco's self-proclaimed "progressives," one of their thought leaders uses a recent study to denounce Mayor Ed Lee's legacy of job creation in an editorial. In doing so, he leaves out some inconvenient facts. On reading it, we wonder if he would have preferred if we had left one out of every 10 San Franciscans unemployed this last decade.
In an August 12 editorial at 48 Hills,Tim Redmond proclaims that Mayor Lee's economic policies "made life worse for many San Franciscans." In doing so, he cites a recent study from the UK, which concludes previous studies may have overstated peripheral job growth in high-tech economies.
The study finds that for every 10 high-tech jobs created, only six low skilled workers gain employment. While growth in high-tech can raise average wages for mid-skilled workers, average wages for the new low-skill jobs are more depressed, "particularly once housing costs are considered."
Redmond, along with Richard Florida,interprets the study to mean that developing high-tech jobs is done generally at the expense of low-wage workers: "attracting high-tech companies with highly skilled and high paid jobs to cities actually hurts lower-skilled workers." Meanwhile, the study highlights how "low-skilled workers benefit from new employment, but average wages fall, particularly once housing costs are considered."
Moreover, the study qualifies this conclusion:
"An important caveat to the study is the time we focus on. This was an unusual time for the UK economy comprising relatively strong employment performance but also very weak productivity. Much of the new employment was nonstandard… Given weak wage growth after the crisis, our wage results will have been biased downwards because of the slack in the market."
This caveat highlights the problem of real wage growth: it has been stagnating for decades in the United States. The wage gap is not unique to San Francisco - cities like Boise and Knoxville have the same problem.
According to research done by the Economic Policy Institute, blame for this generational net drop in wages can be laid at the feet of reflexive federal and corporate policies enacted since the 1970s. This includes failure to raise the minimum wage, which would be over $18, had it risen along with productivity, according to EPI.
Meanwhile, in San Francisco, Ed Lee presided over a landmark raise in the local minimum wage.
In sharp contrast to Redmond's dim conclusions, San Francisco's statistics regarding jobs, income growth, and housing cost burdens tell a very different story.
Mayor Ed Lee helped create tens of thousands of new jobs, not just for coders, but for construction workers, nurses and civil servants.
Between 2010 and 2016, business growth in San Francisco between 2010 and 2016 was 12%, with 47% of that growth in information technology. In zip-codes 94102 and 94103, the equivalent numbers were 15% and 68% respectively.
Nobody is surprised by these numbers. But what may surprise is that during the same period, other job categories such as transportation and warehousing, retail, financial services, administrative and support services, educational services, and health care also increased, both citywide and to a greater extent in 94102 and 94103.
Caption: From “Economic Changes in the Central Market Area,” presentation by Office of Economic Analysis, 6 June 2019
With an increase in jobs came a predictable rise in housing values, but the untold story there is that overall rent burdens in San Francisco went down.
Between 2011 and 2019, rents grew faster in San Francisco compared with the rest of California, but so did incomes. The result is that in 2017, according to the American Community Survey, the number of San Francisco residents paying more than 30% of their incomes on rent was at its lowest in over a decade - and that's for all occupations, not just tech.
Caption: from “Stock-Based Compensation Tax: Economic Impact Report,” Office of Economic Analysis, 17 July 2019
Moreover, Mayor Lee staked his legacy on combating displacement. Ed Lee built over 17,000 new homes on his watch. He formed the coalition to enact the City's housing trust fund in 2012. He leveraged that same coalition to pass, in 2015, what was then the largest affordable housing bond in recent memory - in a political environment whereprevious attempts had failed.
Perhaps his most enduring legacy will be his leveraging of existing federal programs to reinvent public housing in a way that has provided long-term protection for some of our most vulnerable residents, radically improving their living conditions in the bargain.
For much of the time, Mayor Lee fought an uphill battle to achieve these goals - not just in Sacramento and Washington, but at home. At every turn he was challenged by political forces, who often claimed to represent the city's most vulnerable residents but more often than not benefited those far more well-off.
The City's so-called "Progressives," more often than not reflexively heeding the call of wealthy homeowners, responded with cockamamie, obstructionist canards like the Mission Moratorium.
The problems that San Francisco faces with housing and wages are the same ones faced by the rest of the country. Ed Lee seized opportunities to mitigate those and other issues, to considerable opposition. One can only imagine how much more success he would've achieved – that we all would've benefited from – without those obstacles.
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