Bay Area's Middle Class Is Being Squeezed Out in Droves: Report

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Protesters with signs gather at the entrance to Twitter's headquarters in San Francisco on November 7, 2013. The protest was against corporate tax breaks and high housing costs, which the protesters blamed on the social media company. Robert Galbraith/REUTERS

For well over two decades now, the San Francisco Bay Area has struggled with rapidly growing income inequality and the lack of housing supply as a booming Silicon Valley lures workers from around the world with six-digit salaries. As the middle- and lower-class residents in the Bay Area are pushed to the brink, they're leaving the area in droves for cheaper pastures, according to a recent report.

Mark Uh, a data scientist for the real estate website Trulia, found that San Jose led the nation by a sizable distance in middle- and low-income residents leaving. Nearly half of all households that left San Jose between 2010 and 2014 made less than $60,000. Only 27.4 percent of San Jose residents as of 2014 made below that threshold.

San Jose's "move-away rate," which is the current share of households living in the city compared with the share leaving the city, is a whopping 77.2 percent, meaning San Jose middle-class households are 77 percent more likely to move out of the city than to move in.

"If people with brown eyes make up 60 percent of a city’s population,” Uh says, “our expectation would be that 60 percent of everyone who moves out would have brown eyes.” But with the middle class in San Jose, that’s not happening. Instead, Uh discovered that for San Jose residents who make more than $150,000, a somewhat standard mid-level salary for Silicon Valley workers, move-away rates were the lowest in the nation at minus 52.7 percent. The negative move-away rate occurs because there were far more high-income households moving in rather than away.

San Francisco and Oakland, which are also dealing with an influx of high-paying Silicon Valley jobs, were fifth and sixth, respectively, in move-away rates. Strangely, for Oakland, Uh found that the move-away rate for those making between $31,000 and $60,000 was in the minus, much as with San Jose's high-income residents.

Uh hypothesized in a conversation with Newsweek that Oakland's relatively low rent and cost of living may be a "pressure point" only for residents who make around $30,000. He also discovered that those who left mainly migrated to Sacramento, Los Angeles or New York City.

"It's a question of 'Are you going there because it's more affordable or pursuing more opportunities?'" Uh asks. "Sacramento is more affordable. L.A. can be the case for both. NYC is mainly for people who are switching to a completely different job and lifestyle."

When broken down to occupations, the largest priced-out households came from the category "Educational, Health and Social Services"—mainly teachers and nurses. In San Jose, more than 24 percent under that occupation umbrella left the city.

While the Bay Area saw the largest displacement of low- and middle-class residents, Uh says that this is a national phenomenon over the last decade. Even New York City, which finished last place in move-away rates, saw those making less than $60,000 18 percent more likely to leave the Big Apple than move in.

Uh says that middle-class residents moving away was apparent in every city he studied. "Between the years 2010 and 2014, there has been a resurgence in wealth accumulation by a few that has many people left out,” Uh says.