The Hourglass Economy is Real, Now What Do We Do About It?

Acknowledging the extremes of poverty and wealth in Silicon Valley may have been radical 15 years ago, but today even the business community issues reports highlighting the social and economic problems generated by the growing hourglass economy.

The question is no longer “Is the hourglass economy real?” We know that a third of households in the Valley do not earn enough to meet a basic self-sufficiency standard, and nearly a third of jobs in the Valley pay less than $16/hr. With homelessness spilling out from garages and car campers into riverbanks and public parks, the triple epidemics of underemployment, inadequate pay and soaring rents have become the Valley’s worst-kept secret.

The real question is: “What can we do about it?” At the community level, many of the reforms needed are out of our hands: establishing a national full employment policy, closing tax loopholes that favor outsourcing, reforming labor law, passing comprehensive immigration reform, transforming our trade policy into one that supports job creation rather than job destruction. Certainly we can advocate for our representatives to lead on these issues, but for most the real action is at the federal (or even global) level.

But one of the most underutilized tools for promoting good-quality local job creation is also one of the major powers exercised by cities and counties: land use planning.

Local governments are deeply embedded in land use and development decisions every step of the way, from adopting multi-decade General Plans that shape the city’s growth, all the way down to dictating the architectural style of an individual building. Local governments and agencies often are also major landowners in their own right – check out the new mega-developments proposed to be built on City of Santa Clara land near the new 49ers stadium. Layered on top of these are regional planning requirements and incentives, which in the Bay Area flow primarily through the Metropolitan Transportation Commission (MTC).

Targets for job creation and business development are incorporated into every General Plan and are primary consideration for most cities. For some reason, though, planners and policymakers have rarely considered the mix of jobs being created or the quality of those jobs to be land use issues. The resulting focus on high-rise office buildings (which largely employ upper-income workers) and large-scale retail and restaurants (which tend to pay minimum wage) exacerbates the hourglass economy and exacerbates issues of housing affordability and excessive commute distances.

Is the tide turning? It’s too soon to make that declaration, but there are some signs of a shift in thinking.

On those Santa Clara mega-developments, the City Council – after hearing testimony from dozens of hotel employees and other low-wage workers – recently directed its negotiators to make sure labor peace provisions (which help ensure industry standard wages and working conditions) are included for both construction and permanent jobs on the sites.

At the regional level, MTC recently adopted a process to incorporate quality job standards into its development of guidelines for a potential $3.1 billion dollars in regional funding from cap and trade revenues.

And the City of Sunnyvale is studying approaches to improve local hiring and job quality on all major new developments, following similar efforts in Newark and South San Francisco. 

Think your city should follow suit?  There may be no silver bullet for inequality, but we can start to tackle it one community at a time.


Louise Auerhahn is the  associate policy director for Working Partnerships USA


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