Sure. Personally, I believe San Francisco restaurants (for example) had less ability to bid up salaries in a highly-competitive labor market while using generous endowments from VCs flush with cash in a ZIRP climate in order to weather many unprofitable quarters the way that San Francisco tech unicorns like Uber and Twitter did. I believe that San Francisco restaurants, like restaurants anywhere else, cannot survive more than a few unprofitable quarters. Besides restaurant workers, I believe this applies to education workers, retail workers, and many healthcare workers who nevertheless have to compete in the same city as tech workers for: housing, food, services, etc. I believe that contributed to the income inequality which we already know grew in San Francisco over this period. Moreover, I believe when housing prices tilt upward dramatically in the way they did in San Francisco over this period, people at the bottom margin predictably will fall off of that margin. Some of them will become homeless, and homelessness tends to intersect with substance abuse.
That's what I believe tends to happen when one group of people (let's say, "tech workers") have salaries wildly divergent from everyone else who lives in that place. But, maybe I'm wrong. Maybe everyone benefits equally when only a subset of people get very large salaries. I dunno. What do you think?
You forgot the part where a lot of these big companies are still making buckets of cash and now those buckets are distributed amongst fewer people within the company further straining inequality, especially considering investors are generally rewarding companies for their reductions in force.
10,000 software developers losing their jobs in SF or Palo Alto are not going to make either of those areas affordable. Facebook's stock increasing in value 175% in 1 year is likely going to push some engineers into home buying compensation territory and the ones that can will start bidding wars for houses.
I'm not actually taking too much of a side here but its interesting how you view the ZIRP and VC industry as drivers of inequality as if VCs throwing enough money at startups so that some late 20s/early 30s person can make 180k/yr (plus some largely valueless equity) is the real problem. If anything VCs have made capital accessible to a class of people that would have otherwise been kept out of the party. During downturns and high interest rate periods, incumbents and bigger companies do well as they can weather the storm and buy up more of the market at a discount.
Even if you could drive up the interest rates to the point that these "generous endowments from VCs" and large companies cease to exist, the restaurant worker in SF won't start thriving. VC funding subsidized a lot of people's lifestyles in SF including the restaurant worker. There is not a substitute for building more housing.
dventimihasura|2 years ago
That's what I believe tends to happen when one group of people (let's say, "tech workers") have salaries wildly divergent from everyone else who lives in that place. But, maybe I'm wrong. Maybe everyone benefits equally when only a subset of people get very large salaries. I dunno. What do you think?
AnimalMuppet|2 years ago
But I wonder: Will higher interest rates mean less income inequality? Or just income inequality still increasing, but increasing more slowly?
That is, is ZIRP the cause, or just one of the causes?
taxyz|2 years ago
10,000 software developers losing their jobs in SF or Palo Alto are not going to make either of those areas affordable. Facebook's stock increasing in value 175% in 1 year is likely going to push some engineers into home buying compensation territory and the ones that can will start bidding wars for houses.
I'm not actually taking too much of a side here but its interesting how you view the ZIRP and VC industry as drivers of inequality as if VCs throwing enough money at startups so that some late 20s/early 30s person can make 180k/yr (plus some largely valueless equity) is the real problem. If anything VCs have made capital accessible to a class of people that would have otherwise been kept out of the party. During downturns and high interest rate periods, incumbents and bigger companies do well as they can weather the storm and buy up more of the market at a discount.
Even if you could drive up the interest rates to the point that these "generous endowments from VCs" and large companies cease to exist, the restaurant worker in SF won't start thriving. VC funding subsidized a lot of people's lifestyles in SF including the restaurant worker. There is not a substitute for building more housing.
jackthetab|2 years ago
Got any data?
cesarvarela|2 years ago
dventimihasura|2 years ago