California is the future of the United States, goes the oft-cited cliché. What the US is doing now, Europe will be doing in five years, goes another. Given those truthy maxims, let’s examine the socioeconomics of the “City by the Bay” as a harbinger of what’s to come.
Data shows that technology and services make up a large fraction of citywide employment. It also shows that unemployment and housing prices follow the tech industry’s boom-and-bust cycle. Amid the current boom, a family of four earning $117,400 now qualifies as low-income in San Francisco. Some readers laughed when I wrote in a memoir about working at Facebook that my six-figure compensation made me “barely middle class.” As it turns out, I wasn’t far off. With that credential, consider this rumination on bougie life inside the San Francisco bubble, which seems consistent with the data and the experience of other local techies.
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San Francisco residents seem to be divided into four broad classes, or perhaps even castes:
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The Inner Party of venture capitalists and successful entrepreneurs who run the tech machine that is the engine of the city’s economy.
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The Outer Party of skilled technicians, operations people, and marketers that keep the trains belonging to the Inner Party running on time. They are paid well, but they're still essentially living middle-class lives—or what lives the middle class used to have.
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The Service Class in the “gig economy.” In the past, computers filled hard-for-humans gaps in a human value chain. Now humans fill hard-for-software gaps in a software value chain. These are the jobs that AI hasn't managed to eliminate yet, where humans are expendable cogs in an automated machine: Uber drivers, Instacart shoppers, TaskRabbit manual labor, etc.
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Lastly, there’s the Untouchable class of the homeless, drug addicted, and/or criminal. These people live at the ever-growing margins: the tent cities and areas of hopeless urban blight. The Inner Party doesn’t even see them, the Outer Party ignores them, and the Service Class eyes them warily; after all, they could end up there.
Mobility among the castes seems minimal. An Outer Party member could reach the Inner Party by chancing into an early job at a lottery-ticket company (such as Facebook or Google) or by becoming a successful entrepreneur. But that’s rare; most of the Outer Party prefers working for the Inner Party, gradually accumulating equity through stock grants and appreciating real estate.
The Service Class will likely never be able to drive/shop/handyman enough to rise to the Outer Party, at least not without additional training or skills. They're mostly avoiding the descent to Untouchable status, while dealing with precarious gigs that disappear semi-regularly. Uber, for example, has made no bones about its intent to replace its drivers with robots. Delivery bots have already been deployed on city streets, though they were later restricted.
There are of course people outside this taxonomy. There are longtime property owners (and renters) who view the tech boom warily, even if the former benefit from rising property prices. (Peter Thiel, that ever-entertaining VC, recently groused about how his hard-raised capital was disappearing into the greedy mouths of “slumlords.”)
There are also workers in more traditional, non-tech industries. In more economically diverse cities like New York, they serve to brake the boom effect of tech’s rise. In San Francisco, though, their lives are increasingly impossible in a city taken over by tech, and the socioeconomic stratification it fosters. I was a tenuous member of the Outer Party, and my partner is a relatively well-remunerated non-tech professional, but we likely won't be able to remain in the San Francisco Bay Area, particularly with a child in tow.
Outside San Francisco’s 49 square miles of unreality, economies like those of Europe have a social safety net to dampen the hardships for the lower classes. They also defend traditional industries and labor practices, in a (probably) futile effort to stem the threat from automation. Uber is banned in several places in Europe, and taxi drivers have mounted occasionally violent protests at the automation intrusion. Barcelona, one of Airbnb’s largest European markets, cracked down on that company’s rental listings, out of fears that large swaths of the old town center were becoming a huge Airbnb hotel.
As quixotic as the European Neo-Luddism might be, it does make for a pleasant place to live. One of the most refreshing things about living in Europe (or small towns in the rural US) is knowing that the poor aren’t condemned to a completely separate, and inferior, life. Your place in the world isn’t wholly defined by wealth.
The story is rather different in San Francisco.
There, the Outer Party, whose consumer life consists of telling mobile apps to tell humans to do things, has a different relationship with the Service Class. As an Instacart user for example, you’ll often have a person of color come to your door, laden with the groceries you couldn’t bother to buy yourself, and whose total value likely exceeds what they’ll make in a day of hefting and following Instacart prompts. Often, the order will contain errors, revealing that the buyer didn’t quite know what he was buying (fancy cheeses are particularly risky). You’ll peck at the app and leave a tip to assuage your conscience and avoid thinking about the soaring—and largely unshared—returns to technology and capital.
This, of course, is a burgeoning dystopic nightmare. But it is the vision of the future that San Francisco offers: highly stratified, with little social mobility. It's feudalism with better marketing. Today’s “sharing” economy resembles the “sharecropping” of yesteryear, with the serfs responding to a smartphone prompt rather than an overseer’s command.
Inequality rarely decreases, and when it does it’s often as the result of wars, revolutions, pandemics, or state collapse. If there’s any nonviolent political hope here, it’s probably to be found among the Outer Party. The Inner Party lives estranged from reality. But the Outer Party still has to teach their kids not to pick up street needles and occasionally feels the depredations of crime to person or property (our household has experienced both within the past few months). Though the Outer Party has little collective identity, they have common interests around street cleanliness, crime, schools, and transit. Those interests expressed themselves in the recent mayoral election, where pro-development, pro-techie London Breed, a favorite among the tech Outer Party, narrowly defeated two mutually endorsing candidates in an electoral nail-biter. Breed broke from typical San Francisco progressive politics, proposing to eliminate homeless camps via government conservatorship (essentially forced institutionalization).1 Perhaps a city founded in a literal gold rush can foster a newfound civic spirit, at least among the gold miners, while in the midst of a figurative gold rush.
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The pessimist in me, however, thinks San Francisco can only continue further down this path, with the old-money propertied class dying or cashing out, the non-techies getting squeezed, and everyone getting pushed into the four-level hierarchy. In case there's any doubt, I find the growth of this rigid caste system horrifying, and antithetical to both liberal democracy and the American project. It also seems that, at least in San Francisco, we're close to a point of no return. Whether that’s true elsewhere remains to be seen.
1 CORRECTION, July 9, 4:35PM: An earlier version of this article said London Breed opposed rent control. She does not oppose rent control, though she has taken some other stands that rankle tenant advocates.