December 18, 1998
By MARTHA MENDOZA
AP Business Writer
SAN JOSE, Calif. (AP) -- Connie Tort, a 25-year-old single mother of four, spends $400 a month for an unheated room in a sour-smelling house with cracked walls and blankets on the windows.
Just outside looms Adobe Systems Inc., a software company with annual revenue close to $1 billion.
"Silicon Valley? No, I never heard that term," said Ms. Tort, who gets a $500 disability check each month. "Not everyone out here is involved in this technological stuff. A lot of us are barely making it with our kids."
The high-tech prosperity that has transformed Silicon Valley over the past decade has bypassed the poor and is even pushing out the middle class, forcing teachers and police officers into long commutes.
For every five jobs created this year in Silicon Valley, only one new home was built. The average rent for new tenants seeking unsubsidized apartments soared 29 percent over the past two years, from $935 to $1,208.
At the end of 1997, only 37 percent of Santa Clara County's homes were within the reach of families earning the average household income, $70,200. During the first half of 1998, housing prices soared from $288,000 to $317,000 in the county, which forms the heart of Silicon Valley, according to the National Association of Home Builders.
Silicon Valley is the world's leading high-tech region, home to 20 percent of the biggest software and electronics companies. At Intel Corp., Hewlett-Packard Co. and Apple Computer Inc., annual revenues are counted by the billions.
"It's shameful that anyone is in need in the Silicon Valley," said Millard Fuller, founder of Habitat for Humanity International in Americus, Ga., an organization that builds homes for the poor. "If that brainpower could be focused on making sure that everyone's needs are met, you would have no substandard housing, you would have no food lines, you would have no homeless people."
To try to ease the pressure, the San Jose City Council adopted the nation's highest minimum wage last month. City contractors now have to pay at least $9.50 an hour with health benefits and $10.75 if benefits aren't provided.
"I don't mean to sound like I'm not grateful, because I know that's a lot of money," said Larry Contreras, 32, who scrubs vomit off the commuter rail tracks and picks gum off benches. "But I run out of money every pay period. In this town, it's really barely enough."
Contreras supports three children. More than half of his wages go to the room he rents in a relative's home.
"This has become a major problem in the Silicon Valley," said Andy Grove, founder and chief executive of Intel, the world's largest maker of computer chips. "It's starting to remind me of a tourist resort where the hotels have driven prices so high that the people who work there have to live out of town."
The Second Harvest Food Bank serves 108,000 people a month in Silicon Valley. Only 11 percent are homeless, said executive director David Sandretto, a former IBM manager.
"The rent prices are causing this. They have only so much money to spend and the rent prices are so expensive in Silicon Valley that they have to devote a huge amount of money to housing," Sandretto said.
The average salary in the high-tech sector -- about one out of every four workers in Silicon Valley -- was more than $72,000 last year. But overall, the 1 million workers in the geographical area known as Silicon Valley averaged only $46,000. And after taxes, a low-skilled worker earning minimum wage brings home less than $10,000 a year.
Some say the gap between the haves and the have-nots might not be so huge if Silicon Valley's high-tech executives and companies spread more of the wealth around.
The family of David and Lucile Salter Packard -- of computer giant Hewlett-Packard Co. fame -- is leading the charge, pledging $400 million in the coming year for environmental, social and educational organizations and projects, giving special consideration to Silicon Valley applicants.
But the Packards are an exception, said Tim Lenoir, who teaches the history of science and technology at Stanford University. "It is notoriously difficult to get people in the high-tech world to contribute," he said.
A survey by Community Foundation Silicon Valley found that giving as a percentage of pre-tax profits remained constant from 1994 to 1997 at just over 1 percent.
Last week, retired lithographer Paul Savage donated a sleeping bag to the Sacred Heart Community Service center for a giveaway of clothes, food and medical care. The free child care center was filled. So were the computer classes.
"The rich just don't share," Savage said as people lined up for free groceries. "There are people making $100,000 to $200,000 a year in this town and they don't share anything."
Ms. Tort picked up the sleeping bag and showed it to her 2-year-old son, Anthony.
"You like it, son?" she asked.
He nodded.
"OK," she said. "This can be your bed."
