Low-Tech, Low-Income in Silicon Valley

In a sunny playground at the heart of Silicon Valley, children fill pails with sand and dangle from bars while their nannies chat. Invariably the conversation leads back to one subject: money.

“We just don’t make enough to live on anymore,” says Juana Hernandez, who gets $10 to $12 an hour to watch two young boys. “Certainly our bosses could afford to pay more.”

Hernandez sits within 20 miles of many of the world’s leading computer companies, places like Intel Corp., Hewlett-Packard Co. and Sun Microsystems, which are fueling the nation’s economic boom.

For a nanny in another region, $10 might be good money. But in the Silicon Valley, where the average two-bedroom house rents for $1,200, it’s simply not enough.

Economists say the high-tech prosperity that has transformed Silicon Valley over the last decade has bypassed unskilled laborers. While their neighbors made millions, their wages shrank.

“People talk about trickle-down, but money just doesn’t trickle down very far,” says Chris Benner, a researcher at Working Partnerships USA who recently completed a study of the Silicon Valley economy.

He found that hourly wages of 75% of Silicon Valley workers were actually lower in 1996 than in 1989. And even 10 fastest-growing occupations in the Silicon Valley offer little economic hope: They pay less than $10 for entry-level jobs.

At the same time, top executives in the electronics industry earn more than 200 times as much as average production workers. Last year, the valley’s top 10 executives received $442 million, mostly from stock options. And the average annual wage of software engineers exceeds $90,000.

This newfound prosperity comes with a price. Housing costs have soared, freeways are packed, and a new class of “have-nots” has emerged.

Francisco Colunga, pulling a huge rake across a mass of soil in front of a fancy Palo Alto home, earns $8 an hour. He lives with six men, mostly gardeners and day laborers like himself, in a three-room apartment in nearby Redwood City. They share the $1,200 monthly rent.

Twenty years ago, a Palo Alto gardener could earn enough money to support his family. But Colunga is single and on the verge of poverty. “That’s just the way it is,” he says, wiping dust from his eyes. “Some people make more money than others, and I’m just a gardener.”

Amy Dean, CEO of the South Bay Labor Council, recently pushed the city of San Jose to raise its minimum wage to more than $10 an hour. The city agreed to $9.50 an hour with benefits, which Dean says won’t be enough.

“We see unprecedented prosperity, millionaires being minted on the hour,” she says. “But on the other hand, we see hundreds of thousands of people simply being left behind.”

An estimated 19% of all area jobs pay less than a living wage for a single adult, Dean says. And nearly 55% of Silicon Valley jobs pay too little to support a family of four.

Alfredo Felix trims hedges a few blocks from the home of Apple CEO Steve Jobs. His employer, a landscape contractor, pays him $8 an hour. Felix, his wife and two boys live in one room of a house in San Jose. The rent is $500 a month.

“Yes, I see these people here make good money,” Felix says. “But for me, it’s very difficult. I work hard, yes, but it just isn’t enough.”