Middle-class workers are victims of Silicon Valley's tech boom

By U.S. EconomyFOXBusiness

Tech leaders went from heroes to villains: Vivek Wadhwa

Carnegie Mellon distinguished fellow Vivek Wadhwa discusses the corporate culture in Silicon Valley.

While the Silicon Valley metro area has seen one of the highest upticks in GDP across the nation over the past several years, a new study suggests that middle-class workers in the area are actually making less now than they were in the 1990s.

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According to research from the University of California in Santa Cruz, 90 percent of Silicon Valley workers have a lower salary now than they did in 1997 – despite the fact that per capita economic output increased by 74 percent between 2001 and 2017. Since the economic recovery began, those 90 percent of workers have actually seen inflation-adjusted wages drop.

The area is home to the likes of Google, Facebook and Apple.

Real wages among middle-class workers declined 14 percent between the mid-1990s and the mid-2010s. Wages for lower paying jobs also dropped, but less substantially, thanks in part to higher mandated minimum wages. Only the highest-level employees have seen a pay bump.

The average U.S. worker saw wages increase by more than 3 percent during the last quarter.

Meanwhile, the number of middle- and high-wage jobs in Silicon Valley has actually declined over the past two decades, while the share of workers in low-wage jobs has increased by 25 percent.

“Over the past 20 years, the Silicon Valley labor market has continued to be characterized by stagnating wages for many, growing inequality, and continued insecurity,” researchers wrote.

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The problem is exacerbated for older workers in the tech industry: those above the age of 48 earn less than their younger counterparts.

Part of the explanation, according to the report, is that instead of raising wages for employees, companies are increasingly rewarding investors and top-level executives. They are also outsourcing to acquire talent.

All of these factors have led the area to have one of the highest rates of income inequality across the country.