Despite Economic Gains in the Bay Area, Many Workers Are Still Struggling to Recover
January 25, 2023
Our analysis reveals that the region’s communities of color and low-income communities are still facing significant economic challenges, including a consistent loss of employment income and difficulty covering their usual expenses.
By Simone Robbennolt
Already shouldering some of the worst housing affordability challenges in the nation, extreme income inequality, and a high cost of living, many Bay Area residents have yet to fully recover from the initial shock of the Covid-19 pandemic. Recent data on gross domestic product released by the Economic Bureau of Analysis indicates rapid economic growth in the region, with San Francisco, Santa Clara, and San Mateo Counties leading the state in the largest economic growth between 2019 and 2021. But data from our Bay Area Recovery Tracker illustrates how racial and economic inequities in employment, income, and other key measures of well-being point to an uneven recovery for communities of color and people with low incomes.
The Bay Area Equity Atlas has been tracking the nine-county region’s progress toward an inclusive and equitable recovery through a regularly-updated dashboard that features data on economic security and prosperity, housing justice, and healthy communities of opportunity. This analysis provides a closer look at the economic trends unfolding across the region.
As we enter the fourth year of the pandemic, the economic challenges facing people living and working in the Bay Area continue to linger and evolve. Our key findings include the following:
Low-income people and people of color in the region have continuously struggled to cover their usual expenses throughout the pandemic. Six in 10 low-income adults and almost half of adults of color are still unable to cover their usual expenses, including buying food and groceries; paying housing and utility bills; and keeping up with monthly car payments and other transportation costs.
The gap between lower income and higher income households experiencing a loss of employment income continues to widen. At the start of data collection in April 2021, there was an eight percentage-point gap between low- and high-income households that experienced a loss of employment income. By October 2022, that gap had grown to 23 percentage points.
Occupational segregation continues to fuel inequitable outcomes and differences in job quality. Workers of color are disproportionately represented in low-wage occupations, and they continue to experience a persistent lack of flexibility in working conditions. In San Mateo County, Latinx workers make up three-quarters (74 percent) of building and grounds cleaning and maintenance positions, yet they are only one-quarter (25 percent) of the total working-age population.
There are new challenges on the horizon that will worsen already mounting economic uncertainty for workers in the region. Tech industry layoffs and cost-cutting measures, such as an attempt to lay off more than 120 janitors at Meta last fall, have increased job insecurity and instability for subcontracted workers in the region.
Data and Methods
The Bay Area Recovery Tracker draws from a mix of data sources — prioritizing regularly updated data sources when possible — to provide a real-time snapshot of how communities across the region are faring during this period of recovery.
The following sources undergird our findings:
- The Census Household Pulse Survey, covering the period between the middle of August 2020 and the end of October 2022
- The monthly Integrated Public Use Microdata Series (IPUMS) Current Population Survey data, which provides social and economic trends in the United States and includes responses to Covid-specific questions
- The Center for Women’s Welfare Self-Sufficiency Standard, which measures the base income necessary to afford basic expenses in California (Note: The Standard helps support the development of the Insight Center’s Family Needs Calculator.)
- The State of California’s Employment Development Department data on county-level unemployment rates
- IPUMS data from the 2019 and 2020 5-year American Community Survey (ACS) (Note: We use data from the ACS when regularly updated data is not available through the other sources listed above.)
The dashboard relies on timely, nationally representative datasets. To ensure adequate sample sizes that allow us to disaggregate data by race/ethnicity, we sometimes combine monthly observations at the quarterly level or aggregated demographic groups to create broader categorizations. For several indicators on the dashboard, we combine race/ethnicity groups into an overarching people of color category in an effort to avoid reporting highly unreliable estimates. We highlight the various geographies available throughout the dashboard and provide data at the most localized level when possible.
For more details on our data and methods, visit bayareaequityatlas.org/recovery-tracker/data.
A Significant Share of Low-income People and People of Color in the Region Are Still Struggling to Pay Their Bills and Other Usual Expenses
Low-income people and people of color in the region have continuously struggled to cover their usual expenses throughout the pandemic. Since August 2020 — when the Census Bureau started tracking the ability of households to cover usual expenses such as food, housing, utilities, and car payments — the share of Bay Area residents unable to make ends meet has remained above 26 percent. More than one-third (36 percent) of the region’s residents currently are unable to cover their usual expenses. Six in 10 low-income adults and almost half of adults of color are still unable to cover their usual expenses, rates that are three and five times higher than their higher income and white counterparts, respectively.
These stark differences in income inequality existed in the region long before Covid-19, with the pandemic only exacerbating persistent gaps. From 1980 to 2019, the incomes of the highest-earning workers in the Bay Area increased by almost 70 percent, yet the incomes of those in the lowest-paid jobs have decreased by 9 percent. Income inequality in the region was compounded by the pandemic and an equitable recovery will require quality jobs and compensation that can meet the needs of all workers, not just the highest earners.
The Gap between Lower Income and Higher Income Households Experiencing a Loss of Employment Income Continues to Widen
Eighteen percent of the region’s residents overall are currently experiencing a loss of employment income, a slight decrease from 21 percent reported at the start of data collection in April 2021. Still, the gap between lower income and higher income households has grown markedly wider: In April 2021, 26 percent of lower income households and 18 percent of higher income households reported a loss of employment income — an 8 percentage-point gap. By October 2022, that gap had grown nearly three-fold to a 23 percentage-point gap — 32 percent of lower income households reported a loss of employment income compared to just 9 percent of higher income households.
As residents have continued to experience employment income loss over the last year, pandemic safety net programs (e.g., expanded unemployment insurance benefits, emergency rental assistance, economic impact payments, and the expanded child tax credit) have tapered off. These critical supports provided stability through a prolonged period of uncertainty. For example, in 2021 public support programs effectively reduced the poverty rate in California to 11 percent compared to a projected 26 percent without public supports. Additionally, because some populations, including undocumented individuals, were excluded from federal relief programs, California implemented Disaster Relief Assistance (DRA) for 150,000 filers with Individual Taxpayer Identification Numbers. DRA provided $500 in direct cash assistance to adults who were unable to receive other forms of assistance, with a maximum allotment of $1,000 per household.
Expanded safety nets were a lifeline for many low-income households during the peak of the pandemic, yet many of those resources are no longer available as the region has continued to return to pre-pandemic activities. In turn, the financial hole that many households are experiencing because of the pandemic has deepened.
Occupational Segregation Drives Inequities in Wages and Benefits
The Covid-19 crisis brought into focus the entrenched occupational segregation at the heart of the region’s labor market. Workers of color are disproportionately represented in low-wage, low-quality occupations. In San Mateo County, Latinx workers make up three-quarters (74 percent) of building and grounds cleaning and maintenance positions, yet they are only one-quarter (25 percent) of the total working-age population. White workers make up 54 percent of management positions, yet they are only 38 percent of the total working-age population. This racial occupational segregation is a major factor in persistent racial pay gaps. In San Mateo County, the median annual income of white workers was $107,489, compared to $53,279 for Black workers and $42,585 for Latinx workers. The disparity of overall median earnings leaves Black and Latinx low-wage workers in San Mateo struggling to cover their families’ basic living expenses.
Occupational segregation is extremely apparent in Silicon Valley (comprised of San Mateo and Santa Clara Counties), where the workforce is largely polarized between the high-wage tech sector workers (like engineers and executives) and the underpaid workers (like janitors and other service workers) who keep the highly profitably sector running efficiently and safely. Despite the necessity of every job within the sector, not all of them provide the same level of job quality to workers.
In general, jobs created in and adjacent to tech in the Bay Area have been segmented into two types: direct employees that receive high levels of compensation and benefits and subcontracted service workers who make a small portion of executives’ pay and receive minimal benefits. In the Bay Area, hourly wages for software developers are almost four times higher than those of security workers, janitors and cleaners, and landscaping and groundskeeping workers, according to the Bureau of Labor Statistics.
Occupational segregation also stratifies working conditions, as workers of color and women are concentrated in the lowest-paid occupations. In the second quarter of 2020, 54 percent of adults in the Bay Area reported that they were able to work from home for pay. That rate decreased to 26 percent by the third quarter of 2022. There are clear differences between Latinx and non-Latinx workers in the ability to telework, with white, Black, and Asian American workers able to work remotely at significantly higher rates — 26 percent, 29 percent, and 36 percent respectively — than Latinx workers (10 percent). Additionally, people working in low-wage jobs are much less likely to be able to work from home: 14 percent of low-income adults were able to work from home, compared to 32 percent of high-income adults.
The benefits of remote work can be wide-ranging. Among them is the ability of workers to maintain employment income while also prioritizing the health and safety of themselves and their families.
Economic Uncertainty for Workers in the Region Has Continued to Mount
Over the past several months, economic uncertainty has rattled the tech sector in the Bay Area. Almost 100,000 jobs in the industry have been lost since November 1, 2022, according to a San Francisco Chronicle tracker. Rising costs and massive corporate layoffs have created a platform for uncertainty for contracted workers in the region: “Workers are struggling more than they were before,” said Sanjay Garla, an organizer with SEIU-USWW. “The cost of everything — from housing, transportation, food, and childcare — has continued skyrocketing. And even with the significant wage increases that were won during the pandemic, wages still aren’t keeping up with the pace of inflation.”
Despite the uncertainty, cultivating worker power can counter ever-evolving challenges in the labor market. In October 2022, the janitors who clean Meta’s offices went on strike after more than 120 of them were laid off by SBM Management, the firm that handles the contract for Meta’s janitorial services. The downsizing was initially based on the corporate sentiment that high-intensity cleaning services were no longer needed in the later stages of the pandemic, as many people in the region were already vaccinated and returned to their workplaces with less fear regarding their health and working in person. Yet this cost-cutting measure led to an increased and excessive workload for the remaining employees. In the end, SEIU-USWW was able to negotiate with SBM and Meta to reduce the number of overall layoffs.
As the world and the Bay Area continue to recover, the essential workers who supported the region’s health and safety during deeply uncertain times feel that their efforts have been undervalued. “There is kind of a disconnect,” Garla said. “A majority of our workers never went anywhere. They continued to work, and now they’re frustrated because they never quite felt like they were being treated as ‘essential.’”
Silicon Valley Rising and Union Membership in the Bay Area
In response to ongoing job quality inequities in the tech sector, a coalition of local labor groups (UNITE Here, Teamsters, and SEIU-USWW), faith leaders, community-based organizations, and workers came together to form Silicon Valley Rising. Led by Working Partnerships USA, this multi-sector, cross-racial initiative aims to reduce the severe income inequality in the tech sector by giving voice to workers, raising minimum wages, and creating affordable housing in the South Bay. Together, unionized workers can build collective power to improve job quality and push back against exploitative practices.
At the start of the pandemic, the tech industry was able to move many of its white-collar workers to remote work. To prevent a major financial impact on the workforce that was unable to work from home, many major tech companies continued to employ subcontracted workers that maintained their campuses.
Despite the enormous uncertainty that workers faced at the beginning of the pandemic, their participation in unions gave them representation and bargaining power to maintain employment, said Maria Noel Fernandez, the executive director of Working Partnerships USA.
“The minute the pandemic hit, there was a lot of uncertainty on how the tech sector was going to respond and how it was going to work with service workers in the industry,” Fernandez said. “Early on, with some minor exceptions, we saw mostly that the tech industry did right by those workers and continued to support their pay and benefits through their subcontractors. I firmly believe that there were two reasons why they did so: First, those workers had been organizing for several years, so they had already won a seat at the table and had a union that was supporting their interests. Secondly, we were in a moment where everyone was talking about essential workers and their value to all of us.”
Working Partnerships USA — in partnership with the Santa Clara Office of Labor Standards and Enforcement — created the Fair Workplace Collaborative, a coalition of unions, worker centers, and small business chambers that facilitates “know your rights” training sessions. The coalition also worked together to identify when there were health and safety violations related to Covid-19. Additionally, Silicon Valley Rising coalition members advocated for employers to prioritize access to personal protective equipment during the pandemic.
SEIU-USWW also participated in a union trust fund that paid for health insurance and guaranteed that its members were able to maintain health care benefits even if they were laid off during the pandemic. This support was provided at no cost to workers, ensuring that they and their families had access to quality healthcare during the global health crisis.
Membership in the coalition as well as other unions in the region were lifelines for many workers. These unions were trusted sources of information, they prioritized health and safety measures in the workplace, and fought for some semblance of job security for the subcontracted workforce. An equitable recovery in the Bay Area would create a more inclusive economy that ensures the right to organize so that workers — both now and in the future — will have their voices heard.
An Equitable Economic Recovery Will Require Policies to Advance Workforce Equity
To ensure economic security and prosperity for all in the region, equity-focused policies to rebuild the structure of our workforce must be prioritized. These could include:
Fair labor standards, including a living wage commensurate with the cost of living in the region, to support workers in their ability to meet their household needs;
Access to benefits that provide a well-rounded supportive employment package (e.g., health insurance, paid sick time and family leave, retirement savings, and unemployment benefits);
Stable working conditions, such as advanced notice for work schedules and other equitable scheduling practices; and
The right to organize, given that strengthening worker power is an essential element for ensuring that all jobs are good jobs, which has been demonstrated through the successful advocacy of Silicon Valley Rising.
Beyond labor practices, policy solutions to advance equity in the social determinants of work are also critically important. Access to affordable housing must also be a central focus of policy action to ensure workers are not priced out of housing near where they work, which can lead to extreme commuting times and overcrowded housing conditions. In addition to growing the affordable housing stock, policymakers must put protections in place to ensure renters are supported as they continue to struggle to pay rent and prevent unjust evictions (e.g., the right to counsel).
An equitable recovery should ensure that everyone who wants to work has access to family-sustaining employment that allows them to thrive within their communities. As the financial effects of the pandemic continue to manifest in the region, Garla emphasized the need for companies to create better working conditions: “Folks are returning to the workplace, but it is still a struggle to make sure that companies are not taking advantage of the pandemic to cut costs and bring people back at lower standards than they had before.”