Housing Crisis, Silicon Valley’s Dark And Shiny Underbelly

A homeless person resting on Church Street in San Francisco, California
A homeless person resting on Church Street in San Francisco, California
Anais Moutot

SAN FRANCISCO â€" A billboard for a new housing complex being built in San Francisco caught people's attention last spring. Its sales-pitch slogan? "From the low 1,000,000s."

Some may have chuckled at the absurdity, but the price of the new units reflects the current reality of the market. The median price of a house in San Francisco is $1.13 million, an increase of 70% in five years, according to Zillow, a company that analyzes the real estate market. For renters, prices are outrageous too: You need almost $3,500 per month for a one-bedroom apartment, according to Zumper, another real estate firm.

The cost of living has always been higher in California than in other states in America, explains Brian Uhler, who recently penned a report about the housing crisis for the state Assembly. "The temperate climate, the closeness to the sea and the rich cultural life have always made San Francisco and Los Angeles very attractive cities," says Uhler. "But the cost differential with the rest of the country has grown over the years."

Why? The boom of the high-tech sector in the region has brought in top-end employees, but it has not been matched by a boost in new housing. Whereas 450,000 jobs were created in the region between 2010 and 2014, only 54,000 new housings were built, according to Egon Terplan, an analyst at Spur, a local think tank specialized in urban development. "In recent decades, only a few cities, such as Detroit, Cleveland or Pittsburgh, have built less than San Francisco, but these cities doesn’t have the same economic growth," notes Uhler.

During this same period, young employees’ lifestyles have also evolved. The American dream, with wife, children, and dogs in a pretty garden in the suburbs is over. The Millennials, stay single longer, and want to live in an "exciting" cosmopolitan area, explains Sarah Karlinsky, head of public policy at Spur.

This mismatch between a tiny supply and enormous demand has led to higher prices, leading to very difficult situations for employees with modest income. In California, households in lower-income brackets often dedicate up to two-thirds of their monthly budget to pay rent. This is 11% above the median of households in the same situation across the United States, says Uhler.

Crossing poverty line

Consequently, if including the weight of housing prices, California becomes the state with the highest percentage of people below the poverty line, according to the California Housing Partnership Coalition. Tipping Point, another NGO fighting poverty in the region, estimates that at least four median salaries are needed if you want to live in or around San Francisco. Thus, don't be surprised to encounter a teacher or nurse driving an Uber to make ends meet.

This housing crisis is not hard to see on the streets of San Francisco. With housing prices up to 64% over the past decade, San Francisco now ranks highest in the U.S. for the number of homeless people who sleep in the streets. On the sidewalks of the city's downtown, not far from the headquarters of such tech giants as Twitter, Airbnb and Uber, dozens of men and women wander the streets, some with swollen feet and dirty clothes. One woman talks to an imagined mobile telephone, which is in fact her left hand, another sings a lullaby to a Donald Duck doll, as if it was a child, while a man jumps on the floor, lowering his pants and imitating a frog. Nearby, employees at Twitter meet for lunch inside the company's shiny cafeteria that offers quinoa and kale salad.

Homeless woman with dogs in Haight Street, San Francisco â€" Photo: livenature

The two worlds have never been so close. Because the gap between rich and poor households continues to rise. The median salary of the wealthiest one percent increased of 219% over the past quarter-century, as the tech boom created many millionaires and even billionaires, while the remaining 99% saw their salaries increase 34% instead, according to a study of the California Budget & Policy Center.

One result of this is a creeping gentrification. The popular Mission neighborhood south of downtown, a prime destination for employees of top startups, is emblematic of this transformation.

Tax breaks

For the owners of buildings built before 1979, the only way to raise rents that remain frozen until tenants move out is to offer generous "packages" to them, to make them leave. Elise Zareie, who is 25, and works in an environmental startup, had to leave the neighborhood in 2013, after her owner gave $35,000 to her roommate to not renew the lease. The rent then doubled.

Tommi Avicolli Mecca, a longtime LGBT activist in San Francisco, has lately focused on the housing issue. He now works for Housing Rights Committee, an association for the defense of tenants. "After having been beaten because of my sexuality in several cities, I came to San Francisco in the 1980s for its reputation for tolerance and I found an apartment for $750. Nowadays, I fear that the San Francisco that used to be a shelter for so many communities will disappear. What can a young LGBT do, when he arrives here, with hope that he will be welcomed, and find rents at $5,000?"

For Avicolli Mecca, the blame rests with the attitude of the technology giants that dominate the region. "These companies assumes no responsibilities in the crisis that they have created," he says. Another culprit is the city government, which gave tax breaks to companies to lure them away from other cities, to the south, in Silicon Valley.

There are even new associations forming of employees in the high-tech sector who themselves are victims of the housing crisis, as well as articles in the local press about an engineer from Google who sleeps in his car or a Facebook developer leasing a closet-like apartment in San Francisco.

"Rich people don’t want to see poor people move in their neighborhood, and vice versa " quips Sarah Karlinsky, from Spur.

One direct consequence is that for the first time since 2011, the number of inhabitants moving away from the city is higher than the number of newcomers. This news brings smiles to the cities that dream of being a new Silicon Valley: Austin, Seattle, Portland. And yes, Californian biggest tech’s giants are busy opening offices there.

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7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.

But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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