Is tech a solution to or cause of income inequality?
When it comes to income inequality, many in high-tech believe they have answers. Even as Salesforce (CRM) founder Marc Benioff castigated an audience at a recent industry conference for being "stingy," others argue that they offer the best solution for problems like the income gap in San Francisco. "There are so many new employment opportunities for people now ... the tech community being the backbone building that industry, and tech community being the customers," said Intuit (INTU) co-founder Scott Cook.
There's little doubt that the tech sector offers some fabulous job opportunities. But it's unclear that they necessarily extend far beyond the industry. To put tech salaries into perspective, look at the salaries of highly paid foreign workers, as reported by Quartz. At the top was Netflix (NFLX), paying an average $214,693. The next highest was Box (BOX) at $143,318 per employee. The lowest listed was $91,402 at Tesla (TSLA).
For comparison, the median U.S. household income -- including all people working in a household -- was $52,250 in 2013, according to the Census Bureau. Bureau of Labor Statistics numbers show that the wages are high for STEM (science, technology, engineering and math) employment. The average salary for computer and information research scientists in May 2014 was $113,190. Information security analysts made $91,600. Computer programmers, $82,690. And application software developers received $99,530 on average.
Foreign talent brought in, typically through a special H1-B visa, often makes far less than others in a company. Ronil Hira, an associate professor of public policy at Howard University, has testified in front of Congress that cost savings of such hires typically run approximately 25 percent over what an American worker would receive. Although that includes many workers brought over by outsourcing companies, it's possible that even the average employee at high-tech companies makes more than what H1-B workers receive.
The sums offered by tech companies are staggering compared to what most people can dream of making. Bonuses ranging into the hundreds of thousands of dollars and doubled salaries reportedly allowed ride-sharing company Uber to poach 40 robotics researchers and scientists from Carnegie Mellon University.
The irony is that Uber is often held up as one of the companies creating work opportunities for the average person, but robotics would potentially allow it to run cars without drivers, taking away what it supposedly had offered.
Some make the argument that tech creates a trickle-down effect, with all these wealthy tech employees buying goods and services that require the employment of those further down the economic ladder. And yet, a look at economic conditions in San Francisco, a hotbed of tech wealth, shows it's unclear whether even that rationale ultimately holds water.
If there were a strong impact on general conditions, one might expect that median household income in San Francisco would have benefited. Analysis of Census data shows that, despite some up and down movement, median household income rose only 2 percent between 2005 and 2013, and that might be explained by reported displacement of lower-income families from the city as income disparity widens. Depending on where in San Francisco one lives, median household income ranges from a high of $137,199 down to $24,545.
Some companies, such as Facebook (FB), Microsoft (MSFT), Google (GOOG) and Apple (AAPL), have made efforts to set a higher payment floor for contracted low-wage workers or to bring some in as permanent employees, with the full benefits available to tech experts. But that leaves many people who don't work for a tech giant and for whom technology doesn't seem to offer a bridge over a widening income and wealth gap.