The world’s most popular social network recently executed an agreement to donate $20 million towards construction of affordable housing units in East Palo Alto, one of the many communities that make up Silicon Valley in California.

With this monetary donation, Facebook will be in compliance with a local development ordinance that requires the company to help ease the displacement of the working class in Silicon Valley. When the social media giant announced its intention to expand its Menlo Park campus by more than 125,000 square feet, the municipality required $6.3 million from the company to develop affordable housing options in the region.

Working with local non-profit organizations, Facebook agreed to double its required contribution plus provide additional funds for technical training and relocation funds that will be made available to residents who have been forced to move out due to the massive gentrification that has taken place across Silicon Valley in the last few decades.

The Golden State of Gentrification

California has not been able to stop a statewide gentrification trend that has been developing since after World War II. Sociologists believe that the initial waves of gentrification got started by the success of the Hollywood film and television studios. In Northern California, gentrification started in San Francisco thanks to the riches generated by the music and financial industries.

Silicon Valley is ground zero for California’s ongoing gentrification. Historically, the expansion of NASA’s Jet Propulsion Labs and IBM planted a seed that continued to attract high-tech companies to the region between San Jose and the Bay Area. By the time companies such as Atari and Apple set their headquarters office in Silicon Valley, gentrification had sparked a housing crisis.

When wildly successful companies in a common sector amass in a single region, gentrification often follows; this has clearly been the case in various regions in the West Coast. Gentrification contributes to the displacement of low-income residents and eliminates the working class due to a sudden spike in the cost of living. A clear example can be seen in Southern California’s housing costs and massive boom in construction equipment and contracting industry

The Silicon Valley Housing Shortage Problem

The confluence of companies such as Facebook, Google and Apple in Silicon Valley has made it very difficult for working class families to find affordable housing. Gentrification usually starts when the founders and executives of successful tech firms move closer to their companies. Property owners and landlords know that these high-income tenants are able to pay higher prices, and thus working class residents are often evicted.

It certainly doesn’t help when companies such as Facebook start offering generous bonuses to employees who move closer to the office. When local landlords learned about this move, they jacked up rental prices and evicted tenants who made considerably less than what Facebook employees earn.

The Future of Housing in Silicon Valley

With the funds pledged by Facebook, approximately 1,500 housing units will be built in East Palo Alto. While this is a good initiative, it only helps to alleviate the housing crisis to a small extent. Although tech companies such as Apple and Facebook are known to pay good wages, the number of employees pale in comparison to the number of low-income residents who have been displaced.

In August 2016, the Silicon Valley housing crisis reached an apex when a housing official was forced to move out of Palo Alto because she could no longer afford to pay rent. The working class residents being displaced are not just construction workers and dishwashers; they are also teachers, paramedics, administrative assistants, and even tech workers who are in between jobs.

For the time being, housing officials in California are short on ideas as to how to balance the situation in Silicon Valley. Even though workers in the Golden State pay the highest wages in the United States, their paychecks are not enough to make monthly rent payments.


By: Isaac Christiansen