The disruptive economy — what the Internet Age equivalent of robber barons who ignore regulations to amass personal fortunes like to call their handiwork accomplished through sharing websites — is something many of us take part in.
Why pay top dollar and wait 20 minutes for a taxi when you can get a ride on demand for a few dollars less and have them pick you up in half the time? The potential loss of taxi jobs are dismissed by noting economic turmoil has always been the case as inventions such as the automobile cost blacksmith jobs but created new ones such as auto mechanics.
But what if the disruptive economy does more than simply transform the job market? What if it squeezes an entire economic class out of a city?
That is what proponents of a Nov. 3 San Francisco ballot measure to limit short-term rentals to 75 nights a year in the City say they want to prevent. Airnb — the San Francisco-based Internet start-up that basically came up with a business model that side-stepped regulations governing hotels, hostels, bed and breakfasts as well other non-residential housing to be worth $25.5 billion virtually overnight — argues they are just making San Francisco affordable for more tourists. They also say they are helping struggling middle class San Franciscans earn extra cash so they can afford to live in the City.
You will notice that Airnb and their supporters don’t worry too much about the working class or the poor. The poor — you know those people struggling to feed, clothe and shelter their kids are taking the biggest hits in the disruptive economy.
There’s nothing new about that. Changing technologies since the dawn of the Industrial Age have always taken their toll the hardest on those on the lower rings of the economic ladder.
But what is making Airnb in relation to San Francisco different is the fact it has the potential to take both jobs and housing from the poor.
Let’s say you’re a hotel worker in San Francisco. You make good money, but it’s a struggle to keep a roof over your head. RealFacts notes that in the first nine months of the year the average asking San Francisco rental price for a studio apartment is $33,936 a year or $2,828 a month. That’s up from $30,900 annual or $2,575 a month in 2014.
The per-night charges through Airnb tend to be cheaper than hotels but are at least 50 percent more than what a landlord can get for a traditional long-term rental. Do the math.
It is why the measure is supported by U.S. Senator Dianne Feinstein.
Those opposing any plans to restrict the Airnb business model include Gavin Newsom, who wants to be our next governor.
Someone should ask Newsom — definitely more a member of the jet set than the working class — exactly where are all those people who work at the fancy hotels and restaurants he stays at are ultimately going to live.
This is a question that should be asked of anyone running for governor of California.
Why should you care if you live in the Central Valley? The answer is simple. The ripple effects that the Bay Area housing market causes are felt for miles away.
Bay Area housing — or more precisely the lack thereof — is why Manteca one-bedroom apartments have broken the $1,100 per month barrier. In Tracy, they are pushing $1,400 a month.
Granted there are a lot of things at work here: Strict zoning, long environmental reviews, a super-heated tech job market, and escalating salaries that has created a situation of a lot of money chasing few housing options. That is forcing people farther and farther away from jobs to seek affordable housing whether it is to rent or buy. Creating more pressure on Bay Area housing will only make the situation worse.
If the Airnb model succeeds as the Internet Age robber barons hope, it won’t be too long until even more working class — and some middle class — San Francisco workers start heading east to look for housing. That will mean better paid SF workers will displace those from housing across the bay who are paid less. They in turn will head east and the domino effect is well underway.
As an added bonus, it will put more stress on transit and freeways all so tourists can save a few bucks and a handful of wealthy investors and Internet entrepreneurs can earn billions.
Meanwhile that middle class that Airnb is so worried about will be taxed in a greater proportion to fund government solutions to the displacement issues that occurred in order to make Airnb filthy rich, whether it is affordable housing, assistance to the needy or more infrastructure for extended commutes. Rest assured the Airnb entrepreneurs and their investors will do everything they can to avoid paying taxes by employing shelters or lobbying Congress and the California Legislature to create ones that work for them.
Come to think of it, the disruptive economy isn’t much different than the current one where the middle class ends up taking it in the shorts after buying into a free enterprise argument by concerns that make sure they can maximize their profits while minimizing their taxes.
This column is the opinion of Dennis Wyatt and does not necessarily represent the opinion of The Journal or Morris Newspaper Corp. of CA. He can be contacted at email@example.com or 209.249.3519.