The Bay Area’s economy now exceeds its level during the 2000 tech boom in many ways, but it can’t sustain itself if it doesn’t continue to attract top talent from around the world.
To do that, the region needs more and cheaper housing, shorter commutes and tax breaks for companies that want to launch and grow in the Bay Area, according to a study from the Bay Area Economic Forum presented Thursday by its president, R. Sean Randolph.
Equal numbers of Bay Area residents are entering and retiring from the job market, but the economy won’t grow unless more people join the workforce. The high cost of living, coupled with corporate taxes and tough immigration standards, may drive workers — particularly the innovative workers the Bay Area is famous for — to other regions, according to the study.
“If we can’t continue to attract and retain the finest people in the world, we will be looking at a very different picture in five years,” Randolph said.
The Bay Area prides itself on its quality of life, but the numbers tell a different story.
Bay Area residents have some of the highest salaries in the nation, but they spend 48 percent of their income on housing, compared to 33 percent in Seattle and 24 percent in Charlotte, N.C.
They also spend roughly 70 hours each year sitting in traffic. If they spent those hours at work, it would translate to a 5 percent increase in productivity, according to Randolph. Only San Francisco residents use public transit in significant numbers — 31 percent, compared to 10.6 percent or fewer in other Bay Area counties.
The Bay Area economy is based predominantly on work involving knowledge and innovation — high-tech,biotech, medical research and financial services. One-third of its companies are founded by immigrants, particularly those from China and India who graduate from local universities, according to Randolph.
Post-Sept. 11 immigration crackdowns may deter that kind of entrepreneurship.
“There’s now a five- to six-year waiting list to get a green card,” Randolph said. “We need to stay tolerant and welcoming.”
In addition, California offers more tax incentives to cities for retail than for residential, and charges sales taxes on manufacturing equipment, factors which discourage cities from increasing housing and businesses from locating here, according to Randolph.
Despite the numbers, some remain optimistic about the Bay Area’s prospects. “Companies considering coming to San Francisco are aware of the shortcomings of this area, but they feel the positives outweigh the shortcomings,” said Dennis Conaghan, executive director of the San Francisco Center for Economic Development.