Backlash to dotcom hypergrowth

High tech can be a remarkable engine for economic growth, but it's also causing economic and racial tensions.

For most of the past decade, community after community has rolled out the welcome mat to members of the high-tech industry.

Why not? New jobs, good wages, and a foot in the door of the New Economy.

But around the United States, cities that have become high-tech magnets are beginning to wrestle with the downside of their successes.

Escalating housing prices, traffic, and sprawl are being felt - and bemoaned - in communities such as Atlanta; Austin, Texas; and Virginia's Fairfax County.

And in some cities - including Seattle, Boston, and Oakland, Calif. - tensions are rising as longtime residents get priced out of downtown neighborhoods by waves of wealthy, young dotcom workers.

Nowhere are these tensions more severe than here in San Francisco, where neighborhood activists and Mayor Willie Brown this week came up with dueling plans to restrict dotcom growth, or even ban it altogether, in certain neighborhoods.

Dotcom angst strikes cities as rents, traffic skyrocket

"What we're dealing with here is the preservation of a San Francisco that is amenable to working families," says activist Richard Marquez, who supports a restrictive approach to dotcom expansion. "The city's class and cultural character are at stake."

Angst over the dotcom influx is particularly acute here because of its proximity to Silicon Valley and its lack of vacant land. But the nature and speed of high-tech growth are creating similar ripples in a variety of communities across the country, say experts.

"There are early signs of a backlash in a number of places, and I see it accelerating," says Ross DeVol, an economist who specializes in high tech for the Milken Institute in Los Angeles.

Mr. DeVol says most communities that have attracted high-tech industry have found it to be a remarkably effective engine of growth. High-tech jobs have a higher than average "multiplier" effect, he says, meaning they become a magnet for other supporting industries and jobs.

While this is just what many communities want, many have been unprepared for the pace and nature of high-tech growth once it takes hold.

New kind of growth

One of the main differences between tech-style growth and expansion from older, more traditional types of businesses, says DeVol, is simple velocity. High tech can grow far more rapidly than older industries, outstripping the ability of community planning and other institutions of local government to keep pace. A key issue, say experts, is the feebleness of regional governmental agencies to deal with the breadth of issues raised by rapid high-tech expansion that falls within a number of jurisdictions.

In addition, the tech industry brings much greater income and wealth disparities than older forms of business and industry. This, say experts, can create deep and fairly sudden class and racial cleavages within a community, something that is harder to quantify but perhaps a more explosive ingredient in the stress and strain of high-tech expansion.

One of the greatest regional tech success stories outside of Silicon Valley has been Austin. But even there, "it's become a love-hate thing," says Larry Warshaw, a former policy analyst for Mayor Kirk Watson and now director of business development for an Internet company.

Environmentally sound growth has always been a hot issue in Austin. But with the explosion of technology firms there over the past decade, housing, traffic, and air quality have leaped to the top of the political agenda as a result of the tech expansion, says Mr. Warshaw.

And Austin, too, has seen its own cultural friction emerge between some of the city's older communities of artists and musicians and the new dotcom workers, says Warshaw.

As one step to deal with Austin's high-tech growth, a proposal for a light-rail system will be put before voters in November.

In some respects, tech expansion is generating some new waves because its nature is changing.

A decade ago, many of the new tech firms were involved in manufacturing and assembly operations, which tended to push them to the outskirts of cities. That created concerns about sprawl and whether the regional infrastructure of highways, water, and even electricity was adequate - not to mention potential loss of open space. Now, much of the tech expansion is headed downtown, posing different challenges.

"In many respects it's just the demographics of the dotcom workers," says DeVol. Internet start-ups are populated by a young and single workforce, and for many of them, the city is more attractive than the suburbs.

That, in one respect, is what has occurred in San Francisco. Many of the Internet workers of nearby Silicon Valley have by choice, or necessity, been driven to San Francisco for places to live or start their companies.

The result has been an increase in the city's population by tens of thousands, with many of the newcomers bidding up home prices and rents, and taking office space that was once occupied by small, local businesses.

Dealing with consequences

Across the bay, in Oakland, a high-tech expansion, eagerly sought by Mayor Jerry Brown, has led to protests outside his home over the loss of affordable downtown housing.

Similar tensions have arisen in Seattle, where some poor neighborhoods are being transformed, says Doug Bloch of ACORN, a national neighborhood organization. In Seattle's low-income Rainier Valley neighborhood, for example, dotcom workers are pouring in and rents are racing upward, says Mr. Bloch.

"There is noticeable tension and separation between the whites coming in and minorities that have lived here for years," says Bloch.

Sometimes it's not just the economics at issue. Iowa City, Iowa, for instance, has created a thriving technology cluster of communications and satellite firms. But in doing so, the largely white community has had to learn to incorporate an expanding community of Chinese scientists.

Even in multiracial San Francisco, the high-tech issue has ethnic overtones. Activists in the largely Latino Mission district see a steady encroachment of white and Asian workers and businesses, and rising resentment.

Neighborhood opponents of dotcom expansion here say they will seek voter approval of a ballot initiative that would ban dotcom development in the Mission and a nearby neighborhood, while barring it in other areas pending a local review process.

The mayor's proposal, aimed for the November ballot, would also limit dotcom growth, but not to the degree many neighborhood activists want.

(c) Copyright 2000. The Christian Science Publishing Society

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