Oakland Doesn't Need To Copy San Francisco

Income inequality is destroying San Francisco. Oakland is better situated for an economy for everyone.

Disclaimer: This article and every single article on my Substack only represent my own personal opinion, and not the opinion of my employer, or any public body I serve on or volunteer with.

—

There was an SF Standard article discussing how Oakland seems to be on hard times while San Francisco basks in the prosperity of the AI boom. Some people think Oakland needs to catch the AI boom while others are scared of the affordability impacts of said boom coming east. Unfortunately, we’re stuck in this binary where cities can either be economic powerhouses for a shrinking number of very wealthy people, or depressed economic zones that are affordable.

The last time Oakland wasn’t knee deep in deficits was in the mid-to-late 2010s during the last tech boom, when real estate developers and wealthier home buyers were propping up the city budget with transfer and property tax revenue, and population growth increased sales tax revenue. Oakland today is dealing with the pandemic-era after-effects of reduced tax revenue and vacancies in office space and retail downtown. The unprecedented rent hikes in San Francisco and the uncanny bidding wars for rentals typically reserved for owner-occupied housing may start pushing San Franciscans and the AI boom into Oakland.

No one can deny Oakland has budgetary issues and vacancies downtown, but Oakland is already “looking up.” Homicide continues to fall from the pandemic-era highs and back to a normalized path of historic lows. Oakland’s affordability is a bargain compared to San Francisco. Median condo prices have fallen to $500,000 in Oakland and nearby cities (which media frames as a bad thing but it’s actually good for homeownership affordability) while in SF it’s over $1 million. Brand new apartments with two bedrooms are going for $3,000 just 8 minutes from downtown San Francisco on BART. The median 1-bedroom rent in Oakland is $2,000, affordable to households making at least $80,000 a year, while in San Francisco one bedrooms are $4,000—barely affordable to 1-2 person households making at least $160,000 before taxes.

The latest Oakland Chamber of Commerce’s “direction of the city” poll reveals that Oakland’s voters feel better about Oakland than at any point since 2018, the height of the previous economic boom.

We look back at 2010s Oakland with nostalgia over Warrior parades and a vibrant and diversifying downtown, but nostalgia hides some of the damage that boom did to Oakland. The 2010s tech boom was great for workers, both locally-raised and transplanted, who had the networks to get tech jobs. It was also great for homeowners and property owners who saw their property values skyrocket. But the most working class Oaklanders got lesser paid private security jobs, service jobs, and food and package delivery gigs.

Compare the relatively even income distribution of Oakland households in the year 2000 before the software boom. . .

The median household income in Alameda County was $50,000 in the year 2000.

. . . to Oakland in 2024.

Overall incomes rose over 20 years, as expected with inflation, but households earning over $200,000 jumped from just 3% to a quarter of Oakland households, while the number of households earning below $200,000, and especially between $40,000 to $75,000 dropped. Oakland’s once evenly distributed income classes became uneven, and when broken down by race it’s extremely stark.

Oakland can do worse, though. Here’s San Francisco:

Not only is San Francisco’s richest income bracket 10 percentage points larger than Oakland’s, but compared with Oakland, San Francisco also has a greater shortage of middle-class households than of low-income households. San Francisco’s housing shortage and boom-bust cycles have created a city of poverty and wealth, and an exiled middle class that is too wealthy for subsidized housing yet too poor to remain in the market.

If Oakland diversifies its economy by growing sectors like healthcare—the defining industry of an aging society, one that reliably hires local workers at scale—it will build a middle class economic base. Distribution warehouses are also good employers for the working class and a good use for the declining industrial land of Oakland. Fremont and San Jose’s warehouses are worked in by Oakland residents whose labor should be generating tax revenue for their own community’s infrastructure, not Silicon Valley’s. Union jobs like Costco grocery coming to West Oakland is a great start.

This AI boom is different than the last tech boom because it is predicated on not hiring many programmers and workers. There’s been no explosion in tech company headcount since 2022. Regardless of whether AI comes east or not, the city should focus on attracting a diversity of industries that are middle-class oriented. Especially a city so strategically located in transportation and geography.

Building more housing will obviously help to soften the blow of capital and population influx. Oakland’s long been a pro-housing city, universally held among its political factions, which is a major reason its affordability fared better than the housing politics polarized San Francisco. But there’s only so much Oakland can do on that front when its neighbors don’t build their fair share. Severe income inequality has made the Bay Area’s longstanding housing shortage catastrophic and Oakland cannot resist it alone.

San Francisco is doing well in some respects, but it resembles a commuter Disneyland. I love partying on Folsom or Castro streets late at night to music by DJs who live in the East Bay. Or trying out new restaurants and cafes listed in the Chronicle staffed by cooks, baristas and waiters who live in the East Bay. Or visiting the manicured parks and riding the high frequency Muni lines maintained by public workers who live in the East Bay. Or visiting museums curated and crafted by artists who live in the East Bay.

Another advantage Oakland has is that its vibrancy doesn’t need to depend on commuters. Telegraph Avenue is crowded with partying young people on most nights, as well as the warehouses and house parties in West Oakland or Jingletown. Crime’s in free-fall and headed back to pre-pandemic historic lows. Commercial districts like International and San Pablo Avenue are seeing new businesses. Rockridge and Piedmont Avenue are more popular than ever on the weekends. I also like living in an area with children, not just dog owners. Oakland has its issues with segregation, but Oakland is far more integrated and diverse in ethnicity and income than most cities around it.

Many of the issues facing the Bay Area’s political economy extend beyond municipal politics. If we in California taxed not just billionaires but multi-millionaires too, including by reforming Proposition 13 to fund public services; if we had universal healthcare and an efficient infill housing industry providing middle class construction careers and accommodating population growth; and if we had diversified economic booms in sectors like healthcare and green tech manufacturing then there would be less income inequality than we see exploding in San Francisco right now.

—