Can Oakland Avoid Tech Conflicts as Startups Move In?

Kapor Center

he start-up scene has spilled over from San Francisco into Oakland. The blog Live Work Oakland has created a map showing where all these new tech companies are popping up in the city. The city’s emerging tech industry is trying to cultivate a new brand — one that’s more diverse and has a better relationship with the community. Entrepreneurs, investors and activists are hoping to avoid the “pricing out” of locals and cultural displacement happening in parts of San Francisco.

Like most of the new start-up founders in Oakland, Daniel Rodriguez and his business partner aren’t originally from the city. They came to the Bay Area from Colombia, and they expected to end up in San Francisco.

“When we thought about the U.S., we thought about San Francisco, like the mecca of the Silicon Valley,” he says. “But when we got there, the price of the rent was so high. Even sharing a room was high.”

So instead, the pair moved into West Oakland, a place they had heard about from others in the tech world. Now, they run their start-up out of Impact Hub Oakland. It’s a new shared co-working and event space at Grand and Broadway that’s buzzing with people trying to create the next big thing.

Mitchell Kapor, a venture capitalist also based in Oakland, thinks some of them will succeed.

Kapor, whose Kapor Center for Social Impact is just down the street from Impact Hub, says tech can have a different culture here than it does in San Francisco. He thinks it can be more diverse, socially aware and connected to the community.

“I do not want to be a Pollyanna. I think change is always a challenging process,” Kapor says, then adds: “We are already off to a different start here in Oakland, and that bodes well.”

Entrepreneurs and investors like Kapor are trying to grow local talent. The Hidden Genius Project and Black Girls Code are initiatives in Oakland that help African American youth get involved in tech. Google just gave $500,000 to a charity that teaches low-income kids coding and business skills.

Community organizer Olis Simmons says it’s nice if a few local kids get to learn coding, but that’s not nearly enough if Oakland wants to head off the kind of displacement happening in San Francisco.

“It’s tokenism,” she says. “It’s marketing. It’s public relations.”

Simmons heads Youth Uprising, a neighborhood center in East Oakland, far from downtown. Unemployment there hovers around 20 percent, and the school next door doesn’t have reliable high-speed internet. In order for real change to happen, she says, Oakland needs money for social programs and improving public schools—real investments that would help stabilize her neighborhood. She points out that Google and other big tech companies send billions of dollars in profits overseas to avoid taxes that fund services and education.

“The truth is, if you don’t invest, then over the long haul what you do is you transfer ownership of the city to someone new,” Simmons says.

And she says if that happens in Oakland, there will be conflict, and it will be more severe than the clash over tech in San Francisco.

“I hate to say this. It breaks my heart to say this,” Simmons says. “San Francisco had a very long ramp of displacement and gentrification, that by the time things exploded, the vast majority of the poor people and the people of color were long gone. That’s not true in Oakland. It will happen much more rapidly and it will be a much grittier experience.”

Economist Carol Zabin thinks that distributing the wealth generated by tech could ease the tensions. Zabin is the research director at theUC Berkeley Labor Center. One of the quickest ways to do that, she says, would be raising minimum wage. Higher pay would ensure that when the cost of living increases, regular folks could afford to stay.

“It’s not just about getting into the tech jobs.” Zabin says. “It’s also about improving the jobs that tech creates.”

Zabin’s colleague Enrico Moretti calculates that each tech job eventually creates five additional jobs outside of the innovation sector. The wealth that tech generates leads to the employment of more people in areas like food service and construction. That’s why Zabin says other tech hubs should follow Seattle’s lead.

Seattle is increasing minimum wage to $15 an hour. San Francisco has a similar measure on this November’s ballot.

“What are the economic costs of that?” Zabin asks. “It means those wealthy tech workers have to pay more for their restaurant meals and their retail expenditures, and their services, and not very much more — 1 or 2 or 3 percentage points more when we get a wage jump of 50 or 60 percent.”

The start-up scene is relatively new in Oakland, but the city is already grappling with wage inequality.

In November, Oakland will ask voters to decide whether to increase minimum wage to $12.25 an hour, and in West Oakland, there are protests against two new redevelopment zones that community members fear will speed up gentrification. As more start-ups move in, locals are wondering what roll tech companies will play in these issues.