People who live in large cities such as New York tend to have low purchasing power even though they get paid relatively high salaries. This is because people from all around the globe flock to the city, raising the rent and living expenses New Yorkers have to pay. Professor Ed Glazer at Harvard University conducted a study on large cities in the United States and found out that wages and prices grew 10 percent and 16 percent, respectively, each time the size of a city doubled.
When Microsoft co-founder Bill Gates relocated his company from Albuquerque, New Mexico to his hometown, Seattle, in 1979, the fate of the city has changed. The city added hundreds and thousands of jobs as IT experts moved to the city and many venture companies were established there. But when the number of Amazon’s employees grew to some 40,000 recently, complaints of local residents have finally exploded. House prices have soared by 75 percent and the number of homeless has increased by 35 percent compared to five years ago. Eventually, the Seattle City Council approved a bill calling for companies to pay 275-dollar tax annually for every full-time employee in the city.
The unemployment rate of Silicon Valley, the stronghold for innovations in technology, remains relatively low at 2.5 percent. An average yearly income of Silicon Valley residents is almost twice as much as average Americans at 131,000 dollars. Housing prices in Silicon Valley are more than twice as expensive as other parts of California, leaving many people live in camper cars and use a public restroom nearby. For every IT professional hired, five jobs are added, according to a study. But those added jobs are mostly low-paying jobs, increasing polarization between rich and poor. Car factories in Detroit used to hire local residents, providing a boost to regional economic growth. But the growth model of Silicon Valley, which has grown by absorbing IT talents from around the world, presents a question on a trickle-down effect.
Trickle-down effect is nowhere to be seen in Gunsan, North Jeolla Province, Korea, as the GM plant, which used to be responsible for the livelihood of more than 1,800 GM employees and 10,000 workers from partner companies, was shut down at the end of last month. No offense to the residents in Seattle and Silicon Valley, but worrying about the side-effect of the trickle-down that has resulted from IT companies seems like a pleasant concern compared to the dire situation in Korea.