Struggling in the shadow of Silicon Valley wealth

EAST PALO ALTO, Calif. — A few miles from Facebook's sprawling, opulent headquarters, police officers cuff a suspect in a hardscrabble neighborhood while sirens wail not far away.

Drive a few minutes along Bay Road, and you are overwhelmed by the disparity between the haves and have nots. Bars frame windows. Patrol cars crisscross the streets near Cesar Chavez Academy, where schoolchildren frolic. Homeless people wander.

They share the same ZIP code with Facebook but live worlds apart.

Throughout Silicon Valley, fences and roads divide the rich from poor, the powerful from the powerless.

Through a jurisdictional quirk, sections of tony Atherton abut crime-infested areas in Redwood City. A fence separates multimillion-dollar homes from St. Anthony's church, where hundreds of homeless people get free, hot meals six days a week in a dining hall.

"You can toss a rock over there," says longtime social activist Larry Purcell, pointing to $5 million homes within shouting distance of St. Anthony's. "The income gap is shocking. The very wealthy have a hard time understanding the poor — and (sometimes) they live next to each other."

A few miles away, four streets serve as a de facto border between pricey homes and a gang-infested neighborhood in Redwood City.

Abject poverty forms like pockets in Silicon Valley, where job growth, income and venture capital flourish at or near record highs.

It may be booming business at Google in Mountain View, Facebook in Menlo Park and Apple in Cupertino, but for those on the outside looking in, life is hard.

The average home in the San Francisco Bay Area sells for $1 million, and most apartments rent for more than $2,500 a month.

In San Francisco, the hungry form long lines at food pantries in the South of Market neighborhood. Tent cities sprout up in San Jose and elsewhere.

At the Jungle in San Jose, which may be the country's biggest homeless encampment , as many as 350 people live in tents, shacks and treehouses.

In nearby San Mateo County, the third-richest in the state, the homeless rent beds for six to eight hours — or live in cars.

"There has always been an extreme wealth gap between the affluent and others here, but it is more pronounced with the tech boom," says Marianne Cooper, a Stanford University sociologist and author of the new book Cut Adrift: Families In Insecure Times. The book examines the widening gulf between the uber-wealthy in tech and nearly everyone else in Silicon Valley.

Income disparity is the norm in expensive tech hubs such as New York, Seattle and Boston, where high-skilled workers enjoy the perks of those cities, says Stanford University economist Rebecca Diamond, who has studied economic inequality in cities with large numbers of highly paid, college-educated workers.

San Francisco is the extreme case. Tech jobs have skyrocketed 56% in the past five years – more than in any other large city in the nation – and the unemployment rate is down to 4.4%. Housing prices are rising at a 20% rate, and the average rent in 2013 was $3,396 per month, the highest of any city in the country, according to a study by the Boston Consulting Group.

Many have moved to more affordable areas, where they endure long commutes. "About the only time the rich and poor connect is when the poor are service workers for the rich," Cooper says.

Blacks and Hispanics, who work inside companies such as Google and Facebook but are employed by outside contractors, typically earn low wages and few, if any, benefits, The most prominent among those who struggle to piece together a living are the shuttle bus drivers who transport thousands of employees to and from their jobs in Silicon Valley.

Two neighborhoods, centered near tech hubs, underscore the growing gap between the affluent and the needy: East Palo Alto and Redwood City. These are their stories.

TRYING TO SHED ITS PAST

In 1992, East Palo Alto (EPA) was saddled with the moniker "murder capital" of the USA. Two decades later, the city still struggles to shed its reputation.

In 2012, the number of assaults involving a weapon jumped to 230 from 129 in 2011 and remained high last year.

The high rate of crime reflects a general desperation among the economically disenfranchised, leaders say.

"The biggest problem in this country isn't Ebola or ISIS — it's income inequality," says U.S. Rep. Jackie Speier, a Democrat whose congressional district includes East Palo Alto, San Mateo and Redwood City. "It affects everything."

Because there is so much revenue generated within San Mateo County — home to Facebook, NetSuite, GoPro and others — it is "not good enough for companies to give a few dollars," Speier says. "They need to give more."

Silicon Valley companies are increasingly contributing to philanthropic causes, but community leaders say they can do more.

Facebook CEO Mark Zuckerberg and his wife, Priscilla Chan, made a splash last year when they donated company stock worth almost $1 billion to the Silicon Valley Community Foundation. They have also contributed to numerous local charities.

This year, the Silicon Valley Community Foundation raised nearly $8 million over 24 hours to benefit local charities. Tipping Point, an anti-poverty organization in the Bay Area, raised $10 million with the help of 20 companies — including Apple, Google, Dropbox, Box and Jawbone.

Absent major donations from tech, there is inspiration amid the desperation. Community leaders and activists such as Purcell have stitched together social programs, often with little or no financial assistance from the multibillion-dollar companies so close to them.

"There are a lot of poor people in East Palo Alto who need something to believe in," says Sister Trinitas Hernandez, director of Rosalie Rendu Center, a non-profit facility that teaches English and computer training to non-English-speaking adults while offering day care and homework sessions for their children.

Hernandez, a member of the Daughters of Charity Ministry Services, initially rented a one-bedroom apartment in East Palo Alto in 1996. Today, it is a 40-unit complex housing 37 families, purchased through $5 million in donations and funds raised.

The center is an educational oasis in one of the Bay Area's roughest neighborhoods. A piece of art masks a hole from a bullet that "sizzled" through one of the rooms. "Kids are accustomed to gunfire," Hernandez says nonchalantly.

If Hernandez is the center's heart and soul, Bill Somerville, 84, is its patron saint.

Somerville is president and founder of Philanthropic Ventures Foundation, which has awarded $8 million to in-need schools in five counties in the San Francisco Bay Area since 2000.

A short, simple grant application for up to $500 from schools for supplies is processed or rejected within 48 hours. The genial Somerville likes to clinch the deal with a handshake. "What we do is trust 'em and fund 'em," he says.

"The city has no momentum. There is no community here," says Somerville, whose dedication to philanthropy dates to 1960, when he left a family printing business to work on race relations for the University of California-Berkeley.

The center's story is about hope and dreams where crime and poverty are usually the everyday currency.

Martha Perez fled to the USA from Mexico as a teenager in 1994, running through brush and crossing a raging river after shelling out $2,000 to make the odyssey.

Perez, Nancy Alvarez and Imelda Jovel learned English at the center and teach others there and at Cesar Chavez Academy. Each has children either in college or high school. "They don't have a choice with me," Alvarez says, laughing.

"These are my guardian angels," Perez says, pointing to Hernandez and Somerville.

A JEWEL OF GOOD

Several miles north of EPA, amid a gang-infested pocket of Redwood City, there are jewels such as the St. Francis Center, a 28-year-old facility that serves as a school and community center for youth. "It's about teaching kids not just English, music and science, but dignity," says Christina Heltsley, its principal.

"You don't see (as many) homeless people on the street here (in Silicon Valley) as you do in San Francisco," says activist Purcell, 66, a Bay Area native and former priest who has devoted more than 40 years to helping the needy. "There can be 10 people in a one-bedroom apartment because rent is so exorbitant."

Hispanics, in particular, often rely on their extended families — usually grandparents, aunts and uncles — to rear children while the parents work at two or three jobs.

To ease the housing crunch, the Philanthropic Ventures Foundation acquired affordable apartments in Redwood City, where veterans and day laborers live. "I'm one of the 99% who live near the 1%," says Max, a tenant for a month. The veteran of the Iraq and Afghanistan Wars didn't want his last name used.

Philanthropy starts within companies, social workers insist. Although they are grateful for charitable donations, they say throwing money at a problem does not work. There needs to be an executable plan.

"We need to get CEOs to do two things: Live on food stamps for a week, or spend a night in a homeless shelter," says Speier, the Democratic congresswoman who has done both. "It is a very humbling experience."

"Some of these tech guys support things that help their reputation," Purcell says. "We need to change the model, the process."

Alejandro Torres, 12, is one of several seventh-grade students at St. Francis who dream of going to college and one day working for a company like Facebook. Maybe even Facebook itself.

"I want to help communities and people the way Sister Christina helped me," he says.

It's just a few miles away.