Feb. 25 (Bloomberg) -- Peter Seto wakes up at 5:30 a.m., drinks a cup of coffee and makes the 18-minute cross-town commute to San Francisco’s waterfront. There, he hops in the driver’s seat of a 45-foot luxury coach outfitted with tinted windows, plush seats, TVs and wireless Internet to chauffeur a bus full of programmers around the Bay Area.
Seto, 60, is benefiting from the burgeoning technology industry as part of a growing cadre of bus drivers chaperoning employees to Google Inc., Apple Inc., Facebook Inc. and other companies. Yet, his $50,000 annual pay is hardly luxurious in a city where software engineers just out of college can expect more than twice that and are fueling a boom that has sent median home prices skyrocketing past $850,000.
“It’s very difficult for some people,” Seto, who started driving after his garment company closed, said in an interview between his morning and afternoon shifts. “I’ve seen a lot of friends move out. They would rather buy a house outside the city.”
San Francisco’s private bus drivers are at the center of a swelling debate about income inequality and the role of technology’s nouveau rich in turning the city into a place that’s becoming unaffordable for everyone else. With the highest rents in the country and rental evictions at a seven-year peak, the rising presence of company-funded buses in densely populated neighborhoods has led to protests and occasional violence in a city known for tolerance.
Across the nation, the inequality gap is attracting more attention, with President Barack Obama calling it “the defining challenge of our time” in last month’s State of the Union address, and the CIA World Fact Book ranking the U.S. 41st among 136 countries for family income distribution. The widening disparity between rich and poor set off the Occupy Wall Street movement in 2011.
For San Francisco, the trend has created an economic conundrum. High-profile initial public offerings from Facebook and Twitter Inc. and the influx of technology companies has brought jobs, higher tax revenue and increased demand for pricey dinners and multimillion-dollar home renovations. Just last week, Facebook agreed to buy mobile-messaging application WhatsApp Inc. for as much as $19 billion.
Unemployment in the city has dropped to less than 5 percent, compared with 6.6 percent nationally, yet the average monthly cost of a two-bedroom apartment jumped 12 percent in January from a year earlier to $3,350, according to real estate site Trulia Inc. San Francisco has the second-highest level of inequality in the country, behind Atlanta, according to a Feb. 20 report from the Washington-based Brookings Institution.
“While a lot of people are benefiting, especially people who are moving here for the tech industry, a lot of longtime residents aren’t benefiting,” said Erin McElroy, 31, who has organized blockades to protest the buses as a member of the group Eviction Free San Francisco. “The buses are definitely symbolic for a larger systemic shift and gentrification.”
City health-care workers protested outside of Twitter’s San Francisco headquarters on Feb. 12, demonstrating against corporate tax breaks. On the other side of the issue, former venture capitalist Tom Perkins sparked an online firestorm last month after comparing the recent treatment of the richest Americans to Nazi persecution of Jews.
Seto, who drives for Bauer’s Intelligent Transportation Inc., hasn’t paid much attention to the inequality debate, even after a December incident in which demonstrators broke a window and slashed a tire of a Google bus in Oakland. Dressed in a dark suit that serves as his driving uniform and with stylishly spiked black hair, Seto said he likes the riders of his 56-passenger bus, and some even gave him wine, chocolate and gift cards for Christmas. Mostly, they keep to themselves, typing on laptops and phones, he said.
Confidentiality agreements prevent Bauer’s and its employees from saying which companies they work for. On its website, Bauer’s lists Facebook, Yahoo! Inc. and Hewlett-Packard Co. among its recent clients.
Seto, who immigrated to San Francisco from Hong Kong 40 years ago, is fortunate in that he bought a house in the 1980s for about $150,000. Along with his wife, who is a city worker, Seto raised his two kids in that house, located in the Sunset neighborhood, a foggy area that juts up against the Pacific Ocean. Some of his Bauer’s co-workers have moved to cheaper areas like Stockton, about 80 miles away, and take long commutes before starting their routes.
“I was lucky at the time I bought it, and that’s why I can afford to live in the city,” Seto said. “I’ve been thinking about selling it but I changed my mind because my kids like it and I love living in the city.”
Most people in Seto’s income bracket are struggling in San Francisco as technology companies proliferate. Software engineers at Google, Facebook, Apple and Twitter make on average $110,000 to $120,000 a year, not including bonuses, according to job website Glassdoor Inc. Mayor Ed Lee said in a recent interview with Time that middle class in San Francisco includes those making $80,000 to $150,000 a year.
Seto started driving in 2004 after closing his garment business -- cutting clothes for brands like Levi Strauss & Co. - - as that work moved overseas. He first drove vans for senior homes and soon landed work with Bauer’s, which was expanding after signing on with Google to transport workers from San Francisco to the search engine’s headquarters about 40 miles south in Mountain View. Seto spent about five years driving for Google, which now operates its own buses.
Seto’s current driving route for another technology company takes him through the Mission neighborhood, a traditionally Latino working-class area that’s been gentrified amid an influx of software developers and coffee shops that double as co-working spaces.
On a recent morning, a crowd of about 30 casually dressed workers in their 20s and 30s gathered near a city bus stop at the corner of 18th and Dolores streets. Just before 9 a.m., a white double-decker coach with the sign “GBUS to MTV” -- for Google bus to Mountain View -- arrived to pick up the employees, who showed their security badges as they boarded.
Near the stop, trendy bars, restaurants and furniture stores are continuously opening, and residential rent prices have surged past the city average.
“We’ve lost a lot of staff that are moving up to Portland because it’s less expensive,” said Sam Mogannam, owner of Bi-Rite Market, which specializes in organic groceries and has stores near two bus stops. “We’ve definitely seen a major transition in the customer base -- a lot of old faces that we don’t see anymore.”
Jordan Price, a 34-year-old software designer, recently worked as a contractor for Apple and rode the bus from San Francisco to Cupertino. He called the buses an “easy target for a complex situation,” because even well-compensated programmers can have a hard time keeping up with the rising living costs.
“It wasn’t like people on the bus were a bunch of millionaires,” said Price, who grew up doing graffiti art around San Francisco. “I definitely overheard people who were hyper-aware of their budgets.”
Christopher Carrington, a sociology professor at San Francisco State University and 25-year resident of the city, sees a cultural rift between many longtime residents and technology workers. The buses feed a perception that the tech community is insular and detached from a city where civic engagement is treasured. He used the example of a friend who works at Apple and took off his corporate T-shirt before going to a local bar.
“He said, ‘I can’t wear this out, I’ll get too much grief,’” Carrington said.
The boom has been good for Seto’s boss, Gary Bauer, who started his namesake transportation company in 1989 at age 18, driving friends in a used Cadillac. He charges as much as $20,000 a month for high-end coaches that have a tracking system so riders can check a smartphone application to see when they will arrive.
Bauer said that while he understands the frustration of higher living costs, buses aren’t the problem. They reduce freeway congestion and limit emissions, he said.
“People need to look at the whole big picture instead of just ‘poor me, I can’t afford to buy a house,’” Bauer said. “But I get it -- 95 percent of my staff doesn’t live in the city.”
Box Inc. Chief Executive officer Aaron Levie said his software company buses employees from San Francisco to Palo Alto because it’s an efficient form of transportation and “your alternative is to have 75 extra cars on the road.”
To help ease the tension, San Francisco recently struck a deal with companies including Google, Apple and Facebook, which will pay a fee to use public bus stops around the city.
“Apple is committed to providing safe and environmentally friendly commuting options that benefit our employees as well as the communities where they live,” said Kristin Huguet, a spokeswoman for Apple. “We strongly support the new rules.”
Tucker Bounds, a spokesman at Menlo Park-based Facebook, declined to comment.
Google is striving “to be a good neighbor in the communities where we work and live,” said Meghan Casserly, a company spokeswoman. “Since 2011 we have volunteered thousands of hours with local organizations and gave $60 million to Bay Area nonprofits. We look forward to doing more.”
Seto ends his morning shift at 10:45 a.m. He has a break until 3 p.m., when he hits the road again for his return routes, finishing up at 8 p.m.
Seto keeps to a tight budget and doesn’t take many vacations. His priority has been helping put his kids through college. His older son, now 24, works for digital-camera maker GoPro Inc., while the other, 19, is finishing a mechanical-engineering undergraduate program at San Jose State University.
“I’m working for them,” he said. “I try to help them as much as I can.”
Things have changed during his four decades in San Francisco, he said.
“Having a family living in the city is not easy right now for some people,” he said. “It depends on what kind of job you have.”
To contact the reporter on this story: Adam Satariano in San Francisco at firstname.lastname@example.org
To contact the editor responsible for this story: Pui-Wing Tam at email@example.com