Feb 12, 2024 - News

San Francisco's economic growth is held back by income inequality, report shows

people walking in a crosswalk

Pedestrians cross a street in San Francisco in November. Photo: Loren Elliott/Bloomberg via Getty Images

While San Francisco ranks in the top 50 cities in terms of economic performance, its high level of income inequality is holding it back.

  • That's according to a new Milken Institute report first shared with Axios.

Why it matters: The top metropolitan areas offer high wages, plentiful jobs, a (relatively) low cost of living, and thriving tech sectors.

State of play: The San Francisco-South San Francisco-Redwood City metropolitan area ranked No. 27 on the nonpartisan nonprofit's list of the top 200 performing large cities — up from last year's No. 35 ranking.

  • Unsurprisingly, the metro ranks second for high-tech concentration (behind San Jose-Sunnyvale-Santa Clara).

Yes, but: San Francisco saw the second-highest five-year wage increase, 80%, but that has coincided with high levels of income inequality, according to the Milken Institute.

  • In terms of income inequality — as measured by the Gini coefficient — San Francisco ranked No. 192.

What they're saying: "What we mean by top-performing is that these are the cities that are growing the fastest," Maggie Switek, an author of the Milken report, tells Axios.

  • "So if we think about New York or San Francisco, those are cities that have grown in the past and now are maintaining the status quo, whereas the cities that are performing at the top are really where jobs, wages and the high-tech sector are growing."

Driving the news: The Milken Institute assessed 403 U.S. metropolitan areas using 13 economic metrics, based on data from January 2022-August 2023.

  • The report divided cities into large metros (more than 275,000 people) and smaller ones.
  • Austin, Raleigh, Boise, Salt Lake City and Provo, Utah, ranked at the top.
  • Read the full report here, and see more about the methodology here.

What to watch: Measures related to San Francisco's income inequality issues are on the ballot this March, including affordable housing bonds to support the construction of low-income housing.


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