Tech Boom Will Spin Off Thousands of S.F. Jobs: Q&A With Supervisor David Chiu

SF Public Press
 — Jan 23 2013 - 4:53pm

All politicians these days have to have a jobs plan. David Chiu, who was re-elected this month to an unprecedented third term as president of the San Francisco Board of Supervisors, is putting his political stock in high tech.

The proof of the strategy, Chiu said, is in San Francisco’s low unemployment rate — 6.7 percent, far below the 9.8 percent rate for California overall, according to state employment numbers from last fall.

Until 2011, Chiu said, “San Francisco was the least inviting city for tech innovation.”

Then he worked with Mayor Ed Lee on a deal to keep tech companies such as Twitter in the city by giving them tax breaks. That April, Twitter got a six-year exemption from paying the city’s 1.5 percent payroll tax in exchange for settling in the Mid-Market Street area.

The move worked, the mayor told the Chronicle at the time: “We get the benefit of their growing from 350 current employees to the 2,500 expected within two or three years. That’s a huge injection into our local economy, right in one spot.”

But Chiu is not completely a tech fanboy. He supported a successful ballot measure last November that changed the business tax, shifting all businesses from a system based on payroll tax to one based on the total amount of money a company makes each year (taking effect right when the Twitter tax break expires). Chiu also said that moving quickly to expand housing and commercial development brings more jobs in the construction and tourism industries.

The economic theory of the “multiplier effect” for core industries is a respectable and well-researched one. Sylvia Allegretto, a labor economist at the Institute for Research on Labor and Employment at University of California, Berkeley, said that much of San Francisco’s recent job growth has been in industries other than tech. Non-tech jobs in industries such as retail, construction and hospitality take up 75 percent of the recent job growth for the San Francisco, Bloomberg reported recently. Allegretto did add, however, that she was a skeptic when it came to over-reliance on enterprise zones to jump-start a whole city’s economic engine.

So why has David Chiu lent his full-throated endorsement to an emphasis on technology to lift up San Francisco’s labor market? Here’s a condensed and edited interview with the supervisor for District 3, in the northeastern corner of the city:

Q: Do you agree with the mayor that the “tax holiday” for Twitter and other technology companies in the Mid-Market area is San Francisco’s best way to create jobs?

David Chiu: While I think it’s important we did pass the Mid-Market tax policy change in 2011, we also passed the business tax reform to eliminate business payroll taxes for all businesses across the city. That’s resulted in thousands of new jobs created every year.

The tech industry is responsible for job multipliers in other sectors. The Bay Area Council recently had a study that showed for every job in high tech, 4.3 other jobs are created in other sectors in all income groups — from lawyers and dentists to school teachers and retail workers. The multiplier effect in tech is significantly higher than any other sector.

People like to focus on our recent attention to tech. People forget that for many years San Francisco was the least inviting city for tech innovation. It was the only city in the country that taxed stock options. These taxes — which we have eliminated — eliminated these barriers to innovation.

Q: What is being done to help blue-collar workers?

Chiu: Business tax reform was carefully created to incentivize job creation in diverse sectors. We have made many decisions in recent years to build more housing units in San Francisco, both with an Affordable Housing Trust Fund created last year as well as decisions on significant development projects, creating thousands of construction jobs. Our focus on America’s Cup and investments in the cruise ship terminal and Jefferson Street Project will ensure San Francisco remains a top international destination.

Q: The local minimum wage law of 2002 meant that one of the highest rates in the nation automatically keeps up with inflation. With the New Year’s hike to $10.55 an hour, what does this law mean for local living standards?

Chiu: When it was first proposed, there were doomsday scenarios for our economy. We have seen the opposite. At a time when we have many high-wage jobs, it’s important to have a floor on lower-wage jobs to have a balanced economy.

Q: For the next round of negotiations over balancing the city’s $6 billion-plus budget, what will the city be asking unions for at the end of the fiscal year this summer?

Chiu: In recent years, we asked labor unions to be open to contract negotiations to give back to the city. We’re grateful for unions to help address our budget deficits. Fortunately, our budget picture has improved in the four years I’ve been in office. With the budget deficit four years ago, we had to balance a half-a-billion-dollar budget deficit. Today it’s one quarter that size, a much more manageable deficit to balance.