Recession Hits SF Harder Than Dot-Com Bust, Distress Index Shows

Recession Hits SF Harder Than Dot-Com Bust, Distress Index Shows

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Editor's Note: San Francisco is taking a harder hit now than it did during the dot-com bust 10 years ago. The Great Recession – which has been declared officially over but is still being felt on the city’s streets – is hitting more people, harder, with no sign of letting up. That’s according to a new Distress Index developed by New America Media in partnership with a Stanford University research center.

When the dot-com bubble burst a decade ago, Yvonne Dunkley barely noticed.

The 45-year-old Jamaican immigrant had a good job in the human resources department at the San Francisco Marriott and had just bought her first home, a two-bedroom bungalow in the city’s Ocean View District.

But now Dunkley, who supports her teenaged daughter and two disabled parents, is worried. Two years ago, she lost her job at the Marriott. She hasn’t been able to make a mortgage payment since last June and is worried about losing her home.

“I had a good job and 30-year fixed rate mortgage but now I need help,” she said.

Dunkley is not alone. While some outside observers may see San Francisco as a wealthy island largely insulated from the current economic downturn, a new Distress Index developed by New America Media in partnership with a Stanford University research center shows the city has been badly battered by the Great Recession.

“By virtually all accounts, things are substantially worse now than they were even at the peak of the dot-com bust,” said Christopher Wimer of the Stanford Center on Poverty and Inequality, which pooled together monthly unemployment, foreclosure and public assistance figures to give a real-time picture of San Francisco’s economic ups and downs.

The index defines the dot-com bust as running from March 2000, when the NASDAQ began to crash, to June 2003, when unemployment peaked at 7.5 percent.

“What’s really scary,” said Wimer, is that nearly three years after our current recession began in December 2007, “it doesn’t seem to be showing any signs of abating.”

The statistics show nearly 15,000 more San Franciscans are unemployed than at the peak of the dot-com recession. The number of city residents waiting in line for free food from a food pantry has tripled. The number applying for food stamps has increased by more than 50 percent.

Perhaps most striking is the increase in the number of homes falling into foreclosure.

Foreclosures averaged about three per month during the dot-com bust. Today, more than 50 homes are foreclosed on each month.

“This recession is much broader and much deeper,” said Stephen Levy, director of the Center for Containing Study of the California Economy (CCSCE), a private think tank in Palo Alto.

During the dot-com bust, “If you didn’t work in the tech sector and you didn’t have everything invested in the NASDAQ, you were probably okay,” Levy said.

By contrast, in this recession, “There has been a collapse in construction and home values that put the entire financial sector at risk. At the same time, the world economy turned down and that hit our exports and tourism.”

The statistics compiled by New America Media and the Stanford Center show that “as unique and specialized” as San Francisco’s economy is, it is nonetheless “subject to major natural and world trends,” Levy said.

The Distress Index also shows this recession is hitting different types of people than earlier downturns. While the dot-com bust primarily hurt young, educated workers who could pick up and move elsewhere when the tech sector bombed, this recession is hitting the entire city, forcing people like Dunkley out of their homes and sending seniors on fixed incomes into soup kitchens.

Bai Huang, 79, smiles as he wraps his mouth around a hamburger, part of his free lunch at the Curry Senior Center on Turk Street in the Tenderloin. The elderly immigrant, who came to San Francisco 12 years ago from Guangdong in Southern China, lives a few blocks away in an affordable housing complex at the corner of Turk and Gough.
Prior to last year, Huang used to prepare his own meals at home, but state budget cuts have turned that into a luxury. In February and July last year, state legislators and Governor Arnold Schwarzenegger cut a total of $871 million in SSI/SSP checks for elderly and disabled Californians and eliminated an automatic cost-of-living adjustment that kept these benefits in line with inflation.

Lawmakers also cut 10 benefits from the state’s MediCal insurance program, including mental health, vision, and dental care.

“I used to just buy the cheapest food, but now simply I don’t have enough money,” he said, adding all his income now goes to rent, dental bills, clothing, and personal care products like toothpaste and shampoo.

“That’s why I come here,” he said, gesturing around the Curry’s dining room, where many of the diners sport long beards indicating years on the street. “It’s not for fun.”

According Andy Burns, who runs the dining hall at Curry, the number of elders coming for free meals has more than doubled in the past year. Seniors who are put off by increasingly long wait times at better-known kitchens like Glide and Saint Anthony’s have gravitated to Curry, where all of the diners are senior citizens.

“We’ve added lunch on weekends and a second seating on weekdays,” he said. “Now we’re looking at adding a third seating. The need is definitely there.”