Silicon Valley Homeless Feel The Grip Of Recession's Long Reach

Silicon Valley Homeless Feel The Grip Of Recession's Long Reach

REDWOOD CITY, Calif. -- The first time Michele arrived at the Maple Street homeless shelter three years ago, she was still driving her BMW 325xi, the final remnant of her Silicon Valley affluence.

Her paper wealth of more than $2 million had evaporated a decade earlier, she says, via a stock options fiasco. She had used the options to buy stock in her high-flying software startup, netting a seven-figure profit by the government's reckoning, but then held the shares until they were nearly worthless. That left her with no cash and a $200,000 tax bill. She had sold nearly everything to cover it: her house, her remaining stocks, her art collection.

Periods of joblessness, punctuated by depression and bouts with alcoholism filled out the ensuing years, with cause and effect blurring into a cohesive whole -- one life, unraveling.

She had used the shelter as a way station, finding a new job at another software company within two months and then moving into a rented apartment. But by last November, just before Thanksgiving, she was out of work again, broke again, and back at the shelter, again. This time, she arrived on foot, carrying a backpack that contained all she had left in the world: some clothes, about ten dollars in cash, her laptop computer and her mother's Omega watch.

She had spent the past four nights inside a Happy Donut, using free Wi-fi to watch "Top Chef" reruns on her laptop. Exhausted, dirty and devoid of a plan, she took refuge at the shelter for single adults, a low-slung building on a dead-end road in an industrial area, across the street from a tire recycling center and next to a prison.

Back when she was traveling regularly for business, she had favored suites at Four Seasons hotels. Now, she checked in to the Maple Street women's dorm, a brown-carpeted room jammed with five bunk beds. She slipped into a top bunk and absorbed the reality that it had come to this.

Her resume, with a degree in electrical engineering from Duke University and stints in senior positions at software companies, including a post in Paris, had once made her an exemplar of Silicon Valley success. A combination of personal troubles, long-term unemployment and bleak economic times had since turned her into an example of something else: the new suburban poor proliferating in nearly every American metropolitan area -- even here, within miles of the shimmering campuses of Google, Apple and other wellsprings of unfathomable wealth.

"It rips you to the core," says Michele, 49, who used to order room service and, on a recent evening, dined on sandwiches donated to the shelter by Google. (She asks that her full name not be disclosed, fearing embarrassment and the loss of job prospects.) "It's devastating to look at the money you had, the freedom that it gives, and to realize that it's gone. For me, money has always been about security, having control. Now, your whole life is out of control and everything is unknown. You're at other people's mercy and you feel useless. You're stuck. It just can be debilitating, if you really focus on that."

Though her plunge from executive-level wealth to street-level homelessness is extreme, it has become a not-unfamiliar story among case workers at the seven shelters and transitional housing facilities operated by Shelter Network here in San Mateo county, where the wait list for space is at an all-time high. Overall, the number of homeless people in San Mateo increased by 17 percent between 2009 and 2011, according to a recent county census.

(CLICK ON THE MAP for data about suburban poverty)

"The whole face of homelessness is changing, and a lot of that has to do with unemployment," says Craig Billman, who was Michele's case manager when she arrived at Maple Street and is now associate program director at the facility. "People from the professional ranks are becoming more prevalent. You're seeing more first-time homeless than ever before."

That this is happening here, in the crucible of high-tech affluence, is a testament to the fact that it is happening almost everywhere in the country, part of a wave of suburban poverty that began in the 1990s and has accelerated since the beginning of the Great Recession.

Cities still have rates of poverty nearly double those found in suburban areas. But the number of officially poor people living in the suburbs of major metropolitan areas increased by 53 percent between 2000 and 2010, as compared to a rise of 23 percent among city residents, according to a Brookings Institution analysis of census data.

In the San Francisco Bay Area, suburban communities saw rates of poverty expand from 7.3 percent of the population in 2000 to 9.2 percent a decade later, according to the Brookings analysis.

Experts see the trend as a product of the nation's decades-old suburban migration, a steady exodus from major cities by professionals seeking more space, newer schools and distance from urban grit. More recently, jobs have spread to the fringes of large metropolitan areas, attracting workers. Double-digit unemployment amid the worst economic downturn since the Depression did the rest, sending previously middle-class and even affluent households into poverty.

The individual causes of any one person's slide are as complex and unique as the people themselves. Yet those caught in the unfolding narrative of suburban poverty are part of one fabric, united by the knowledge of what it means to lose one's way so fully that basic expectations about life -- its risks and its rewards -- are rendered essentially inoperative.

These are the stories of four people once accustomed to wealth, who never expected to find themselves requiring help, yet wound up in places where they couldn't manage without it.

"It's emotionally challenging," says a former technology sales executive who once made nearly $800,000 a year at Oracle, but has been unemployed for nearly three years. Last month, he needed help from an area social service agency, Samaritan House, to pay his rent. "It makes you feel like you've got a big 'L' on your forehead, like you're a loser."

Before the dot-com crash, the one-time executive -- who also spoke on condition he not be named to spare embarrassment ---had paper wealth of some $6 million, he says. He sailed the Greek islands, rented villas in Tuscany and bought a half interest in a small plane. But he poured most of his funds into the soaring stocks of the era. When the market collapsed, his remaining portfolio was still worth about $1 million. He has exhausted those savings in recent years, during which he has failed to turn up full-time work, sustaining himself with occasional consulting stints that pay as little as $2,000 a month.

Going in to Samaritan House to ask for help forced him to reckon with the depths of his situation: He is a 52-year-old man who used to fly around the world while supervising a team of 60 sales people, and who now must look for a roommate as a condition of his rental assistance.

"I guess I'm probably depressed," he says. "I don't have health insurance at the moment or I'd probably go to a psychologist and say, 'Hey, I'm dealing with a lot of crap here.' I've always been a really positive person and it's hard to keep that up. It's tough. You try to reach down and find that drive and that grit that got you going and got you accomplishments in the past, but it's not as easy when you're in a deep dark hole."


Silicon Valley stretches across much of Santa Clara and San Mateo counties, which together hold some of the wealthiest zip codes in the country. Median annual household incomes sit near $86,000, more than one and a half times the national level. Yet since late 2007, the Second Harvest Food Bank of Santa Clara and San Mateo Counties has seen a 50 percent increase in the number of people it feeds. It now serves about 250,000 people each month, or one tenth of the two counties' collective population.

"You think about what Silicon Valley means to most Americans," says Kathy Jackson, Second Harvest's chief executive. "It's a wealth creation area, and a wealthy collection of suburbs. Yet one out of ten people are at least in part dependent on a food bank."

Between 2006 and 2011, the number of San Mateo residents receiving food stamps nearly tripled, according to the county. Some of the increase reflects aggressive outreach, which has expanded the number of eligible people who are receiving benefits, say county officials. But much of the growth reflects the breakdown of household finances in an era of declining incomes and mounting debt levels, all of this playing out in one of the most expensive areas in the country.

Under the official federal standard, a household of three is poor if its annual income sits at $18,530 or less. But more than 12 percent of San Mateo households earn less than $25,000 a year, according to a recent county assessment, a level that seems poor by any commonplace definition.

Indeed, a single parent household with one preschooler and one school-age child in San Mateo needed almost $79,000 last year to manage basic self-sufficiency, after factoring in the cost of housing and childcare, according to a widely cited estimate from the Insight Center for Community Economic Development, a national research institution. The median home sales price exceeded $750,000 last year, according to the county assessment.

"When you think about the cost of living here, $70,000 household income is not doing fine," says Beverly Beasley Johnson, director of San Mateo County's Human Services Agency, which oversees food stamps and other public assistance programs. "You're struggling."

Food stamp usage has been soaring even in some of the wealthiest pockets in the county. Menlo Park, a town of 32,000 people with a median annual household income above $107,000, is home to the sprawling new headquarters of Facebook, whose planned initial public offering will mint fresh billionaires. Facebook's chief operating officer, Sheryl Sandberg, is constructing a 9,200-square-foot home there. Yet between the summer of 2008 and the end of last year, the number of people drawing food stamps in Menlo Park nearly doubled, reaching almost 1,100, according to county data.

The number of poor families receiving cash assistance in San Mateo county swelled from 4,991 to 7,496 during the same time period, according to the county. During those same years, the county slashed staff dedicated to administering such benefits, eliminating 28 percent of the workforce.

San Mateo amounts to an extreme example of a stark national trend. Just as many suburban communities grapple with sharp increases in poverty and scramble to provide needed services, many are suffering cuts in the face of budgetary crises.

Here, those in need confront an additional challenge: the stigma of seeking assistance in a social scene centered on stock market winnings, trophy real estate and relentless upward mobility.

In a bid to spare applicants embarrassment and compensate for lost staff, the county has added computer kiosks to its social services offices, enabling those in need to apply for benefits without having to tell their stories to another person. The county has also allowed people to apply online, laying out their circumstances in the privacy of their own homes.

This has worked well for beneficiaries, but it has had the perverse effect of making poverty even more hidden. The Valley's technology elite continue to travel between futuristic glass-fronted office campuses and homes in the redwood-covered hills, rarely encountering signs that anyone else lives much differently.

"If you're stuck in traffic in your Lexus, there's no such thing as homelessness," says Steven Carey, a former mortgage broker who now runs a homeless shelter in downtown San Mateo, just down the peninsula from San Francisco. "But if you start taking the bus, that's when there's homelessness."


Carey, 56, has experienced both sides of the divide, his own life paralleling the broader forces of decline afflicting American life in recent times.

Back in the late 1980s, he launched a mortgage finance company. By the early 1990s, his company had offices throughout California, and he was taking home more than $300,000 a year. He bought a home perched over a canyon, about 20 miles south of San Francisco. Unmarried and without children, he worried little about money. Most days ended on the tennis court or on the golf course, followed by drinks and dinner with friends.

But by the mid-1990s, amid an influx of competition from Wall Street, Carey's business was wiped out. By 1999, he was filing for bankruptcy, surrendering his house and his car, and moving into a rented apartment in San Mateo.

He soon secured a commission job in the subprime mortgage industry, on the wholesale side. He stopped in at retail mortgage shops scattered from San Francisco down to Mountain View, in the heart of Silicon Valley. He schmoozed the brokers, bought their loans and flipped them to Wall Street giants, including the ill-fated investment bank Lehman Brothers.

His annual income consistently reached $120,000. But in 2009, amid the aftermath of the great reckoning in real estate, the mortgage market came to a virtual halt. Between June and November of that year, Carey's monthly income plummeted from about $10,000 to nothing, he says.

He sold his Lexus, bought a used Saturn and struggled to find a new line of work. A friend from the subprime lending business invited him to take part in a venture that was in keeping with the times: a loan modification company.

Using a list of homeowners threatened with foreclosures, Carey dialed in search of prospective clients -- people willing to hand over $2,000 in upfront fees in the hope of extracting lower payments from lenders. He promised them that a lawyer would handle their cases, though he knew the firm was really just a telemarketing shop, he says. Many players from the former subprime lending world were shifting into this activity, often making promises on which they failed to deliver.

No one bought his pitch. "I never made a dime," he says.

He was by then soliciting people whose situations bore an uncomfortable resemblance to his own. Unable to pay the rent on his apartment, he moved into a motel that rented rooms by the week. When he ran out of funds altogether, he began hitting up friends and former business associates for cash to pay for a room for the night -- a humiliating undertaking.

"I'm calling up mortgage brokers I used to take out to dinner and asking them for $60 for a motel," he says.

One evening in January 2010, Carey found himself in his car with his Yorkshire terrier and his cat, parked in front of a Motel 6. His last suit was stretched across the backseat, at the ready for job interviews. "I was hoping for the best," he says. On this night, the worst was staring him in the face: He had no money to cover a room. His friends were tapped out or not returning his calls.

"I'm sitting there saying, 'Shit, I'm homeless,'" he recalls.


Carey spent that night in his car in the motel lot. He spent the next several nights camping out in parks, dodging police, before he stumbled on more hospitable terrain -- a hospital parking lot. If anyone asked what he was doing, he would just say he was waiting to see a doctor. When morning came, he entered the hospital, cadged breakfast from the cafeteria and plugged his phone into a wall outlet, charging it for another day of dialing in search of loan modification dollars.

Most days, he drove to a park in nearby Redwood Shores, occupying a bench that looked out on the main offices of Oracle, the software giant. He sat there in his filthy sweat pants, his hair matted and greasy, his face sprouting an unkempt beard, and he called potential clients, inviting other people to lean on him to alleviate their own distress.

"I would call them up, introduce myself as a representative of the company, and say, 'I have a solution to your problem,'" Carey recalls. "They would think I'm sitting in an ivory tower somewhere, and I have all the money in the world, when I'm actually a homeless man who hasn't showered in a week, using a Chevron card for food."

The Chevron card was his lone remaining link to the world of credit. He used it to buy gas and sandwiches, beer and dog food, milk and cereal, whatever he could grab before the masters of finance figured out that he was tapped out and cut him off.

After a month in the hospital parking lot, security forced him to move, rousting him at three o'clock one morning. He shifted to a rest area outside San Mateo, off of Interstate 280. There, he fell in with two dozen homeless people in similar states: a laid-off journalist, an out-of-work handyman, a truck driver. They slept in their cars and barbecued together at night, swapping stories from their past lives, speaking of what had delivered them to this patch of land off the freeway, like characters in an updated scene from "The Grapes of Wrath."

By this time, Carey was drinking heavily, numbing himself to the realization of his circumstances, he says. One evening in early March 2010, as he cracked open the umpteenth beer, his body went into seizure. Someone summoned an ambulance. When he came to in the hospital, a county social worker was standing over him, telling him that his car had been towed away and he was about to be sent to a homeless shelter.

He protested profusely, but the social worker insisted. "She said, 'You've got six dollars and no car, and you're going to a homeless shelter,'" he says.

He landed at Maple Street. Within days, he was working again, telemarketing for a company that painted house numbers on curbs. He moved out of the shelter, renting a cabin on a powerboat docked at a nearby marina. He applied for welfare and food stamps, securing $319 a month.

Then he moved into a rented room and started looking for work -- "anything and everything," he says -- while confronting the reality that most openings were beyond reach.

"I didn't have a car, so I'm screwed for 90 percent of what I could do," he says. "I was going into restaurants where I used to eat and asking for dishwashing jobs. They don't want a 50-year-old back there washing dishes."

After almost a year of looking, he found a job that would have once struck him as almost a prison sentence, overseeing a long-term shelter for chronically homeless people in downtown San Mateo.

He lives there full-time, bonding with a community of people who had spent years on the street back when he was toting golf clubs and lifting martinis.

He is fully sober, he says, and full of appreciation for life indoors.

"I had no clue that there were homeless people," he says, recalling his years of plenty. "I was the kind of guy where, if somebody asked me for a dollar, I'd say, 'Go get a fucking job.' Now, I see them as human beings down on their luck."


Once luck turns vengeful, the descent can be brutally steep, particularly in the relative isolation of the suburbs.

Five years ago, Liza Tellez and her family were representative of the ripple effect emanating from high-tech industries. They lived in Gustine, a small town in California's San Joaquin Valley. Her then-husband commuted to his marketing job at a fiber optics wiring company in Silicon Valley. She worked in a municipal permitting office, processing the paperwork attendant to the construction boom. Together, they brought home more than $100,000 a year, she says.

They owned a speedboat, three cars and a 3,200-square-foot home on a quarter-acre lot. Tall, slim and outgoing, she was a Girl Scout leader. She and her husband both coached softball. They took their three children on annual vacations to Disneyworld.

"We lived pretty much the American dream," she says.

But as the economy turned in late 2007, both she and her husband suffered cuts to their working hours -- the beginning of a downward spiral. They lost the house to foreclosure. They lost their marriage as her husband fell into depression, demoralized by his inability to support his family, she says.

"He couldn't handle being at home, taking on the Mom role," she says. "Losing work -- for him that was everything."

By the spring of 2011, now a single mother, she was behind on rent and utilities and unable to maintain her rapidly deteriorating car. She was fearful her vehicle would break down for good, leaving her unable to get to work. Then what? She put nearly everything into a storage locker -- the children's bunk beds, cookware, clothes, family photos -- and moved to San Mateo, where she had grown up and where she had family.

None of Tellez' relatives had a place big enough to accommodate them all, so she separated the children, assuming they could endure this arrangement for the few weeks she thought it would take her to find a job and a place to live. She sent her eldest daughter to her grandmother's and her younger daughter to her brother's place in Redwood City. She stayed with her son at her mother's house.

But the job market proved lean and her housing search frustrating: She was priced out of seemingly everything. As weeks stretched into months, her relatives grew weary of sharing tight space. Her savings were gone, and yet she felt obligated to contribute groceries to compensate her relatives. She needed gas just to keep looking for work.

On a sunny afternoon in June, she drove to the local welfare office to apply for public assistance.

"I ran into a high school friend who worked there," she says, tears welling in her eyes. "It was kind of embarrassing. I kind of just said, 'I need some help for my kids.' It's very hard to walk into a place like that and be recognized by someone you know. You want to say that you don't care what people think, but you know people know you were doing well and they ask, 'What happened?' Life is what happened."

A social worker referred her to a local social service agency, Samaritan House, where she picked up food from a pantry. A case worker posed a question to which Tellez realized she had no satisfactory answer: "Do you know what your next step is going to be?"

This is how she and her children landed at an emergency shelter for families, First Step, a complex of wood-paneled townhouses that looks little different from the adjacent buildings in surrounding San Mateo.

Inside, suites are stocked with donated furniture and equipped with full kitchens that allow families to cook groceries procured with food stamps.

"It feels like home," Tellez says.

Still, the facility is what it is -- a homeless shelter. It is built to address the myriad problems that have traditionally accompanied homelessness, with support groups for people struggling with chemical addictions and domestic violence. Residents must abide a curfew, sign pledges not to use drugs and take classes in self-betterment. Tellez is not here for reasons of addiction or moral failing. She is here because she used to be well-off, and now she is poor.

"It's completely swallowing your pride," she says.

She has enrolled in a Shelter Network program that will subsidize the cost of an apartment for up to a year while she gains certification as a building inspector at a nearby community college, a credential she says that will allow her to earn as much as $35 an hour.

At 37, she is starting over, looking for a place to rent, this time armed with a voucher, and looking ahead to resuming what she once took for granted as part and parcel of American life: her family, together, in their own home.

"I'm not wanting what I had before," she says. "I'm wanting what I can provide, and that's a roof over our heads."


Michele had long been accustomed to far more than a roof.

She grew up in Woodside, a town in the jagged hills above Stanford University, home to some of Silicon Valley's wealthiest luminaries, not least Larry Ellison, the billionaire chief executive of Oracle. Michele's father had worked in advertising, and her family did not lack for comforts, taking frequent ski trips to the Sierras.

"We were way upper-middle class," she says.

After graduating from Duke, she embarked on a career that would take her to major software companies and several startups. She specialized in marketing customer relations software, used by businesses to track interactions with customers. During much of the 1990s, she was bringing home $150,000 a year. One year, she earned $300,000. This was how she was able to buy a house in Menlo Park and put the BMW in the driveway.

She was spending with abandon, going out to eat for nearly every meal and often taking her colleagues along. She favored swanky Italian restaurants and high-end seafood places, where the tab for six or seven people could reach $1,000.

She got used to relying on her expense account. She was clueless when it came to managing her own funds, she says, and overwhelmed by the imperative to succeed -- sleeping little, drinking much, working virtually around the clock.

"There's a lot of stress," she says. "You have to be better, produce more. The pressure is just immense."

She says this not in the tone of someone making excuses or seeking pity, but by way of explanation: The path from the hotel suite to the homeless shelter is winding, with frequent vistas onto human weakness.

When it all collapsed, her money gone, her resume pockmarked with gaps, she found it difficult to find the next job and harder still to hang on to work, given her tendency to labor to the point of collapse.

Her last job, at a software startup, had been the worst. She was in the office seven days a week, up to 20 hours a day. Not for the first time in her life, she leaned on alcohol.

"Some of it helps me keep the job, and some of it helps me lose the job," she says. "It's self-medication."

Quiet and reserved, Michele leaned back in her chair at a local Starbucks, her de facto office in recent weeks. Every morning, she rode a shelter-provided shuttle to a nearby train station and then walked here, carrying her laptop. She used the Wi-fi to send out job applications.

She soon secured a new position at another software company, this one paying $105,000 a year. She has moved out of the shelter and into a temporary home for recovering alcoholics. She plans to stay there until she receives a few paychecks, enough to rent her own place.

Her credit is tarnished. Few landlords will be willing to give her a lease without a substantial deposit and impressive paystubs. She cannot yet buy a car, making her dependent upon public transportation. Getting to her new job entails rides on two commuter rail systems, and then a mile walk.

"A two and a half hour trip door to door," she says, "If I'm lucky."

But she is feeling fortunate already, having been supplied another chance to make good.

In a part of the world full of fool's gold and paper wealth, and in this era in which poverty and comfort both seem like plausible outcomes for nearly anyone, she has one thing that feels solid: work.

"When you lose everything, there's a weird freedom in that, because there's really nothing left to lose," she says. "I did believe that I could pull myself out."

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