Economic History of San Francisco

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Economic History of San Francisco

As of 2016, San Francisco, California had a population of 883,305 people and its GDP per capita was $100,132... With an unemployment rate of 2.9% and average weekly wage being $1,654, San Francisco currently has one of the strongest economies in the United States . The city’s success started in 1849 when citizens across America learned a man named James W. Marshall discovered gold in the city . After the Transcontinental Railroad was completed in 1869, San Francisco continued to grow as more people moved out west. During the twentieth century, San Francisco became a crucial city in World War II due to its bustling economy and port access . Towards the end of the twentieth century, the DotCom Bubble hit San Francisco and the city flourished, fell apart, and rebuilt itself again. The city today can be seen as one of the largest economies on the west coast.

Gold Rush

In 1848, gold was discovered in Sutter’s Fort, an area near present day Sacramento. As word spread that there was gold in California, San Francisco became the central port during the gold rush and many people flocked to the city . Between January 1848 and December 1849, the city’s population increased from 1,000 people to 25,000 people .In 1850, there were 25,000 permanent residents in San Francisco which included many miners, merchants, businessmen, and sailors. At that time, the wealthiest man in California was Samuel Brannan who purchased all potential gold rush supplies available in San Francisco and resold them in the city for a substantial profit . Another successful businessman of the day was Levi Strauss who in 1873 invented the blue jean with his partner Jacob Davis. The duo made a large profit during the gold rush by selling blue jeans to the miners . Other than local businesses, San Francisco’s economy grew because cable cars were established and transportation became easier throughout San Francisco .

Immigration

Much of the population growth was through steamship travel from New York City. The Pacific Mail Steamship Company would send passengers through overland portages in Nicaragua and Panama to San Francisco . Included in the passengers were many Chinese immigrants who headed to San Francisco to work in the gold mines. Many of these immigrants also worked on the Transcontinental Railroad after the gold rush ended. San Francisco’s Chinatown became the largest Chinese settlement outside of Asia; although by 1882 many of the immigrants were forced to leave by exclusionary U.S. policies .

World War 2

In San Francisco, there are multiple landmarks showing the city’s defense during World War II including military barracks at San Francisco’s Presidio, abandoned battery locations along the coast, Angel Island, and Fort Mason . The city played an important role in World War II as the main western port defense for the Pacific War. During the height of wartime, there were 244,000 people working in Bay Area shipyards. The State of California invested $86 million into the San Francisco port alone and the federal government invested $6 million into war contracts in the Bay Area . The economy boomed as soldiers, shipmen, and civilians worked to keep the city protected. By 1950, it is estimated that the city grew from 634,000 residents to 774,821 . Government records also show that two-thirds of all troops sent to the Pacific in World War II went through San Francisco. This included Marines, soldiers, sailors, and wartime personnel. These personnel totaled to be 1,647,174 passengers who all boarded ships at Fort Mason and headed to the Pacific . Beyond San Francisco’s economic and defense contributions to the war, the city also served as an important staple in many soldiers lives. It was the last American city 1,650,000 soldiers saw before departing for the war and it was the first American city many soldiers saw when they returned from war . At the time, a former director of a top-secret radio research project at Harvard named Fred Terman went to teach at Stanford University and was determined to make the university one of the top engineering schools in the country. Two of his students, David Packard and William Hewlett helped start an electronic revolution in the Silicon Valley and created Hewlett Packard Company .

Angel Island

Angel Island also played an important role during the war because between 1910 and 1940, 175,000 Chinese immigrants and 60,000 Japanese immigrants were detained in barracks on the island. As the war continued, the island became an area where Italian, Japanese, and German prisoners of war were kept. When the war ended, Fort McDowell of Angel Island was used to process soldiers returning home from war. It is estimated that the fort saw the return of 23,632 passengers in December of 1945 alone .

DotCom Bubble & Crash

Between 1995 and 2000, investors across the United States poured money into quick-forming Internet startups creating what is known as the "Dot-Com Boom" . San Francisco was heavily affected by this as a strong demand for highly skilled tech workers began to rise . The city began to gentrify itself as new workers from the internet and technology sectors migrated to historically poor neighborhoods. Neighborhoods such as the Mission District started to see large numbers of computer software engineers and entrepreneurs move into the area, followed by many sales and marketing professionals . The change in population began to change the social landscape of San Francisco and the city climbed its way towards being one of the most expensive cities to live in the United States . During this time, the city’s 18 and under population was 14.5%, making it the smallest share of children in any major United States city .

The Dot Com Bubble Crash

During the Dot Com Crash, San Francisco experienced its fastest shrinking population and the population reduced by 30,000 residents in just a few years . Areas such as South of Market became empty wastelands where many dot-com companies had once been located. After the crash, commercial vacancy rates rose to 10% and there was five million square feet of space available. In South of Market, commercial vacancy rates rose up to 20%, compared to the .6% in early 2000. The unemployment rate increased by 3.1% between May 2001 and June 2001, and the unemployment rate hit 3.7% as of June 2001. This was better than the national average of 4.5%, but it was a large increase in a short amount of time. Although the overall number of jobs in San Francisco increased after the boom, it was not enough to keep up with the growing pace of the population looking for work . The city was able to recover after the crash by 2003 due to the resurgent international tourism industry .

San Francisco Today

As of 2018, the Bay Area economy, including San Francisco, ranks as the nineteenth largest economy in the world . In 2016, the average San Francisco household earned $96,667, nearly double the nation’s average of $57,617. The average individual’s weekly salary in 2016 was $1,654 per person and unemployment in the city was at 2.9%. The GDP per capita was $100,132 and the GDP growth rate was 5.4% . he unemployment rate in San Francisco in September 2019 was 1.8%, which is down from 2.2% in August 2019 and the year-ago estimate of 2.1%. There was also an increase of 37,600 jobs between September 2018 and September 2019 which is an increase of 3.3% . A contributing factor to economic success of San Francisco in the twenty first century has been because of the growing technology industry in the city. San Francisco’s metropolitan area, which stretches from San Mateo to Marin, has had a net gain of 20,566 tech jobs in 2018. Additionally, Los Angeles Brokerage CBRE reports that more than 60% of all leasing activity in San Francisco in 2018 was done by tech firms . Another growing industry in San Francisco has been financial technology companies, or fin-tech companies. Out of Forbes FinTech 50, twenty-five of the firms came from San Francisco and nineteen of those were valued at one billion dollars or more, labeling them as “unicorn” companies . Nearly 40% of the nation’s venture capital money has been sent to either the San Francisco or San Jose metropolitan areas

Tourism Industry Today

The 2018 tourism spending in San Francisco grew by 2.3% compared to 2017 and spending by visitors totaled $10 billion. The number of tourists also went up in 2018 and San Francisco reported a total of 25.8 million visitors coming to the city. The tourism industry created 82,538 jobs in 2018 for San Francisco’s locals. 2018 has been the ninth consecutive year in which the city reported record-breaking outcomes for the tourism industry, meaning 2019 will likely be another record-breaking year

Industrialization of San Francisco

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