Meet San Francisco's 'permanent underclass' — and the ones who think they still have a shot

In San Francisco, a growing underclass of people who feel they have no chance of advancing financially or professionally is emerging, according to a recent report. These individuals, who are primarily small business owners and workers outside the tech sphere, are struggling to keep up with the skyrocketing cost of living in the city due to the AI boom.

Kacie Barrett, a 26-year-old project manager, has downsized her life in an attempt to make ends meet. She now resides in a shared apartment for $1,850 a month, cooks most of her meals, works out at a low-cost gym, and uses Uber instead of owning a car. Barrett feels she is living like a college student, not an adult, and worries about the future.

The term "permanent underclass" has been used to describe this growing group of San Franciscans. However, some argue that this outlook is overstated. Tushar Kumar, a cofounder of Twin Peaks Wealth Advisors, believes the phrase is "so dumb" and that smaller companies and startups will continue to succeed in the long run. He notes that technology has a way of scaling that other businesses cannot, and that there will be headwinds for people in the non-tech sector.

However, others acknowledge the real concern: the difficulty for those outside the tech industry to enter the city's housing market. The housing prices in San Francisco have skyrocketed due to the AI boom, with tech workers willing to pay premium prices to secure a home. This has made it difficult for small business owners and workers in service-oriented jobs to find affordable housing.

Business owner Tolgay Karabulut, who has lived in San Francisco since 2009 and opened his bakery in 2022, has felt the strain of rising housing costs. He pays $1,300 a month for a shared apartment, where he has limited storage space. Karabulut hopes to make more money and eventually rent himself an apartment, but the future remains uncertain.