Is $500K in SF the ‘Permanent Underclass?’ the Tech World Debates

Act fast, or risk being relegated to the “permanent underclass.” That’s the latest worry reverberating around the techosphere.

It’s no secret that AI is creating massive amounts of wealth for some. The startup space is flush with cash, the AI labs are doling out large salaries to retain top talent, and a series of upcoming IPOs could turn average engineers into millionaires many times over.

For those early to the AI gold rush, that’s joyous. For others, it’s a sign of growing class disparity.

Menlo Ventures partner Deedy Das described the feeling in his viral X post. Roughly 10,000 people who worked for companies like OpenAI, Anthropic, or Nvidia can now retire, he wrote. The rest making under $500,000 can work “their whole life and never get there.”

Das referenced the talk of a “permanent underclass” that flies around tech circles. It has long been a meme (and a warning) on X, as techies debate how AI will reshape the economy. In The New York Times, Jasmine Sun described it as the theory that “people have a limited window of time to build wealth before A.I. and robotics are advanced enough to fully replace human labor.”

But Das’ post clearly struck a nerve. Whether a “permanent underclass” is approaching may depend on who you ask.

Are fears of a ‘permanent underclass’ overblown?

Founder Tracy Chou compiled a list of words she felt are overused in San Francisco. Among “agency” and “taste,” there was the phrase “permanent underclass.”

The backlash to Das’ post was almost immediate. Replit product lead Amadeo Pellicce created a list of things to do to “thrive in SF as a member of the permanent underclass.” They included going to therapy, living with others, and spending time with family. Then, he included a reminder: “X is not real life.”

“There is no permanent underclass,” Pellicce wrote. “Labor can always create capital. All you have to do is make something people want. AI just accelerates this.”

Foundation Capital partner Jaya Gupta wrote that we may not want everything the so-called overclass receives. “They cannot monopolize joy, taste, friendship, beauty, aliveness, or the reasons life is worth living,” she wrote.

In a text to Business Insider, Das acknowledged that some people had reacted with some version of “quit your whining” or “touch grass.” Das’ personal reaction: “The anxiety everyone feels is real, both in the Bay or outside of it.”

“This is just a side-effect of capitalism,” Das wrote. “Any new technology has ever increasingly faster adoption rates and thus increasingly faster rates of wealth building.”

Das’ post was specifically about San Francisco. Former Facebook product manager and “Chaos Monkeys” author Antonio García Martínez wrote that it correctly captured the city’s “ruthless boom/bust, winner-take-all competition.”

Some Bay Area-lovers pushed back. Notion marketer John Hurley fought back with a list of beautiful things you can do in the city. “Be deeply grateful for the heavenscape you live in,” he wrote.

“Permanent underclass?” tech PR Ed Zitron wrote on X. “Drive out to the Redwoods, breathe in the air.”

Meanwhile, techies have started diagnosing the traits of future members of the underclass, such as using a notetaking app or saying “I think.”

Real career concerns beneath the memes

While it might be easy to dismiss the warnings of a “permanent underclass,” the memes are also hitting on real fears people have for their careers.

AI leaders keep forecasting how radically the technology will shake up the economy.

It could be a white-collar bloodbath, as Anthropic CEO Dario Amodei puts it. Meanwhile, layoffs keep getting blamed on AI. Others talk about the idea that AI will eventually be so capable that we’ll all just be collecting universal basic income. Americans’ sentiment for AI data center development has nosedived.

One user posted a clip of ex-Google CEO Eric Schmidt’s commencement speech, where graduates booed his reference to AI.

“These kids are embracing the permanent underclass,” they wrote.

It may also be localized in San Francisco (and its famously high cost of living) — and San Francisco alone. One X user wrote that the permanent underclass was real, but that non-tech people should ignore it.

“What SF people consider ‘permanent underclass’ means something very different than in the rest of the country,” they wrote. “But it means ‘relative permanent underclass,’ and it is real.”

In his text, Das wrote that many San Francisco residents had been supportive, and that the common reaction he’d heard from those in the city was: “Thank you for stating plainly the anxiety from conversation we’ve all been having behind closed doors but too afraid to say out loud.”

Another user wrote that AI was both minting checks and threatening the “safe path” — something they said didn’t happen during previous technology booms. “You could sit out the dot-com boom & keep your accounting job,” they wrote.

Kierra Dotson, author of The Data Digest, suggested there is a middle ground to the discourse.

“I think there’s a lot of room between believing you’re free of money from money problems and about to be in the permanent underclass(severe). Homes being expensive in the Bay Area is nothing new(esp during the COVID peak) and the median salary is $136k,” she wrote.

“Has the goal post moved? Absolutely. Are these people in golden handcuffs? Probably,” she added. “But I think they have many more options than they think they do and expectations will have to be reworked…which is something we are all waking up to.”

Das wrote in his text that the lesson was to “be patient.”

“If you look at the people who were the biggest beneficiaries of the AI era, it is people who were diligently doing research since 2013/4, when their skills weren’t ‘hot,'” he wrote. “Patience is underrated.”