The Bay Area is actively repelling its middle class:

In 1900, a few years before Henry Ford founded his auto company, the Detroit metropolitan area had around half a million people. By 1920, the population had almost tripled to 1.4 million, and it grew to 2.5 million people by 1940. Thanks to the booming auto industry, Detroit grew a lot faster than the nation as a whole. Those extra 2 million people weren't just workers on Henry Ford's assembly lines — they included barbers, schoolteachers, doctors, janitors, waitresses, and others providing services to the growing population of middle-class auto workers.

Since 1990, the San Francisco Bay Area has been experiencing a similar economic boom. Google, Facebook, and hundreds of other new technology companies are creating thousands of new jobs. Increasingly affluent engineers want haircuts, restaurant meals, remodeled kitchens, medical care, schools for their children, and so forth, just as auto workers did a century ago. Ordinarily, you'd expect workers across the income distribution would flock to the Bay Area to provide these kinds of services. The population of the Bay Area should be swelling.

But that mostly hasn't happened. Since 1990, the San Francisco Bay Area has grown more slowly than the nation as a whole. Strict housing regulations make it difficult to expand the housing stock. So rather than creating a tide that lifts all boats, Silicon Valley's millions have pushed housing prices up and non-wealthy San Franciscans out. Over the last two decades, a lot of them have left the area for fast-growing places like Phoenix and Las Vegas. The job opportunities there aren't as good, but you can afford to buy a house on a middle-class salary.

The problem with the Bay Area is that regulations limit supply of housing.

In 1990, the San Francisco Bay Area was bigger than the Phoenix and Las Vegas metropolitan areas. Yet the latter allowed dramatically more construction during the 1990s and 2000s. Little wonder that the Bay Area has seen slow population growth and rising rents.

It doesn't have to be this way. The Bay Area has plenty of room for more housing. San Francisco is less than half as dense of Brooklyn. Surrounding communities are a lot less dense than that. If housing regulations were relaxed, developers would make room for millions of new residents, creating thousands of construction jobs in the process. That would alleviate the severe housing shortage currently plaguing the city. And it would create opportunities for millions of non-wealthy people to live near the opportunities and amenities of America's high-tech capital.

And the same point applies to Boston, Washington DC, Los Angeles, and New York itself. We have the technology to build a lot more housing in all of these cities. That would make them more affordable to residents who are not wealthy. Instead, overly strict regulations have created a severe housing shortage, hampering the growth of some of America's most productive industries.

What is exclusionary zoning?

Exclusionary zoning is a process by which a neighborhood or town makes it de facto illegal for low-income — or at times even non-poor — people to live in a given area. The most blunt form is something like a ban on trailer parks or mobile homes.

More subtle forms of exclusionary zoning are also available. In Washington, DC's Spring Valley neighborhood, for example, homes must be located on lots that are at least 7,500 square feet. Minimum lot size rules are extremely common in America's suburbs, as are bans on multi-family structures. These kinds of measures, whether deliberately or unintentionally, make it impossible to locate cheap housing in the areas where it's applied.

Requirements that housing units include off-street parking can also serve as a form of exclusion, as carless households are disproportionately low-income.

See also: Everything you need to know about the affordable housing debate