Statement by Russell Hancock, president and CEO, Joint Venture: Silicon Valley Network
San Jose, Calif, January 19, 2004 - By all accounts, the burning question about Silicon Valley – will it come back from the rubble of the dot.com bubble -- has been answered: Yes, but the Valley will look different, and we must invest in the skills of our people to prepare for new jobs.
We are poised for another recovery in a long history of economic rebounds in our dynamic region sparked by underlying innovative strength from a creative and determined population and business community.
The data in the 2004 Index of Silicon Valley, released today by Joint Venture, says that after three painful years, “we are now seeing the early signs of yet another Silicon Valley reinvention”. Although it is slower than we would like it to be, we are seeing clear evidence that the Valley’s future is taking shape.
But now there is another question: a comeback to what?
While job loss has slowed, changes are taking place in the structure of our region’s economy from dominance in information technology to new industries. In particular, the Index finds that “employment gains are taking place in some high-wage occupational clusters, employment is growing in the Health Services cluster, and the Biomedical cluster is becoming more concentrated in Silicon Valley than in the nation.”
Employment in the high-wage occupational clusters in Silicon Valley, the Index reports, is 25% of our total employment compared to 13% nationally. In our most concentrated clusters, average wages are more than $80,000. And our higher skills give us comparative advantage over other regions.
A Special Analysis in this year’s Index examines “the unique and changing occupational structure of our Valley.” It describes how we compare to the nation, what occupational clusters are growing and declining here, what makes this structure unique, and how our occupational clusters have shifted over time.”
We need, therefore, to understand what our occupational changes mean for future jobs; prepare our workforce for these occupations to stay competitive in the global economy; recognize the importance of career progression from low-level to mid-level to high-level occupations; and help the workforce to make the transition.
Four occupation groupings are highly concentrated in Silicon Valley relative to the U.S., the Index reports. These are innovation R&D; professional services; headquarters; and technical production.
Another six groups are not as highly concentrated but important: administration; installation, repair and production; sales, marketing and distribution; health and human services; education and training; and personal services.
The Index makes clear that we also have significant employment with mid-level wages. The Special Analysis concludes that our region “is not a two-tiered hourglass economy with high-wage research and professional services and low-wage personal services. Our region also has a majority of employment in mid-wage occupational groupings.”
To promote an innovative economy in the future, our region will need to broaden prosperity by retraining our existing workforce to transition to higher-skilled jobs. Our global competitiveness will depend on investing in the skills of our people.
There are other challenges, as well, and Joint Venture announced four Initiatives last fall to address several of them.
One is designed to help sustain our economic recovery. We must have structural reforms in the state’s budget process to provide a strong foundation and a healthier business climate for more good jobs, broader individual prosperity, and a better quality of life. We must seize this moment to make basic changes in our government, which can help maintain our environment for innovation and entrepreneurship.
To this end, Joint Venture has joined with the Bay Area Economic Forum to pursue a non-partisan, Bay Area effort in Sacramento providing a community-wide voice involving leaders from business, labor, education, community organizations, and local government. We want to promote the idea of working together to find solutions and not engage in finger pointing or pushing narrow agendas.
The other initiatives were organized to help accelerate the convergence of biotechnology, information technology and nanotechnology; expand the use of information technology to improve health, education and transportation; and build relationships among technology leaders in Silicon Valley and other regions of the world for mutual economic benefit.