Jobs, income, food, housing, air quality, digital access, physical and mental health impacted
February 17, 2021 – The COVID-19 pandemic has affected every aspect of Silicon Valley’s economy and the greater community, according to the 2021 Silicon Valley Index, released today by Joint Venture Silicon Valley’s Institute for Regional Studies. From the health impacts of the virus, to its effect on employment, IPOs, childcare, hunger, and housing, the pandemic has plowed through every sector, often with long-term implications. As a timely addition this year, the Index includes a section devoted to the impacts of COVID.
Issues that had long plagued the region have been magnified as a result of the pandemic, notably racial and ethnic disparities, the struggle faced by those unable to keep up with rising costs, and gaping income and wealth divides. While some easily transitioned to remote work—even prospering from the staggering market growth of the tech sector—others faced unemployment or worked outside the home, risking exposure to the virus.
The latest Index shows that pandemic-related job losses drove the unemployment rate to an unprecedented 11.6 percent in April, higher than the Great Recession or dot.com bust. Black and Hispanic workers filed initial unemployment insurance claims at rates 1.5 to two times higher than for white workers. Within the first three months of the pandemic, as many as 44,000 low-income renters became burdened by housing costs due to job losses and the need for food assistance rose steeply.
“The fact is, success is actually driving inequality,” said Russell Hancock, CEO of Joint Venture and President of the Institute. “Bidding wars, the high price of tech talent, and housing prices all amplify disparity. And yet COVID-19 has shown that our region is compassionate, resilient, and boasts an economic engine that performs remarkably well under stress.”
Even as the region lost more than 151,000 jobs by June, the tech sector remained nearly untouched with overall employment levels up two percent despite some layoffs. 2020 was a record year for venture capital ($46 billion), which fueled a record 67 megadeals in Silicon Valley and 41 in San Francisco. The region is also home to an elite-eight of 12 U.S. Decacorns – private companies valued at more than $10 billion.
“We’re seeing a study in contrasts play out in real time,” said Rachel Massaro Joint Venture Vice President and Director of Research for the Institute. “Silicon Valley’s income inequality has grown twice as quickly as California or the U.S. over the last decade. The wealth divide is even more stark, with the top 16 percent of households holding a whopping 81 percent of the wealth; meanwhile, the bottom 18 percent have no savings whatsoever.”
Key findings from the Index
- Foreign-born residents represent a larger share of the region’s population than ever before at 39%, and an even larger share of tech workers, particularly female tech workers.
- Pandemic-related job losses drove the unemployment rate to an unprecedented 11.6% in April, higher than the Great Recession or dot.com bust.
- Black and Hispanic workers filed initial unemployment insurance claims at rates 1.5 to 2X higher than white workers. Jobs lost were concentrated in lower-income occupations, most pronounced in the accommodation and food services sector (-41%), the arts, entertainment and recreation sectors (-54%), and personal services (-54%).
- Within the first three months of the pandemic, as many as 44,000 low-income renters became burdened by housing costs due to job losses. The need for food assistance rose steeply, as CalFresh applications tripled between February and May. An estimated 197,000 households remained at risk of rent or mortgage nonpayment at the end of 2020.
- Silicon Valley’s income inequality has grown twice as quickly as the state or nation over the past decade. The top 16% of households held 81% of the wealth; the bottom 53% held a mere 2% of investable assets. Food prices rose by +8% as did the cost of transportation and childcare (rising twice as quickly as inflation over the past decade).
- The region had lost more than 151,000 jobs by June, while tech sector overall employment levels went up by 2% despite some layoffs.
- 2020 was a record year for venture capital at $46 billion, fueling a record 67 megadeals in Silicon Valley and 41 in San Francisco. The year ended with 24 new publicly-traded companies. In aggregate, Silicon Valley and San Francisco companies increased market capitalization by 37%, reaching nearly $10.5 trillion by the end of the year.
- More new commercial space was under construction than ever before with 21 million square feet and another 14 million square feet in the pipeline.
- There was a significant decline in internet speeds. While 97% of Silicon Valley students had access to a computer and internet at home, it was not adequate for distance learning. Graduation rates declined and the high school dropout rate rose by three percentage points, with the highest rates among the homeless (50%), English-language learners (28%), Hispanic (16%) and socioeconomically disadvantaged students (16%).
- Nineteen major COVID-19 response funds granted over $94 million in pandemic relief, $58 million of which was disbursed within the first three months of the crisis; nearly two-thirds of all funding went toward food, shelter, and other basic needs.
- Voter registration rates and eligible voter turnout reached unprecedented levels at 85% and 73%, respectively. Turnout among young voters, traditionally low, rose to a record high of 63%.
- Local government agencies adjusted budgets to accommodate pandemic-related declines in revenues, expected to be greater than those during the Great Recession or the dot.com bust. Cities are expected to have more than $400 million in budget shortfalls.
Rachel Massaro, Joint Venture Vice President and Director of Research for the Institute, authored the Index with assistance from Stephen Levy, director of the Center for the Continuing Study of the California Economy and a senior advisor to the Institute. The 155-page study reports the latest data and trends in economic development, workforce, housing, education, public health, land use, environment, governance, arts, and other sectors throughout Santa Clara and San Mateo counties and portions of Alameda and Santa Cruz counties and San Francisco.
The complete 2021 Silicon Valley Index is accessible online at www.siliconvalleyindicators.org and may be downloaded from the Joint Venture website.
The Index is published in conjunction with the annual “State of the Valley” conference, a town hall-style gathering of regional leaders, elected officials and citizens in a discussion of Silicon Valley’s economic opportunities, challenges and future. The 2021 State of the Valley conference, virtual this year, takes place Tuesday and Wednesday, February 23 and 24. Register here.
About Joint Venture Silicon Valley
Established in 1993, Joint Venture provides analysis and action on issues affecting the Silicon Valley economy and quality of life. The organization brings together established and emerging leaders—from business, government, academia, labor and the broader community—to spotlight issues, launch projects and work toward innovative solutions. For more information, visit www.jointventure.org.
About the Silicon Valley Institute for Regional Studies
The Silicon Valley Institute for Regional Studies provides research and analysis on a host of issues facing Silicon Valley’s economy and society. The Institute is housed within Joint Venture Silicon Valley. For more information, visit www.SiliconValleyIndicators.org.