San Jose, California - Many jobs in Silicon Valley are paying more, per-capita income is edging up, the number of fast-growth companies is on the rise, total employment is back where it was in 1996, venture capital investment grew for the first time in three years, federal R&D spending in the region skyrocketed, and the region is growing still larger shares of US and California patents.
These positive trends and some challenging ones are reported in the 2005 Silicon Valley Index published by Joint Venture: Silicon Valley Network. The report will be released during a public breakfast meeting amassing more than 1,000 Silicon Valley leaders at the HP Pavilion in San Jose on Thursday, January 27.
The report emphasizes that the situation is not all bright. The 45-page document presents a complex picture of the Valley with “mixed signals.” Many residents face barriers to upward mobility. Household income is down, at the same time that housing became less affordable. Health and education disparities persist. Though the level of entrepreneurship and investments in innovation increased in 2004, total jobs continued to decline.
“This is perhaps the biggest message from the Index this year: how we grow has changed,” says Russell Hancock, President and CEO of Joint Venture. “In the past the Valley was driven by quantitative job growth, at dizzying rates. That is no longer the case. The technology revolution and intense global competition have led our companies to do more with less, achieving high productivity gains without adding to their payroll. It has created a strange new world in which economic growth is strong even while job growth is sluggish.”
Mr. Hancock cautions that any measure of Silicon Valley “depends on the year that you choose as a benchmark.” Compared to last year, the signals are quite good. But if you run medium-term comparisons, Hancock says, “then it is clear that many Silicon Valley residents have experienced a sharp decline in their economic prospects.” The Valley’s jobs losses in this period are the largest percentage drop of any U.S. metropolitan area since 1939.
“Perhaps it makes the most sense to compare ourselves against the late 1990s, just before the dot-com phenomenon set our region to overheating” continues Hancock. “If that’s your point of reference, then we seem to have returned to similar levels of performance, and embarked on a new period of incremental growth.”
But there are clear challenges ahead. Hancock poses a question in his introduction to the Index: “Innovative, high producing economies are built on a foundation of productive people thriving in vital communities. Does our region have the essential foundations in place? Are we preparing our workforce for new and transitioning occupations?”
To address these issues, Joint Venture has launched four major initiatives with a broad cross-section of Silicon Valley leaders, staffed by experienced public policy professionals:
- The Technology Convergence Consortium is accelerating the convergence of information technology, biotechnology and nanotechnology in Silicon Valley;
- Smart Valley is pioneering new applications of information technology to improve health care and education;
- Global Silicon Valley is pressing for state and federal policies which address the region’s long-term competitive challenges arising from globalization;
- Fiscal Foundations is pursuing long-term budget and governance reforms in Sacramento, to ensure the State’s ability to invest in education, training, and infrastructure.
In the coming months, Mr. Hancock states, Joint Venture will “stimulate a broad regional conversation about how we grow forward, together.”