Joint Venture Silicon Valley, Silicon Valley Community Foundation annual study
Public sector fiscal crisis, median income, tax system all stalling widespread gains
San Jose and Mountain View, CA | February 7, 2012 – Silicon Valley’s innovation engine is driving a recovery that leads the nation, but the persistent public sector fiscal crisis and other factors are slowing widespread economic gains, according to the 2012 Silicon Valley Index released today by Joint Venture Silicon Valley and Silicon Valley Community Foundation.
The comprehensive yearly study on the economic strength and overall health of Silicon Valley indicates the region that was the last to succumb to the recession now appears to be the first to emerge, paced by tech sector growth that is spawning new companies and creating jobs. Yet these narrow gains, the drag on public finance and housing and the constraints of Proposition 13 are keeping most residents from benefitting.
“Though encouraging, we don’t see the report as a cause for celebration," said Russell Hancock, CEO of Joint Venture, "Small businesses are clearly not out of the rough. The public sector is still in the throes of a fiscal crisis and median household income continues to fall as the gap between those succeeding and those struggling grows wider and wider. It’s as if we’re becoming two valleys.”
“This year’s Special Analysis examines Proposition 13 and reveals yet another challenge facing our region,” said Emmett D. Carson, Ph.D., CEO and President of Silicon Valley Community Foundation. “When Proposition 13 was approved, median home prices were growing faster than most other government revenue sources. Today’s new normal is characterized by reduced home prices and drops in assessed value, which means we must either adjust to fewer public services, find new sources of revenue or a combination of both. We need to ask ourselves if it is time to consider a new approach.”
The 2012 Index reports the latest data and trends in economic development, workforce, housing, education, public health, land use, environment, governance, arts and culture and other sectors throughout Santa Clara and San Mateo Counties and portions of Alameda and Santa Cruz Counties. An accompanying Special Analysis section of the report each year takes a closer look at a particularly significant topic.
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 daylong discussion of Silicon Valley’s opportunities and challenges. The 2012 conference takes place Friday, February 10, at the McEnery San Jose Convention Center.
Other highlights of the 2012 Index and Special Analysis include:
Jobs – Silicon Valley added more than 42,000 jobs in 2011. Unemployment in the region fell 1.4 percent over the previous year to 8.3 percent in December 2011. This is lower than California at 10.9 percent and on par with the U.S. rate.
Innovation Engine – Patent registrations leapt by 30 percent over 2009 with 13,311 new patents registered in 2010, largely in computers, data processing and information storage. Silicon Valley accounted for 49 percent of total registrations statewide and 12 percent nationally, a one percent drop over the prior year. Venture capital investment in clean technology nearly doubled over the prior year and was strongest in energy generation, efficiency and storage. Silicon Valley had 12 IPOs in 2011, one more than in 2010, 46 percent of California’s offerings and 12 percent of the nationwide figure.
Public Sector Fiscal Crisis – City revenues in 2009/2010 fell eleven percent from the year prior, the second straight year of declining revenue since 2003/2004. From 2009 to 2010, total debt funding increased by 43 percent with $2.5 billion in 2010. This growth was mostly due to increased debt funding in education, transportation infrastructure and housing.
Housing – Residential foreclosures fell 16 percent from the first half of 2008 to the first half of 2011 in the region and declined 24 percent in California. Only five percent of new housing in Silicon Valley was classified as affordable, a 14-year low. Total new residential development expanded by 165 percent in the last year.
Income – Silicon Valley’s per capita income in 2011 expanded by four percent to reach $66,000. Per capita income in California and the nation increased just two percent over 2010. However, most residents continued to suffer earnings losses in 2010 as the region’s median income continued to slide for the second year in a row. Median incomes dropped three percent in the region, seven percent statewide and two percent nationally.
Talent Flows, Diversity – Science and engineering talent expanded by four percent in Silicon Valley and by eight percent in the U.S. Half the population speaks a language other than English in the home. Asian speakers make up the large shares, but speakers of European languages are on the rise.
Published annually since 1995, the Silicon Valley Index findings are reported in five major sections: People (talent flows, diversity); Economy (innovation, employment, income); Society (preparing for economic success, early education, arts and culture, health, safety); and Place (environment, land use, housing, commercial space). Governance was not included this year because it is the focus of the Special Analysis.
Joint Venture added the Community Foundation as its partner on the Index in 2008 and expanded the data to include all of San Mateo County. The 2011 Silicon Valley Index and Special Analysis may be downloaded from the Joint Venture website at www.jointventure.org and the Community Foundation website at www.siliconvalleycf.org.
About Joint Venture Silicon Valley
Joint Venture Silicon Valley was established in 1993. A non-profit organization, the group convenes the region’s leaders across every major sector – government, business, academia, labor, and community organizations. The organization provides data and analysis on our region’s challenges, and leads initiatives to address those challenges. Joint Venture is funded by cities and counties, local companies, colleges and universities, labor and workforce institutions, and foundations. For more information, visit www.jointventure.org.
About Silicon Valley Community Foundation
Silicon Valley Community Foundation is a catalyst and leader for innovative solutions to our region’s most challenging problems. Serving all of San Mateo and Santa Clara counties, the community foundation has more than $2 billion in assets under management and 1,500 philanthropic funds. The community foundation provides grants through donor advised and corporate funds in addition to its own endowment funds. The community foundation serves as a regional center for philanthropy, providing donors simple and effective ways to give locally and around the world. Find out more at www.siliconvalleycf.org.