Silicon Valley economy back at dot-com-era highs
JOBS, income and investment keep soaring in Silicon Valley, but the growth is also driving up housing costs and widening the gap between the rich and poor, a report released yesterday says.
"The economy is sizzling any way you slice it and it's about to get hotter, but having said that, we are quick to point out there are perils with our prosperity," said Russell Hancock, president of Joint Venture Silicon Valley, which released its annual Silicon Valley Index in conjunction with the philanthropic Silicon Valley Community Foundation.
The region added nearly 47,000 jobs in 2013, up three per cent over the previous year, and the total number of jobs has surpassed pre-recession levels. Many are high-wage jobs -- 45 per cent of households now earn more than US$100,000, and per capita income is above US$70,000 a year, much higher than the state average of about US$44,000.
Meanwhile unemployment has fallen to less than six per cent.
However, Silicon Valley Community Foundation president Emmett Carson said not everyone is benefiting.
"We have the highest high-wage, high-growth sectors in the country, but rising tides do not lift all boats," Carson said.
The growing divide between rich and poor is driven by an overwhelming demand for housing, according to the report. Last year, the region gained more than 33,000 new residents but only 6,500 new homes.
"It's been tough because we've seen the cost of housing skyrocket and we've seen our pay plummet," said James Gonzales, a 13-year veteran of the San Jose Police Department and a leader of the police union.
Public employees lost wages and benefits during the recession, cuts that made it impossible for Gonzales and many of his colleagues to make their mortgage payments.
Stephen Levy, who directs the Center for the Continuing Study of the California Economy, said middle-wage earners such as nurses, police and plumbers who perform crucial services are being driven out, while low-end earners receive stagnant wages.
Possible solutions include building more housing around transit hubs, improving collaboration between local governments and engaging tech firms in community college initiatives to provide more job training.