Silicon Valley economy rebounding, report says
With 42,000 new jobs and other positive indicators, Silicon Valley's innovation engine is heating up again, according to an annual barometer of the region's economic and social health.
The valley's employment base grew by 3.8 percent in the past 12 months, and the unemployment rate dropped to 8.3 percent — compared to a national unemployment rate of 11 percent, said Russell Hancock, president and CEO of Joint Venture Silicon Valley Network, which issues an annual "Silicon Valley Index." The report was issued in partnership with the Silicon Valley Community Foundation.
The document lists hundreds of economic and social measures in 40 cities stretched over Santa Clara and San Mateo counties, as well as parts of Santa Cruz and Alameda counties.
"Silicon Valley does appear to be mounting a fairly impressive recovery. We were the last to succumb to the national recession and appear to be the first to be emerging out of it," Hancock said in a press briefing Tuesday, Feb. 7.
But the positive economic news fails to translate into broad community health because mid-range jobs are disappearing, Hancock said.
Joined by Silicon Valley Community Foundation CEO Emmett Carson, Hancock called for an urgent public re-examination of the tax structure supporting public services in California, including Proposition 13.
"Our tax system is pegged to an earlier economy, with levies on property and sales tax that do not capture Internet transactions and services," he said.
"We have a crisis brewing in the public sector, with rampant layoffs and investment in public services approaching historic lows."
Last year's job growth was driven by technology companies, including cloud computing, mobile devices, applications to support mobile devices, Internet companies and social media, Hancock said.
"There also was modest growth in just about every sector except manufacturing," he said.
Venture capital formation in the valley — toward biotechnology, medical devices, energy, industrial energy applications and cleantech — rose by 17 percent in the last 12 months, with investments in cleantech doubling over the prior year, he said.
Patent registrations by Silicon Valley inventors took a "huge leap," with 13,310 issued in the past 12 months, a sizeable increase from the previous year, he said.
And initial public offerings bumped up from 11 in 2010 to 12 last year, with many startups also pursuing alternate capitalization strategies such as merging or getting acquired.
But the good news in the tech economy masks the problem of a declining median income, Hancock said.
"In Silicon Valley we have a lot of very high earners, and the classic 'Bill Gates problem.' When he walks into a bar, on average everybody in the bar becomes millionaires," he said.
A growing segment of the region's households — now about 43 percent — earn more than $100,000 a year, Hancock said.
But the "middle group" — households earning between $40,000 and $100,000 — is stagnant or declining, he said.