Silicon Valley economy back at dot-com era highs
SAN JOSE, Calif. (AP) — 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 Tuesday 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 3 percent over the previous year, and the total number of jobs has surpassed pre-recession levels. Many are high wage jobs — 45 percent of households now earn more than $100,000, and per capita income is above $70,000 a year, much higher than the state average of about $44,000.
Meanwhile unemployment has fallen to less than 6 percent.
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.
He sold his condominium and now lives in nearby Sunnyvale where he rents. Recent pay increases aren't enough to get him back into the housing market, he said, and new hires aren't even looking for homes in San Jose.
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.
In the report, Silicon Valley is defined as Santa Clara and San Mateo counties, Fremont, Newark, Union City and Scotts Valley. Hancock said those borders are shifting, and it may be appropriate to include San Francisco when it comes to transportation and other infrastructure in Silicon Valley.