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Keeping Silicon Valley Competitive

Original post made by stephen levy on Aug 26, 2011

I talked to a Rotary group this morning and was asked what I would do to keep/make Silicon Valley competitve for new jobs.

I have recently been part of a team working on three Bay Area economy/workforce studies. Nearly all of our executive interviews found that employers locate here primarily to be close to the world's largest collection of talent. And becasue the entrepreneurs like living here.

So to compete for entrepreenurs we need to compete for talented workers and their families.

Fortunatley most things we should be doing to remain a great place to live and work benefit both entrepreneurs and families--great schools, world-class infrastructure and communities that say "come here to work and live".

We are competing for the best so we have to offer the best. Siliocn Valley is always going to be an expensive area. We have to accpet that--people want to live here and keep housing and land prices high. So we have to offer value for the money.

Companies here know it is an invest or die world. The state and our communities must understand that is true for them as well.

The world offers mamy other places to locate creative and innovative ventures. Right now the Bay Area still gets 40% of the nation's VC funding--a higher share than during the dot.com boom.

But our prosperity depends on being a welcoming region--welcoming by our ivnestments to offer people the best area to live and work in and welcoming for talent--without regard to where you were born or religious or lifestyle preferences.

We are a tech center. That makes it hard to stand still. We either move forward and embrace change or we can't remain the innovative center that has made this region prosperous.

Comments (16)

Posted by education - invest in it!, a resident of Menlo Park
on Aug 26, 2011 at 1:50 pm

Education. Education. Education.

One of the keys to the Valley's start and enduring legacy.

For those that think manufacturing is better done overseas, rather than let American workers compete with fair trade policies - they usually mumble something like: we'll be a knowledge based economy, brains not brawn or some such platitudes.

If so - then invest in education. Don't keep cutting it.


Posted by Tim Buck II, a resident of Downtown North
on Aug 26, 2011 at 2:02 pm

Education is very bad for the Republican party and much worse for its bedrock base: the Tea Party. Educated people tend to be liberals, warmies, evilutionists, and Democrats. Hence the sabotage in Sacramento.


Posted by American-born Democrat, a resident of Los Altos
on Aug 26, 2011 at 4:30 pm

A common theme, in such conversations, is that Silicon Valley should welcome all foreign-born talent that wants to be here. At the same time, American-born engineers from the past are warning their kids to stay away from engineering degrees. The disconnect is easy to understand: Foreign talent is cheaper than domestic talent.

American-born analysts and lawyers and investors, who are able to profit from the foreign talent, are fully in favor of it. However, when economists and lawyers are, in the end, challenged by it, they will be howling like wounded wolves that cheap foreign competition is unfair. The investors will simply open an office offshore...but still live in Woodside or some other enclave.

America, including California, needs to develop it own engine of prosperity, using its home-grown talent. Then education will make sense.


Posted by Talent trumps, a resident of College Terrace
on Aug 26, 2011 at 6:04 pm

"The disconnect is easy to understand: Foreign talent is cheaper than domestic talent. "

I question this statement. The reason why tech companies are pushing for allowing more foreign-born engineers into the country is that there are not enough qualified engineers period. Foreign talent is not necessarily cheaper and it is much easier to hire domestic workers. The problem is that it's difficult to find quality talent.


Posted by American-born Democrat, a resident of Los Altos
on Aug 26, 2011 at 7:41 pm

Web Link

Look, especially, at the side bar from the Rand Corp. It is the driving down of wages, due to foreign competition, that is undermining American-born science and engineering students. There is no shortage of engineers in this country, but they cannot find jobs, when competing with cheap labor. Why should our students enter these difficult fields, if there is no payoff, down the road?


Posted by stephen levy, a resident of University South
on Aug 27, 2011 at 2:16 pm

stephen levy is a registered user.

The idea that foreign workers undercut American workers on wages is a constant fear and there is little conclusive evidence either way for technical occupations.

I sit on the Silicon Valley workforce board and we are all concerned about the difficult situation facing unemployed job seekers.

Yet there are two points to consider.

One is that there are all types of engineers. Siliocn Valley employers are telling of a shortage of software engineers. And we know that over the next decade we need many more engineers to replace retiring workers and prepare for growth. The fact that engineers in some industries today are out of work does not contradict the evidence that the country needs more engineers--American and foreign-born.

Wages for technical occupations in Silicon Valley have been rising rapidly and most firms are bidding up for talent. So the argument that foreign-born engineers are pushing down wages here goes against the evidence.

Our challenge in Silicon Valley as one of the posters pointed out is that it is hard to find enough talented workers even in the midst of high unemployment generally.


Posted by stephen levy, a resident of University South
on Aug 27, 2011 at 2:19 pm

stephen levy is a registered user.

I agree with the posters urging more attention to education.

Better schools are important for developing a more skilled workforce BUT there is a second important reason for better schools.

Families deciding whether to locate here will want to know that there are good public schools in all communities.

We compete for talent and good schools make Silicon Valley a better place to live and work.


Posted by Talent trumps, a resident of College Terrace
on Aug 27, 2011 at 2:25 pm

"There is no shortage of engineers in this country, but they cannot find jobs, when competing with cheap labor. Why should our students enter these difficult fields, if there is no payoff, down the road?"

While there may not be a shortage in terms of numbers, there certainly is a shortage in terms of talent. Agreed, if our students are not going to be talented engineers, then they should pursue other fields.


Posted by American-born Democrat, a resident of Los Altos
on Aug 27, 2011 at 3:46 pm

My son works for a major tech firm in Silcon Valley. He tells me that IT and software design solutions are being offshored, period. It is much cheaper that way. Doesn't mean that they will not still need some here, but it is the major wave of the future. He has friends who are very sharp programmers, with degress, but they can't get a job...unless they are willing to work for very low wages. These guys are making their bets by partnering up with start-up companies. They have dreams of being the next Bill Gates or Steve Jobs, but it will be disappointment for most of them.

It sounds like Stephen Levy is listening to a very selective group of people...the ones that will profite from cheap foreign labor.


Posted by Talent trumps, a resident of College Terrace
on Aug 27, 2011 at 5:18 pm

"He tells me that IT and software design solutions are being offshored, period. It is much cheaper that way."

Ah, that I agree with. I was under the impression that your comment was that the foreign-born engineers here in the US were cheaper than US-born engineers. In my mind, the offshoring phenomena is a different issue than the lack of talented engineers in the US. For example, my company is having trouble even finding qualified engineers (granted, not software engineers, but mechanical and chemical engineers) for several open positions.

I think a better question is that if we are producing enough engineers in terms of sheer numbers, why is the talent level so lacking?


Posted by American-born Democrat, a resident of Los Altos
on Aug 27, 2011 at 6:33 pm

"I was under the impression that your comment was that the foreign-born engineers here in the US were cheaper than US-born engineers"

Supply and demand always will lower the wages, when the supply of labor is relatively high. The recent limitation on H-1B visas has driven the supply down, at least to a degree. This is why the relative wages for some engineers (but not most) have risen. If the H-1B is cut in half (again), then the wages for American-born engineers will also increase. If American companies don't want to pay the price, then they should no longer be allowed to be American companies...China, anyone? And when China attacks Taiwan, you guys are toast (100%).

We need a little dose of American economic nationalism. I know this makes me look like Pat Buchanan, but I am a life-long Democrat, and I will never go over to the other side. However, I think my side should get off the pablum, and assert our own needs.

If you want to see some of the anecdotes, please see the following:

Web Link


Posted by neighbor, a resident of Another Palo Alto neighborhood
on Aug 28, 2011 at 10:26 am

I recommend viewing the CNBC 2011 documentary "The China Question."
The naivete of American citizens, employers, government and (apparently) military officials is staggering and will severely impact the U.S. negatively in about 10 yrs. Frankly, I am not certain everyone CARES about the state of the U.S. anymore - that's sad.


Posted by Follow-the-Money, a resident of Another Palo Alto neighborhood
on Aug 28, 2011 at 4:16 pm

For all you folks who are pitching more "education" to keep the Silicon Valley competitive, look through these web pages on salaries--

Salaries in the US:
Web Link

Salaries in China:
Web Link

"Education" may well work in a 3rd-world country to make that company more competitive, but it's really hard to believe that more "education" is going to make the Silicon Valley more competitive.

One wonders when "software development automation" is going to enter this discussion?


Posted by others, a resident of Southgate
on Aug 28, 2011 at 5:35 pm

I still can not understand why most chinese major cities' property prices skyrocket to the level in $1 million dollar range (one 1200 sqft apartment),I truly can not understand when considering their wages.


Posted by Follow-the-Money, a resident of Another Palo Alto neighborhood
on Aug 28, 2011 at 6:31 pm

> I still can not understand

Property For Sale In China:
Web Link

Chinese property sales soar on easy credit:
Web Link


Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - Web Link

Property sales rose by three-quarters in China last year as easy credit continued to fuel buyers' appetite in the bubbling market.

Full-year sales increased 75.5 per cent from a year ago to Rmb4,399.5bn ($644bn), with residential sales jumping 80 per cent, according to the National Bureau of Statistics on Tuesday. In terms of floor areas, total sales rose 42.1 per cent to 937m square metres last year.
---

A lot of people have also made a lot of money in the stock market.


Posted by Anon, a resident of Another Palo Alto neighborhood
on Sep 6, 2011 at 10:30 pm

Stephen--

There is usually a benefit for the higher levels, e.g. a hard-science or EE Masters, and especially, PhD. The only "need" for importing BS-level engineering talent is lower salaries. I don't know what your workforce executives are telling you, but, the sad reality is that there is a lot of middle-aged and older talent out there going to waste (at home), and, a lot of recent young grads not getting called either. In the meantime, we have a "shortage" of engineers that can only be filled with H-1B engineers.

As to what we could do here to allow talented young and old engineers to compete? Well, for the older engineers, I have to believe that companies would hire them if not for the issue of health insurance. The key to putting them back to work is solving the healthcare conundrum. For the younger employees, the national economy needs to stabilize a little more. Younger engineers are an investment that it often takes a year or two to start getting a return. Nobody wants to bother with today's uncertainty.

--Anon


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