News

Report highlights Silicon Valley's uneven prosperity

New survey of Silicon Valley details rising growth, gaping inequality

Fueled by a sizzling tech sector, strong population growth and low unemployment, the Silicon Valley economy has grown rapidly since the doldrum days of the 2008 recession. So, however, have the income gaps between the region's wealthiest and poorest residents, between its men and women and between its white and black residents, according to an annual report released Tuesday by the Joint Venture Silicon Valley.

The 2015 Silicon Valley Index presents a largely positive picture about the regional economy, with San Francisco's growing tech sector leading the charge. Venture capital investments spiked in 2014; the number of patents filed continues to rise; median household income and average wages both increased; housing prices are on the rise; and the job growth rate of 4.1 percent is the highest since 2000. These factors prompted Venture Silicon Valley CEO Russell Hancock to declare in his introduction to the Index that "the world's hottest regional economy keeps getting hotter" and to proclaim that this kind of growth is "a thing to celebrate, surely."

Yet the report also emphasizes the region's rising inequality, which pertains not just to different job sectors but also to genders and ethnicities. Black residents continue to lag behind other ethnic groups when it comes to income, and the gap between women and men also grew in 2013. Hancock noted that even as the Valley is "proliferating high-wage and low-wage jobs, we're steadily losing share in the middle."

"It's as if the economy has lost its spine, and this has important implications for the kind of community we become," Hancock said.

So what does a strong economy with a fractured spine look like? According to the new report, it means heaps of freshly minted but unevenly spread wealth. In many ways, the wealth is a cause to be celebrated. According to Hancock, Silicon Valley is "poised now to blow through all the employment, venture capital and patent records that were set during the crazy dot-com period, only this time we haven't spiked into it. We've arrived here through a steady five-year process of incremental growth, each year more impressive than the last."

The overall job numbers are particularly impressive. According to the Index, the total number of jobs in Silicon Valley has grown by 14.4 percent since 2010. In San Francisco, the job growth has been 15.3 percent, well above the state and national rates (8.7 percent and 6.4 percent, respectively). The city is also hogging a growing share of the state's venture capital, receiving 36 percent of the state's total, a huge increase over the 4 percent it secured in 2007. This is due in large part to major deals made in 2014 by San Francisco-based newcomers such as Uber, Dropbox, Lyft and AirBnB.

Yet the report also makes clear that the region's overall growth can't be attributed solely to tech. With the exception of "other manufacturing," which saw its employment numbers drop by 1.1 percent between the second quarter of 2013 and the second quarter of 2014, just about every sector has added jobs.

In the category "community infrastructure and services," Silicon Valley added 40,096 jobs between the second quarter of 2013 and the second quarter of 2014. In education, the region added 15,607 jobs; in "health care and social services" the number was 10,875; and in "innovation and information products and service," the figure was 18,445.

The rising economy also means more development, which in turns means more people and more traffic. Approved non-residential development, according to the report, was at a higher level in fiscal year 2013-14 than in any other year over the last decade with a net floor-area equivalent to 224 football fields. Housing construction has also been on the rise, particularly when it comes to multi-family developments. The recent growth has not, however, made up for the lack of building during the recession. With housing still at a premium, median home prices jumped by 7.5 percent from 2013 to 2014, reaching a median of $757,585.

This growth, however, is far from egalitarian. According to the report, the gender inequality gap remains large and is getting worse, particularly in Silicon Valley. Men in Silicon Valley earn considerably more than their female peers and the gap is "getting larger over time," the Index states.

The large gender gap applies to all education levels but is particularly pronounced among those with graduate or professional degrees. According to the Index, for residents with a bachelor's degree (220,000 men and 250,000 women), the individual median income in 2013 was 61 percent higher for men than for women. This is compared to a 20 percent differential in San Francisco, 41 percent in California and 48 percent in the United States. For those with a bachelor's degree, the gender gap in Silicon Valley increased by $5,000 between 2012 and 2013, rising from $29,090 to $34,233.

Per capita income in the region rose slightly between 2012 and 2013, going up by $89 to $75,100 in 2013 when adjusted for inflation. The increase applied to all racial and ethnic groups except black residents, according to the Index. White residents had the highest per capita income in 2013, while Hispanic and Latino residents earned the lowest, despite modest gains.

But according to the report, per capita incomes in 2013 for black and Hispanic residents in Silicon Valley (San Mateo and Santa Clara counties) were well below the pre-recession levels, down 20 percent and 12 percent, respectively, since 2007. During the same period, however, San Francisco saw an increase of 8.5 percent in per capita income for Hispanic and Latino residents, the report notes.

Furthermore, the report's good news about job growth is somewhat offset by the stagnant wages. In most industries, the wage growth in Silicon Valley has failed to keep up with inflation. The report notes that inflation-adjusted median wages for management, business, science and art occupations went down by 2.3 percent between 2010 and 2014. The greatest losses were in arts, design, entertainment, sports and media occupations, which saw a decrease of 10.6 percent since 2010. And despite a 6.2 percent increase in the number of jobs, service occupations in Silicon Valley's major metropolitan areas saw a decline of 9 percent in median wage since 2010, with personal-care occupations suffering a 14.4 percent decrease.

Comments

1 person likes this
Posted by Fomad
a resident of Barron Park
on Feb 3, 2015 at 7:30 pm

Well, according to the way Silicon Valley thinks, shouldn't the women just work harder? White males just work harder than everyone else.


14 people like this
Posted by Stop the Trolls
a resident of Mountain View
on Feb 3, 2015 at 7:50 pm

Fomad -- "White males just work harder than everyone else."

And there you have a prime example of why no one whose emotional age is 14 should ever be allowed to comment on serious issues such as these.


3 people like this
Posted by Fomad
a resident of Barron Park
on Feb 3, 2015 at 8:04 pm

It's called sarcasm. Breathe.


7 people like this
Posted by Stop the Trolls
a resident of Mountain View
on Feb 3, 2015 at 8:11 pm

You mean badly worded sarcasm.


13 people like this
Posted by Fomad
a resident of Barron Park
on Feb 3, 2015 at 8:23 pm

Ahh a wordsmith. Use your inferential skills and read the first line. Watch out for clues!

The point is, it is scary that some people actually think that way (white men work harder than anyone else)


7 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Feb 3, 2015 at 8:48 pm

Old "joke" on ageism:

Happy 50th birthday! What did you get for your birthday?

Answer: Laid off.


4 people like this
Posted by musical
a resident of Palo Verde
on Feb 3, 2015 at 9:15 pm

Looks like they are including overtime, bonuses, dividends and interest, etc. Still, a $100,000 salary measures $80,000 when 401K deferred income lops off $20,000 from adjusted gross. Total compensation is significantly higher when the full benefit package is considered. But prosperity for many is much more about unrealized income. The increase in home equity here often dwarfs the owner's take-home pay, and the value of retirement savings or long-term stock portfolio can take wild swings. Are a 25-year-old and 50-year-old who each earn $100,000 considered to be equally compensated or equally well-off? These surveys always leave plenty to the imagination, and it's difficult to know how anyone stacks up.


Like this comment
Posted by Robert
a resident of another community
on Feb 3, 2015 at 11:01 pm

>Are a 25-year-old and 50-year-old who each earn $100,000 considered to be equally compensated or equally well-off?

For the most part no, because even making 100k (and even with the current boom, what % of 25 year olds are making that), without already having equity there are few if any opportunities for ownership.


2 people like this
Posted by musical
a resident of Palo Verde
on Feb 4, 2015 at 1:29 am

Uh, just about every software engineer at Facebook, Google, or equivalent? I don't really know, but internet salary searches seem to indicate six figures to start, plus signing bonuses and options for those who stay long enough. Of course at 120 hours a week it's just over minimum wage, but food is provided.


14 people like this
Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Feb 4, 2015 at 7:51 am

Just like the rest of the country, SV is an oligarchy. The narrow top is getting consistently wealthier and more powerful, the middle is disappearing, and the vast bottom is getting poorer and even more powerless.


1 person likes this
Posted by Chris Zaharias
a resident of Crescent Park
on Feb 4, 2015 at 8:29 am

Chris Zaharias is a registered user.

My neighbours are worth 10-25000x more than me. Palo Alto needs wealth redistribution NOW!


Like this comment
Posted by Neighbors Helping Neighbors
a resident of Midtown
on Feb 4, 2015 at 11:09 am

Dear Friends & Neighbors,
NHN is pleased to see that the income wealth vs median gap NHN as an organization takes issue with the average income of $75K and that per capita incomes rose 2013 to 2014.
Neighbors Helping Neighbors serves mostly middle income ($25K to $100K) in Palo Alto & Mtn. View, plus some from Los Altos, Menlo Park, Red wood City and Sunnyvale. Of our 1400+ clients on our rosters for basic needs services and 1200+ clients in our housing/jobs networks, their incomes either remained the same or fell dramatically in 2013 to 2014.
Plus, the number increasing of Palo Alto, Mtn. View, Los Altos, Menlo Park, Redwood City and Sunnyvale residents with income, $50K to $120K asking for help with their basic needs including housing. The local economy is not over the doldrums of 2008. In fact, our data shows that compared to 2008 our middle and low income clients are more financially 'overburdened' and so many more are in crisis.

The good news, we can all be a part of the solution plus contribute to 'alternative measures' that can ensure our middle income neighbors have better outcomes, become stable and thrive.

Please get to know us, Neighbors Helping Neighbors.
NeighborsHelpingNeighbors2013@gmail.com
Phone: 650-283-0270 (No Texting, please)

FACEBOOK: Web Link


7 people like this
Posted by Barron Park Resident
a resident of Barron Park
on Feb 4, 2015 at 11:34 am

Equal opportunity is not equal results.


6 people like this
Posted by Robert
a resident of another community
on Feb 4, 2015 at 12:16 pm

@Barron Park Resident

What's your point? The only way that right wing meme works is if someone is suggesting there should be equal results, which no one is. If you follow any of these these discussions, they're specifically about providing equal opportunity.


8 people like this
Posted by Me Too
a resident of Old Palo Alto
on Feb 4, 2015 at 4:26 pm

Me Too!

I want my neighbors money! More redistribution!

In fact, I want to invite all my relatives to move in and get free money!!


7 people like this
Posted by equal what?
a resident of Green Acres
on Feb 4, 2015 at 4:39 pm

I would have thought Silicon Valley does provide equal opportunity.

For example, it doesn't take rich parents to learn to program, and you don't have to be a great programmer to leverage programming ability/experience into any number of career opportunities, including management, starting your own company, sales, tech support, etc.

And even if you are not technical, there are opportunities to do marketing, event coordination, web content development etc.

Many tech companies are hurting for local employees.

Is someone claiming that there are not equal opportunities to advance a career or earn increasing compensation in silicon valley?


15 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Feb 4, 2015 at 5:38 pm

"Is someone claiming that there are not equal opportunities to advance a career or earn increasing compensation in silicon valley?"


Yes.

How many articles were there this week alone on sexism in Silicon Valley? Wasn't sexism in SV the cover story in Time Magazine just this past week?



4 people like this
Posted by Surveillance
a resident of Another Palo Alto neighborhood
on Feb 4, 2015 at 5:41 pm

A poll taken by the WSJ last year showed that Apple's wages overall were 15% above industry average in Sillycon Valley, while Google and Facebook each paid 25% above average.

I have a coworker whose wife works at FB and makes $120,000/ year at the age of 24. She also got $500,000 cash when the company went public.

One just has to be in the right place at the right time.

Of course, it doesn't help that the Big Three prefer PhD degrees, or at least a master's, before they will consider hiring a job candidate.


Like this comment
Posted by Really?
a resident of Leland Manor/Garland Drive
on Feb 4, 2015 at 5:52 pm

Why is this being discussed? I do not care how much my neighbor makes. I do not care how much you make.

Now, go back to work.


6 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Feb 4, 2015 at 5:59 pm

Good for your co-worker's young wife. Lots of young women do well on the first tier. It's advancing and getting promoted that's the issue.

How long and how hard and how publicly did Cheryl Sandburg, Facebook's Chief Operating Officer, have to fight for a board seat? It would have been automatic if she'd been a guy.


Like this comment
Posted by equal what?
a resident of Green Acres
on Feb 4, 2015 at 8:34 pm

Most articles with making the point that there is sexism in Silicon Valley are either depending on inequality of results, or are about overt sexual aggression by men toward women.

Inequality of results can be explained by many things other than inequality of opportunity.

For example, the percentage of top engineering students who were women in college classes 30 years ago is *lower* than the percentage of top women executives in tech. For most people, it takes time to build careers that put them near the top of a tech company.

For example, pay is correlated highly to height, for the same height, women on average earn more than men.

Inequality of results does not imply inequality of present opportunity.


5 people like this
Posted by Lynn Huidekoper
a resident of Menlo Park
on Feb 5, 2015 at 1:14 am

I am sickened by all the positive take on the success of Silicon Valley. How can you crow about this when there are 7,613 HOMELESS people who have to live outdoors and freeze to death> There is little mention of the increasing gap between the rich and the poor. It's precisely why there are so many middle class people becoming homeless. The young, rich techies are causing the housing to be so expensive that middle class people have to work at several jobs to pay the ridiculous rents in SCC. It is a MORAL disgrace in one of the wealthiest areas of the country.

Bill and Melinda Gates keep saying over and over that the millionaires and billionaires should be donating 50% of their wealth to improve the lives of those who are less fortunate. There are college and high school students who have to sleep in their cars. When is this madness going to stop?

Since its inception in 1974, Second Harvest Food Bank has become one of the largest food banks in the nation, providing food to nearly a QUARTER OF A MILLION each month. This is what this article should be about. Shame on you !!


4 people like this
Posted by Resident
a resident of Crescent Park
on Feb 5, 2015 at 8:31 am

It's a faulty moral premise that incomes should be equal. Substantially different education, skills, abilities, etc. should, over a large number of people, result in substantially different compensation.


6 people like this
Posted by neighbor
a resident of Another Palo Alto neighborhood
on Feb 5, 2015 at 9:30 am

Some Silicon Valley companies have been making strong attempts to advance women for years. On the other hand, try being a person who turns 50 - better keep it quiet. The most overt discrimination in the Valley is against people over 50.


2 people like this
Posted by say what
a resident of another community
on Feb 5, 2015 at 9:53 am

oh good lord. I'm middle class and not in the software industry. Sounds like I cannot afford to move to this area.


2 people like this
Posted by Bex
a resident of Palo Alto High School
on Feb 5, 2015 at 1:21 pm

Income inequality is fine to a point. No one here seems to be saying we all should earn equal incomes. The point is that the bifurcation of our incomes has become obscene. It is killing this town and ruining everything that made it a great place to begin with. Surely you can see that totally bifurcating our society and getting rid of the middle class is not a healthy economy. All the great people who make the richly innovative culture, art, and music and food are being forced out.


1 person likes this
Posted by Steve
a resident of Southgate
on Feb 5, 2015 at 2:13 pm

"It is killing this town and ruining everything that made it a great place to begin with."

How silly! Palo Alto was made a great place by Leland Stanford and his legacy. Leland had a great disparity in incomes with all his employees. Perhaps you could study a little local history?


1 person likes this
Posted by Crescent Park Dad
a resident of Crescent Park
on Feb 5, 2015 at 6:32 pm

"Bill and Melinda Gates keep saying over and over that the millionaires and billionaires should be donating 50% of their wealth to improve the lives of those who are less fortunate."

While I am happy that Mr. Gates found religion in terms of philanthropy (along with Mr. Buffet), let's not forget how Mr. Gates created his incredible wealth. Phrases that come to mind: monopolistic, predatory, ruthless, exclusionary, sabotage, etc.

In other words, Mr. Gates is no angel...and to say that the executives of this region are not worthy in comparison of his (very recent) concern for others is a bit limited when it comes to the full measurement of how he created his wealth.


1 person likes this
Posted by Mike-Crescent Park
a resident of Crescent Park
on Feb 6, 2015 at 8:44 am

Mike-Crescent Park is a registered user.

Shouldn't this report be viewed as valuable information for high schoolers choosing colleges and majors? There have always been jobs in the US and here in the Bay Area that pay more or less than others. The message for those concerned about what they want to earn here is clear.


Like this comment
Posted by equal what?
a resident of Green Acres
on Feb 7, 2015 at 12:00 pm

The real emphasis should be on looking at, deciding on, and preparing for what you want to do rather than what you earn.

The great thing about Silicon Valley is that you can do all kinds of things: fail, succeed, change your phone a little, or change the world. A lot of money has been made by people who do good stuff, and that's good money. A lot of money has also been made by people whose only goal is to try to capture money one way or another. That's not as good. I've lived here long enough to know that this last part has increased over the decades.

If there is systemic inequality in opportunity, that's a huge, high priority problem. Most of that (I think) is unequal social opportunity.

From what I've seen, there is less external social inequality of opportunity here in Silicon Valley than almost anywhere else. There is a fair amount of inequality in behavioral comfort zones based on group identification. Windows are regularly blasted through those walls by reality (big time success by members of a wide variety of groups).

People don't reject an app because its creator is a woman or black or Mexican or Asian.

But there are indeed systemic subtle pressures, cultural impacts, lifestyle assumptions that make things harder for certain groups. I don't see women as being one of those groups. In particular, schools are especially adjusted so that success there is more likely for girls and women than boys and men.

True, for white men and their "careers," it's like having a faster, better milage, more comfortable, better handling car. Great. It doesn't make it any easier to decide where to go, which is the important thing. Makes it easier to get there in style. It's not fair.


Sorry, but further commenting on this topic has been closed.

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