Silicon Valley added jobs last year for the first time in half a decade, and the incomes of those working in the four-county northern California region rose for the second consecutive year, said a new study scheduled for release this week.
Companies in the region grabbed an increasing share of venture capital investment, generated a rising percentage of U.S. patents, and experienced productivity gains that outpaced the rest of the nation, according to the latest yearly report card from Joint Venture Silicon Valley, a public-private partnership that tracks trends and promotes growth in the region. The study is scheduled to be released Friday.
“The Valley has experienced a turbulent five-year period of economic restructuring and occupational change, producing both unprecedented job losses and substantial wage gains,” said the report.
The 1,500-square-mile region, centered around Santa ClaraCounty, gained 2,000 jobs in 2005 and its unemployment rate fell to the lowest since June 2001, the study found. The job gains were driven by hiring at software companies and firms specializing in “creative and innovation services” such as legal work, graphic design, marketing, and advertising work.
Plus, the region generated 10 percent of the nation’s patents, double its share a decade ago. What’s more, the region sucked up 25 percent of all U.S. venture capital investment, up from 18 percent in 1995.
The message: creativity and innovation are driving the region’s economy and keeping it globally competitive. “Silicon Valley’s most important competitive edge may be its ‘creative edge,’” said the report.
Fewer CEOs
Still, not all the report’s economic news was rosy. Semiconductor manufacturers and designers, which for many years were the backbone of Silicon Valley’s economy, shed jobs in 2005.
And last year’s gains did little to reverse employment losses the region has suffered over the last five years. Since the second quarter of 2000, Silicon Valley has lost 212,150 jobs and the workforce declined by 118,600.
Even as employment shrank, though, wages grew. Over the last decade, per capita income in the region rose 9 percent faster than the national average, increasing to $56,633 in 2005.
“This striking juxtaposition of job loss against wage gain indicates a fundamental shift to higher-skilled occupations,” said the report.
The number of jobs in the region for top-level engineers, scientists, and managers has risen since 2000, while jobs in key support occupations such as computer programmers and electromechanical technicians have declined.
Curiously, the number of Silicon Valley CEOs fell by 780 over the period, while the ranks of management analysts swelled by 1,130.
Soaring Housing Costs
And although average wages increased, not everyone in the region has benefited. Silicon Valley’s median household income fell for the fourth consecutive year, and now hovers at $84,987—near its 1995 level.
While that’s close to double the national median of $44,389, it doesn’t stretch nearly as far as it would elsewhere, as soaring housing prices have pushed home ownership beyond the reach of most Silicon Valley residents. Even though housing affordability in the region increased last year, barely one in five households in the region could afford to buy a median-priced home, the study said.