SAN JOSE, CA – Silicon Valley isn't experiencing the same booming energy and rapid growth it's known for as the local tech economy continues to adapt to post-pandemic realities – but researchers say the region is still a powerful Innovation center is fully functioning recover.
While Silicon Valley remains a place of enormous wealth, long-standing inequalities persist. With most of the wealth and resources concentrated at the top, many residents struggle with the rising costs of housing, food and child care.
That's according to the Silicon Valley Index, an annual high-level investigative report on the region from Joint Venture Silicon Valley, an organization that studies trends in the region. This year's index examines how the Valley fared in 2023.
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CEO Russell Hancock said the region grew by almost 8,000 jobs last year.
“We used to grow by 10,000 to 50,000. There were a few crazy years where we grew by 100,000. This is clearly not happening. We are not booming in Silicon Valley, but we are not shrinking,” Hancock said on Monday during a press conference media call for the annual report.
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Hancock stressed that while layoffs in the tech industry following the pandemic caused a stir last year, he viewed the cuts as more of a “recalibration,” saying technology remains one of the region's strongest economic drivers.
“There was a lot of hiring during the pandemic because it proved to be a goldmine for these companies. That actually led to some over-hiring, so with the pandemic in the rearview mirror, these companies have since right-sized,” Hancock said.
The Bay Area's 20 largest tech companies lost about 7% of the region's workforce in 2023, or about 18,800 workers. But when the dust settled, about 37,000 more people worked for Bay Area tech companies at the end of last year than before the pandemic, the index report said.
“It's almost as if these tech companies have rediscovered efficiency as a path to profitability, and that's totally happening,” Hancock said.
Another indicator of the region's overall health is its population. Net migration in Silicon Valley began declining in 2015, but between mid-2022 and mid-2023, nearly 1,800 more people arrived in the region than left. The report attributes the change to a 52% decrease in the net number of out-migrants and an increase of about 37% in the net number of foreign immigrants.
Gaps in wealth and opportunity
But despite a robust tech economy and overall low unemployment, a level playing field and a lack of affordable housing have widened the region's wealth gap and exacerbated the affordability crisis.
“There are striking disparities based on race,” Hancock said.
Approximately 30% of all Silicon Valley households were not self-sufficient in 2023, meaning they did not earn enough money to meet their most basic needs without the support of the government or other informal support networks such as friends, family, or faith and community groups.
Among white households, about 22% were not self-sufficient, compared with about 50% of African American households and about 54% of Latino or Hispanic households, the report said.
With the average home sale price in Silicon Valley at $1.76 million at the end of 2023, the report estimates that a home purchase is “out of reach” for 74% of first-time buyers in the region.
Things aren't looking much nicer for tenants in Silicon Valley, who are more likely to be “burdened” by their housing costs here than in other regions, meaning they spend more than 30% of their gross income on rent. About 41% of renters were burdened in 2023, the report said, and about 23% of renters spent more than half of their income on rent.
Even as the region's leaders promote equity measures, white workers occupy about 59% of management positions and 49% of technical positions at Silicon Valley's largest tech companies, while making up just 31% of the region's total workforce. Asian workers make up 38% of technical jobs at the largest tech companies and make up about one in five employees.
“In stark contrast, Hispanic or Latino workers make up a disproportionately small share of workers in the same companies, at 17%, even though they make up 24% of the civilian workforce,” the report said. Without including Amazon, the share drops to 9%.
The share of African American workers at the largest tech companies is 6% without Amazon and 18% with Amazon. The report notes that 18% includes a 6% share of technical roles and a 7% share of leadership roles.
Overall, women make up 44% of Silicon Valley's workforce, but only hold about 33% of leadership positions at major technology companies.
For some, a breathtaking wealth
The top 10% of Silicon Valley households own about 70% of the region's wealth, the report said.
“Both income and wealth inequality have been influenced by a rise in demand for housing, as well as a rising share of ultra-high-net-worth households and the world's largest concentration of billionaires outside of New York City and Hong Kong,” the report said.
Silicon Valley's total assets in liquid assets and real estate are around $1.7 trillion. The index report notes that if this wealth were distributed equally among all households in the region, it would provide each about $2 million.
Story by Joseph Geha, San Jose Spotlight.
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