by GEORGE AVALOS | firstname.lastname@example.org | Bay Area News Group
PUBLISHED: February 16, 2017 | UPDATED: February 17, 2017
SAN JOSE — Silicon Valley’s ultra-fast job growth slowed in 2016, but nevertheless extended an expansion that has created a region of high incomes and widening economic disparity, according to a new report released on Thursday.
“We are driving a race car, but instead of driving at 120 miles an hour, maybe we’re going at 110 miles an hour. But we still are in a race car,” said Russell Hancock, chief executive officer of Joint Venture Silicon Valley, which released the report as part of its 2017 Silicon Valley Index, a closely watched barometer of the region’s economic health.
Even as it slowed, the valley’s job growth still attracted more foreign-born workers to the region. It also added to traffic woes.
During 2016, Silicon Valley added 45,600 jobs, the report stated. That was slower than the 2015 growth of 64,000 jobs in the region, which the index defines as Santa Clara County; San Mateo County; the East Bay cities of Fremont, Newark and Union City; and the Scotts Valley area of Santa Cruz County. It also was the fewest number of jobs added in the region since 2012, when 42,400 jobs were added, the index report showed.
“The slowdown is real, but I don’t think it’s as worrisome as the numbers might make it out to be,” said Mark Vitner, a senior economist with San Francisco-based Wells Fargo Bank. “A lot of contract positions in the tech industry are now full-time positions.”
Plus, experts said, job growth tends to decelerate as an economic expansion persists.
“The jobs slowdown is not of concern,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “You can’t keep growing forever at 6 percent, 5 percent, 4 percent or even 3 percent a year.”
Average annual earnings have climbed to an all-time high of $125,580, and per capita income has hit a record peak of $86,976.
Despite the slower pace of job gains, Silicon Valley now has chalked up seven straight years of employment expansion, the report found.
Plus, demand from tech companies has yet to slacken, at least for certain kinds of jobs, according to NOVA Workforce Services.
“What we hear from tech employers is they are in a desperate search for employees with very specific skill sets,” said Kris Stadelman, NOVA executive director. “They want very highly-skilled workers.”
The job gains, income boom and skyrocketing home prices have intensified an array of economic pressures for people in the region.
About 34 percent of the households in Silicon Valley commanded an annual income of $150,000 or more in 2015, the most recent year for which such statistics are available. That’s up sharply from the 27 percent of households in 2010 that were in the high-income category.
Middle-income workers, with wages ranging from $35,000 to $149,000, accounted in 2015 for 49.3 percent of all residents of the region. That’s down significantly from a share of 54.1 percent in 2010.
Low-income workers, those making less than $35,000, accounted for 16.8 percent of the residents in 2015, down from 18.7 percent in 2010.
“Silicon Valley is becoming the land of high earners,” Hancock said.
Many workers aren’t capturing high wages by “climbing the income ladder” at work, Hancock said. Instead, workers are “self-selecting” this region and moving from other parts of the country into Silicon Valley because they’ve been recruited to a high-wage job here, he said.
Increasingly, Silicon Valley is being reshaped as a land of foreign-born workers. An estimated 37.5 percent, or roughly 1 million of the 2.7 million residents of Silicon Valley, are foreign born. That compares with 27.3 percent in California and 13.5 percent in the United States.
The employment boom also has intensified traffic pressure on the region’s roads. In 2015, Silicon Valley commute times averaged 27.9 minutes, a 16.9 percent increase from 23.9 minutes in 2005.
“This means an additional 35 hours a year of additional driving time for each commuter,” Hancock said.
While scant consolation for Silicon Valley drivers, the trend is even worse for San Francisco commuters, who in 2015 spent an average of 33.9 minutes traveling to work, up 18.1 percent from 2005.
Despite the challenges for Silicon Valley, the area continues to outpace the nation in employment gains. During 2016, the number of jobs in Silicon Valley grew by 3 percent, compared with a growth rate of 2.5 percent for California and 1.5 percent for the United States.
“We are a growth economy in Silicon Valley,” Hancock said. “We are still going strong.”