Recession Lingers On in Silicon Valley

Much has been made recently of the huge valuations of rising Internet players like Facebook, Twitter and Zynga, but while Web 2.0 is doing well, the Silicon Valley region itself is not. A new report from Joint Venture: Silicon Valley Network and Silicon Valley Community Foundation shows compensation and unemployment in the region haven't improved since the downturn, and it's not entirely due to the tech layoffs during the recession. The problems of poor pay and joblessness stem from widespread troubles which have plagued the region for years.

"Per capita income ended its two-year long fall in 2010, stabilizing at 2005 levels of roughly $62,400," the report says. Further, it notes: "The region added 12,300 jobs during 2010, bringing employment back up to 2004 levels." Those are hardly the signs of a healthy economy. The report covers Santa Clara and San Mateo counties and portions of Alameda and Santa Cruz counties.

Under the surface of the headlines in the report is the fact that tech jobs have recovered somewhat. Engineers and other tech workers aren't streaming out of the region anymore. But in other sectors that rely on the health of the local tech industry, employment is flagging, and most of all, it's the public sector that is suffering.

The problems of the region aren't unusual. The recession eroded tax bases, which meant services had to be cut. As local government deficits continue to grow, public sector employment continues to drop. Without a recovery in property taxes, the process will not reverse itself, and there is no sign the decline in home prices will reverse itself sharply anytime soon.

Silicon Valley is often viewed as a region that stands apart from the rest of the nation, prospering come rain or shine thanks to it status as the cradle of the tech movement that has transformed America. But in terms of the recession, the housing crash, and the effect of the tax base collapse on public services, Silicon Valley is just like the rest of the nation -- fervently hoping for a faster recovery.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum

6 Comments

Filter by:
bhawkes328

OH WOW REALLY... LOOKS LIKE TO ME ITS LINGERING ON THROUGH OUT THE WORLD... I MUST LIVE ON ANOTHER PLANET

February 16 2011 at 10:48 AM Report abuse rate up rate down Reply
fuzzywzhe

Really? There's been cuts in the public sector in Silicon Valley? I have to state flat out, I've not noticed any change at all in services in either Sunnyvale where I live, or in Mountain View where I work, or San Jose where I also do work.

Whatever jobs that were eliminated don't seem to serve a public good, at least to me.

I think it might be a good idea to permanently eliminate these jobs, whatever they were. After all, that's what a private corporation would do when they realize a group of people don't produce anything tangible. Of course, a private corporation can't force anybody to buy their products, like a a government can. Unlike the public sector, the private sector actually have to make something or produce a service people actually want - they can't just impose a tax and assure you it's for your own good to pay for it like a government does.

February 16 2011 at 8:06 AM Report abuse +1 rate up rate down Reply
bggdg

I'm not sure who it is that views Silicon Valley as "a region that stands apart from the rest of the nation, prospering come rain or shine", but they aren't a very insightful student of history. This is a region that relies heavily on a sector of the economy that has gone through boom and bust cycles that rival those of Wall Street. Have we already forgotten the bursting of the tech bubble?

February 15 2011 at 10:09 AM Report abuse rate up rate down Reply
bhawkes328

No s*** Doug... LOOKS TO ME THAT IT IS HOLDING ON THROUGH THE WHOLE COUNTRY.. WITH A DEATH GRIP

February 15 2011 at 9:08 AM Report abuse rate up rate down Reply
scottee

as long as we have a trillion dollar national debt and as long as The Fed prints and dilutes our dollar, we'll have a form of recession or depression. we need smaller government, fewer and simpler taxes and free markets.

February 15 2011 at 8:53 AM Report abuse rate up rate down Reply