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March 21-27, 2007

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Don't Call It a Comeback

Not everyone is feeling Silicon Valley's economic recovery

By Raj Jayadev

IT'S OFFICIAL: Silicon Valley's economy is healthy again. After a six-year slump, the spirit of innovation has returned us to glory.

According a California Employment Development Department report released last week, the valley gained over 22,000 jobs in 2006, many in high-paying sectors. "Valley Job Market Sizzling," announced the San Jose Mercury News.

We haven't heard the word "sizzle" associated with the valley's economy since 2001, right before the region shed 200,000 jobs. The spirit of optimism in the valley's business circles has been supported by the 2007 Silicon Valley Index, released by Joint Venture: Silicon Valley Network, a local think tank, at its annual State of the Valley conference. Joint Venture CEO Russell Hancock announced that the valley has "entered a new phase in its dynamic evolution."

Whenever the Silicon Valley economy gets diagnosed, the presumption is that the health of the tech sectors is a barometer for the whole valley. But according to Tracy Gross, a senior research associate for Collaborative Economics, which did much of the analysis for the Silicon Valley Index, only 33 percent of the region's jobs are in the tech sector. That means two-thirds of the jobs in Silicon Valley aren't "Silicon Valley" jobs. They're just jobs—retail work, driving a cab, staffing a parking lot. From this rung of the ladder, the economic picture looks very different.

Dig a little deeper into the Joint Venture report and a different picture emerges. Things have stayed bad, and in some cases gotten worse, in terms of the indicators that matter to the invisible two-thirds: income disparity, education levels, incarceration rates and home ownership levels.

According to the new numbers, a tech worker in "computer and communications hardware manufacturing" is making $160,347 a year, while the average Silicon Valley retail worker makes $29,301 a year. The computer guy's wages rose by 6 percent last year, while the retail worker's rose by only 2 percent. So while analysts may point to one of the highest average incomes in the country—$74,302 a year—those numbers are heavily skewed by the fat paychecks of the few, and the gap between the few and the many is becoming a chasm.

More people in Silicon Valley pay 30 percent or more of their paycheck for housing than anywhere else in the nation. The number of affordable units approved for construction in 2006 was the lowest since the beginning of the survey's history in 1998.

But nothing is more revealing than the report's analysis of dwindling opportunity for young people in Silicon Valley. The region's high school graduation rate dropped for the second year in a row, and the share of graduates who met University of California or California State University entrance requirements also fell. The rate of juvenile felony offenses rose in Silicon Valley for the fourth consecutive year.

Shana White, 26, knows the other side of the current economic numbers. She says times now are no better than they were before this latest "recovery."

"Back in 2001 I was temping as a secretary," she says. "When the economy tanked, I had to postpone the schooling I had planned on doing."

White did eventually go to culinary school, but now that she has graduated cannot find work in that field. Times are similarly hard for other frustrated job seekers. Despite recent job growth, the valley still employs 150,000 fewer workers than it did six years ago.

Sium Asret is a cab driver with Golden Star, which caters mainly to the San Jose airport. "I have been reading about the recovery, and maybe in the upper classes it's so, but it has not trickled down to the rest of us," Asret says.

He says drivers are working more hours to meet expenses—the price of gas alone has gone up $1 since a gallon since 2000.

Three days before Al Gore congratulated Silicon Valley tech leaders for their achievements, hundreds of cafeteria workers gathered in a church in downtown San Jose. They, along with the union UNITE, were about to launch a campaign to get heath care and increase wages for the people who serve food at major tech firms such as Oracle, Broadcom and Genentech.

Mireya Villalobos, who works at Broadband, told the crowd she is part of the economy that Silicon Valley's elite don't see.

"Even though I serve these people and chat with them every day," she said, "they don't know that I struggle to afford dinner for my kids."

Contact Peter Byrne or send a letter to the editor about this story.