Release Date: February 5, 2013
Silicon Valley has rebounded from the recession, but persistent challenges remain. How we use this recovery to address these challenges will determine our future competitiveness and quality of life. The region is adding jobs faster than it has in more than a decade, and at a faster rate than the rest of California and the nation. Over the past year the Valley grew by 42,360 jobs and the quarterly growth rate reached four percent, the highest we’ve seen in over a decade. Those numbers swell dramatically if we add San Francisco into the head count.
San Francisco’s impressive performance raises interesting and important questions about the Bay Area’s growing connectedness and interdependencies. It’s clear that technology, innovation, and entrepreneurship are no longer clustering in the South Bay alone, and the spread of these activities forces our region to address questions of integration that have long been ignored. This year’s Special Analysis looks at those issues in depth and suggests it is time Silicon Valley and the greater Bay Area take a fresh look at regional planning and decision making. This year’s Index also makes it clear that our current economic growth, however widespread, is not a cure-all. The rebound has not reached all our residents, and it is not addressing the most serious challenges there were here before the recession and which remain with us today. A large and growing education deficit keeps too many residents from sharing in the new prosperity. The high school drop-out rate is rising. Incomes continue to slip for our Hispanic and African American populations, while rising for other groups. Housing starts have not recovered to pre-recession levels, and the percentage of income spent on rent has reached a decade high (46 percent).
The Index shows Silicon Valley maintaining its status as the world’s major innovation hub, with solid gains in patent registrations and IPOs. And yet it is also clear we cannot take those advantages for granted. Our report also shows a decline in venture capital investment, and though there has been growth in angel financing and conventional loans, we may be on the cusp of a disruptive shift in the Valley’s financing model. As our economy continues to grow, and as that growth takes on a wider footprint, the 2013 Index challenges us to think more expansively about all the associated challenges, to become more regionally integrated, and to ensure that our growth is more widely shared.