Silicon Valley Economy Sizzles, but Not for Everyone

But middle wage earners such as nurses, police and plumbers are being driven out while low-end earners receive stagnant wages.

Feb 4, 2014 at 4:28PM

SAN JOSE, Calif. (AP) -- Jobs, income and investment keep soaring in Silicon Valley, but the growth is also driving up housing costs and widening the gap between the rich and poor, a report released Tuesday says.

"The economy is sizzling any way you slice it and it's about to get hotter, but having said that, we are quick to point out there are perils with our prosperity," said Russell Hancock, president of Joint Venture Silicon Valley, which released its annual Silicon Valley Index in conjunction with the philanthropic Silicon Valley Community Foundation.

The region added nearly 47,000 jobs in 2013, up 3% over the previous year, and the total number of jobs has surpassed pre-recession levels. Many are high-wage jobs -- 45% of households now earn more than $100,000, and per capita income is above $70,000 a year, much higher than the state average of about $44,000.

Meanwhile unemployment has fallen to less than 6%.

However, Silicon Valley Community Foundation president Emmett Carson said not everyone is benefiting.

"We have the highest, high-wage, high-growth sectors in the country but rising tides do not lift all boats," Carson said.

The growing divide between rich and poor is driven by an overwhelming demand for housing, according to the report. Last year, the region gained more than 33,000 new residents but only 6,500 new homes.

"It's been tough because we've seen the cost of housing skyrocket and we've seen our pay plummet," said James Gonzales, a 13-year veteran of the San Jose Police Department and a leader of the police union.

Public employees lost wages and benefits during the recession, cuts that made it impossible for Gonzales and many of his colleagues to make their mortgage payments.

He sold his condominium and now lives in nearby Sunnyvale, where he rents. Recent pay increases aren't enough to get him back into the housing market, he said, and new hires aren't even looking for homes in San Jose.

Stephen Levy, who directs the Center for the Continuing Study of the California Economy, said middle wage earners such as nurses, police and plumbers who perform crucial services are being driven out while low-end earners receive stagnant wages.

Possible solutions include building more housing around transit hubs, improving collaboration between local governments, and engaging tech firms in community college initiatives to provide more job training.

In the report, Silicon Valley is defined as Santa Clara and San Mateo counties, Fremont, Newark, Union City and Scotts Valley. Hancock said those borders are shifting, and it may be appropriate to include San Francisco when it comes to transportation and other infrastructure in Silicon Valley.


Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information