Given that high-tech’s ballooning salaries are a major cause of
the Valley’s astronomical cost of living, residents contend with one
of the most extreme examples of income inequality in the nation,
and nowhere is that disparity more glaring than in the lack of affordable
housing. In Santa Clara County alone, 7,394 people were
homeless in January 2017—the most recent data available from
county officials. About two-thirds of that group was unsheltered.
As middle-income workers turn their backs on the Bay Area,
many potential replacement employees are choosing not to come
here in the first place to deal with the region’s exorbitant costs.
More fallout involves employers, who have begun to expand operations
and ramp up hiring in less-costly locales around the nation.
It even threatens the DNA of Silicon Valley entrepreneurism—
the ability of innovative startups to jump-start their existence
here. Previous examples are current Valley
heavyweights like Apple and Google.
“What’s newly disquieting are indicators
that our fundamentals might be changing,”
Hancock said. “More people are leaving the
region than coming into it. Most of our
growth in tech is being driven by a handful
of large, established companies. Our high
costs and rising salaries are causing innovative
companies to look elsewhere.”
If no good deed goes unpunished, it might
be added that no booming economy goes
unthreatened by its own success. This year’s
Index—which defines Silicon Valley as all of
Santa Clara and San Mateo counties—reported
that from July 2015 and July 2018,
the region gained 61,977 foreign immigrants.
But it lost 64,318 residents to other
parts of California and other states.
Still, the Valley remains a magnet for tech
workers from around the globe. Perhaps the
United Nations might want to consider relocating
its headquarters. Thirty-eight percent
of the region’s residents are now foreign born,
giving it a uniquely cosmopolitan flavor. For
the first time, people of Asian descent outnumber
white residents and no less than 60 percent of the Valley’s
highly educated tech workforce hails from other nations.
While the imported flow of talent helps to sustains the local
economy, companies must now contend with the worrying trend
of net migration out of Silicon Valley. Jeff Bellisario, vice president
of the San Francisco-based Bay Area Council Economic Institute,
voices his concerns over efforts at the federal level to curb even
legal immigration into the U.S. For decades, local high-tech
companies have become highly dependent on using the nation’s
H-1B visa program to temporarily hire foreign workers with technological
expertise to augment its native-born workforce. Many
come from Asia.
“When you look at the national scene on the immigration issue,
it’s very worrying,” says Bellisario. “A lot of our growth comes
from people moving here from outside the country to take tech
jobs. If this closes down, where will our high-tech talent come
from? We don’t have a large number of unemployed people to fill
those jobs and people from other parts of the country are hesitant
to move here since they can have a higher quality of life in Seattle
and Austin.”
58 South Bay Accent
Stephen Levy, director and senior economist for the Palo
Alto-based Center for the Continuing Study of the California
Economy, echoes Bellisario’s alarm. “The Index report doesn’t
talk too much about the future, but several (federal government)
policies on immigration and foreign trade could really put quite
a damper on the Silicon Valley economy in the near future,” says
Levy. “Silicon Valley exists as a welcoming community with an
economy that depends on immigration and good relationships
with other countries. We could also attract fewer foreign students
in the future, because they no longer feel welcome here.”
And on another front once they arrive, they, like everyone else,
have to get from one place to another without becoming gridlocked.
The Valley’s legendary traffic congestion is horrendous
and only getting worse.
POSITIVE SIGNS
While the migration and immigration issues will not be resolved
near-term—and present genuine impediments to uninterrupted
growth and expansion—the Valley continues to put up astonishing
figures across the board. Last year’s total of 28 initial public
offerings, better known as IPOs, among Bay Area companies
more than doubled the 2017 number, raising $5.9 billion. That
more than quadrupled the money raised by IPOs the year before.
Patents numbered nearly 20,000 in Silicon Valley in 2018, up
slightly from the previous year. Tech behemoths Apple, Google,
Facebook, LinkedIn and Amazon now lease roughly 18 percent
of all available office and R&D space in the Valley. The nearly 24
million square feet of commercial space built in the past four years
easily outpaces the amount built during the previous 13 years—
18.6 million square feet constructed between 2002 to 2014.
“We have the highest average annual income ever for Silicon
Valley,” Hancock says. “The combined VC funding between
Silicon Valley and San Francisco is mind-blowing. It’s the biggest
number generated since the crazy days of the dot-com era. Now,
we have some huge IPOs in the pipeline for this year, including