In Silicon Valley, the Jobs Keep Coming

California’s job figures for June were released today, and Silicon Valley again was half the story.

The Silicon Valley half was a total of nearly 14,000 new jobs across just four counties:  San Benito, Santa Clara, San Mateo and San Francisco.  Our region is a large part of the reason that the state’s unemployment rate remained unchanged at 4.9 percent — the lowest rate since 2000.  It continues a trend that saw jobs in Silicon Valley increase 24.5 percent between 2010 and 2015.

Yet, despite Silicon Valley’s job growth, California had a net job loss in June, and therein lies the other half of a familiar story:   Much of the state continues to struggle economically.  This is the “Two Californias” dynamic that the California Business Roundtable honed in on some years ago:  a divide that runs east-west rather than north-south, with a wealthy coast and depressed inland regions.   The great challenge for our state legislators:  How are we to think about economic development policies in a state that has both some of the richest and some of the poorest counties in the country?

Why Do We Have a Housing Crisis? This is Why….

SV@Home highlights exactly exactly the dynamic that drives Silicon Valley’s ongoing housing crisis:  A town that has met just 15 percent of its new housing allocation denies a properly permitted and reviewed project that conformed with all city planning documents.   A court has now forced the Town Council to reconsider, but the folks who are desperately scouring the Valley for a place to live won’t have a vote when they meet on the issue.

Democracy means having a voice in matters that affect your community.  A city or town is clearly a meaningful political community in matters of land use, but it is not the only relevant political community.  The impacts of housing do not end at the town’s edge.   In this particular case, the Los Gatos Town Council’s decision will be making a decision that impacts impacts Campbell, San Jose, and a much broader region.  We need to find the right way to see that the region has a greater voice on projects with regional impact.

Senator Scott Wiener’s SB 35 aims to address situations just like this one.  Here’s hoping it makes it to the Governor’s desk, and leaves with a signature.

Mid-Year Progress Report 2017 – Part III

With the last of our three mid-year progress report blogs, we’re looking ahead to California’s legislative home stretch.  The state legislature closes its 2017 year on September 15th, and we’ve got our eye on a number of bills that are making their way through the process.   The issues?  Housing, housing, and housing.   That’s no surprise, given that Silicon Valley produced only about one new housing unit for each 10 jobs created between 2010 and 2015.

If you think we need bold and thoughtful proposals to meet the housing challenges facing Silicon Valley and California, we hope you’ll call your state legislators and voice your support for these bills:

Senate Bill 35 (@Scott_Weiner):   This legislation by Senator Weiner is as bold as they come – so bold that a similar measure proposal by the Governor died last year in the face of considerable opposition.  Senator Weiner has worked hard to construct a broader coalition to back this new version, which would streamline the process of approving new housing.

At its core, SB 35 addresses the collective action problem that characterizes California housing policy:  New housing stock is critical for a region, but it is easier for individual cities to wait for their neighbors to do the hard work of building new housing and providing the accompanying services.   It is a system that stymies even the most forward-thinking local leaders in the Valley who understand the need for new housing.  To address this problem, SB 35 would shift some decision-making authority away from local governments who have failed to meet their regional housing allocation requirements.

SB 2 (@SenToniAtkins):  While builders, regions and local communities will drive creation of most of the new housing we need in California, state funds for affordable housing are critical.  Bonds have provided important funding in recent years – and proposals like SB 3 below still have a role to play – but the permanent, stable source of affordable housing funds that would be provided by Senator Atkins’ SB 2 will allow for long-term planning at lower cost.  That’s just good policy.

SB 3 (@Jimbealljr):  State funding for affordable housing is an important tool for addressing California’s housing needs.  This legislation – from Silicon Valley’s own Senator Jim Beall – would place a $3B housing bond on the California’s 2018 General Election ballot, as funding from previous bonds in 2002 and 2006 dwindles.

AB 1505 (@AsmRichardBloom):  A healthy community includes housing for residents at a broad range of income levels.   Assm. Bloom’s AB 1505 helps the cause, by allowing (but not requiring) local jurisdictions to put in place inclusionary renters housing ordinances, which in 2009 had been disallowed by the courts in Palmer vs. City of Los Angeles.

There is no silver bullet to the housing crisis, but these bills would move us in the right direction.  If you’d like to learn more about the housing challenge in California, check out the California Legislative Analyst’s report on the topic here.

Mid-Year Progress Report 2017 – Part II

Any discussion of Silicon Valley’s health must have the competition for talent at its core.  From a policy perspective, talent is a three-legged stool:  immigration from abroad, migration from other parts of the U.S., and local Bay Area talent.

Few expected 2017 to be a year of thoughtful pro-growth immigration policy.  Of course, it turns out folks in Washington had quite a few thoughts about immigration.  They have left Silicon Valley and other globally networked U.S. metro areas fighting a series of rear-guard battles against clumsy, blunt-force bans.

Those battles will continue, and need to be fought.  But there is a lot that we can do on other fronts.  In the competition for American talent — a second leg of the stool — we continue to lag behind key competitor regions like Seattle and Austin.  And it’s not close.  In 2015, we saw another net domestic out-migration from Silicon Valley, while those other regions added thousands of Americans from other parts of the country.

The cost of housing is a major driver in this trend, of course.  Here again, the comparisons with Austin and Seattle over the 2010-2015 time period are grim.  Yet the latest available housing data from California’s Department of Finance show positive movement more recently in Santa Clara and San Mateo Counties, and in San Francisco.  In each of these cases, the gap between population growth and housing growth narrowed.  That shift was driven more by reduced population growth than new housing, but we know that building housing is tough.  Credit is due to the local officials making hard decisions to increase our housing stock.  Just keep it up.

With respect to the third leg of that talent stool – Silicon Valley’s own local education systems – sweeping policy progress is hard to come by.  When wins come, they are often district by district, or system by system. Here’s one:  An initial meeting between leaders of ten of Silicon Valley’s community colleges and executives from some of the Valley’s largest tech employers earlier this month shows promise for closing the vexing gap between employers and educators.  IBM sees such promise in community colleges that they have announced of an expansion of its partnerships with community colleges across the country to train tech workers.  Are we seeing a trend?

In the third of our three mid-year reports, we’ll take a look at some legislation that we think can move the needle between now and the end of the end of California’s 2017 legislative year in September.

Mid-Year Policy Progress Report 2017 — Part I

High drama.  We’ve seen plenty of it in Washington DC in the first half of the year, generating more heat than light.  At the state and local level, however, the drama’s led to some remarkable policy outcomes through the first six months of 2017.

Today we’re reporting on transportation, where much of the good stuff has happened.  With commute times that are second only to New York City among key U.S. tech hubs, Silicon Valley needs all the good transportation news it can get.

In February, 14 House Members protested the payment of $650M in a federal matching grant for the electrification of Caltrain, in an effort to scuttle California’s High Speed Rail project (though, we should note, Caltrain electrification makes great sense independent of any other projects). The federal funds were critical to the electrification effort, which promises to double Caltrain’s capacity to 120,000 daily trips.

With the project very much in doubt, Senator Dianne Feinstein led an armada of public, private and nonprofit leaders that in May prevailed on U.S. Transportation Secretary Elaine Chao to release the funds, matching more than $1B in local and state funds.

Meanwhile, in Sacramento, Governor Brown and State Senator Jim Beall were struggling to resurrect a desperately needed transportation infrastructure package.  In a politically risky move, the Governor imposed a short deadline for measure’s passage and lobbied wavering legislators hard in the effort to reach the two-thirds threshold required for passages.  In a vote that could define this legislative year, the measure secured the supermajority it needed, to provide an estimated $5.2M annually to improve California’s deteriorating roads and bridges.

Neither Senator Feinstein nor Governor Brown would generally draw comparisons with Oakland Raiders running back Marshawn Lynch, but both leaders ran through multiple tackles and threw some wicked stiff arms this year to secure big, meaningful victories.  There are very few political leaders who could have pulled off either of these wins.

We hope you’ll give them a shout out @JerryBrownGov and @SenFeinstein.

Oh, and by the way, the new Warm Springs BART station opened in March, another key step in the steady march toward connecting BART with Caltrain in San Jose and Santa Clara.

It’s been a banner year for transportation in Silicon Valley.

Coming up:  In the search for talent, it’s one step forward and two steps back….

2017 SVCIP Forum – Public Policy Proceedings


This blog entry summarizes key themes and discussion points shared during the Silicon Valley Competitiveness and Innovation Project 2017 Public Policy Forum, held at Microsoft’s Silicon Valley campus in Mountain View, California on March 3, 2017.  More than 190 participants attended the forum, including C-level executives, elected officials, education leaders and other community members.

Overview Of Silicon Valley Competitiveness and Innovation Project

Now in its third year, the Silicon Valley Competitiveness and Innovation Project (SVCIP) is a research initiative co-managed by the Silicon Valley Leadership Group and Silicon Valley Community Foundation. SVCIP tracks multiple economic and quality of life indicators to assess and evaluate Silicon Valley’s business and innovation competitiveness against other national and international “innovation regions.” Designed to coincide with the beginning of California’s two-year legislative cycle, the 2017 public policy forum is convened to engage community leaders and obtain feedback on best strategies for SVCIP advocacy.

Forum Structure

Leadership Group CEO Carl Guardino and SVCF Board Chair Samuel Johnson, Jr. opened the forum with a welcome and provided an overview of the event. SVCF’s Chief Community Impact Officer Erica Wood and Leadership Group Senior Vice President Dr. Brian Brennan then presented a data-based update on report indicators. California Lieutenant Governor Gavin Newsom provided a keynote discussion on public policy opportunities. The Lieutenant Governor then joined a panel moderated by Carl Guardino to discuss the region’s innovation and competitiveness with Silicon Valley Bank CEO and Leadership Group Board Chair Greg Becker, Genentech Vice President Carla Boragno, Microsoft Corporate Vice President and SVCF Board Member Dan’l Lewin, and Education Trust-West Executive Director Ryan J. Smith.

Participants then engaged in breakout conversations to address one of seven policy areas in which they had indicated interest during their registration. Participants were specifically asked to identify two to three attainable and realistic policy approaches that could be accomplished within the next 18 months. The event ended with a brief report out from each conversation and organizers’ commitment to capture and disseminate discussion content. The following section summarizes the approaches identified within each discussion group, and do not necessarily reflect the policies or priorities of SVCF or the Leadership Group.

Breakout Session Proceedings

  • Housing
    • Sacramento needs to implement an incentivize affordable and accessible housing. (AB 71, SB2)
    • Pass legislation to secure $ for affordable housing (AB 71(Chiu) and SB 2 (Atkins)
    • Find way to revenue share property taxes
    • State needs to pass local accountability measures – by-right and requiring building planned for in housing elements and RHNA.
  • Education
    • Teacher shortage:
      • Create streamlined pathways into the profession for new teachers and mid-career
      • Use tech to facilitate teaching and delivery
      • Differential pay to incentivize
      • Improve the narrative around teaching
    • Early childhood development
      • High quality early childhood education for all
      • Align to k-12 system
    • Funding
      • R&D funds for local education innovation
      • Restructure tax (Prop 13) and funding distribution
      • Pension reform
    • Clearinghouse for public-private partnerships
  • Transportation
    • Electrify Caltrain
    • Transit Agency Coordination
    • 9-County Transportation Measure
  • Workforce/Higher Education
    • Summer program that brings together a task force to solve issues of affordability, access, and curriculum alignment with industry needs – with members from industry, community colleges, 4-year institutions, and K-12 entities.
    • Summer program – Professional development that links professionals in industry with educators, makes it easier for talented industry folks to teach, and provides opportunities for teachers to work in industry temporarily (like Ignited).
    • Make sure that the first two initiatives are industry-led, so that it can define the skills needed, and inform and fund the process.
  • R&D/Innovation
    • R&D:  increase funding, focus on supply chain
    • STEM initiatives
      • Replicate Genentech models of hands-on learning
    • Focus on addressing the skills gap in the high tech manufacturing workforce
  • Entrepreneurship
    • 6 entrepreneurship challenge events, outreach with/to local community colleges, innovation challenges, friendly competition and create inclusive tech ecosystem
    • Workforce development and training for emerging leaders (students)
    • Policy-specific:  housing, immigration
  • Tax/Regulation
    • Prop 13 reform (how property is valuated)
    • Debt forgiveness for teachers in STEM
    • Incentives for students to have access to STEM and the treatment of computer science as math.





Poverty, Wealth and California’s Migration Flows

By Brian Brennan

The primary takeaway from the immigration data in the 2017 Silicon Valley Competitiveness & Innovation Report – released last week at Microsoft in Mountain View – is that people keep coming to the Valley.  Despite demoralizing commutes and onerous housing prices, there is a steady stream of newcomers from abroad – nearly 2,800 a month in 2015.

The domestic migration dynamics between Silicon Valley and the rest of the United States are more complicated.  Net domestic migration to the Valley is negative (-832 in 2015), but that number itself masks a larger narrative that is revealed in a report earlier this week from the Sacramento Bee about California’s migration patterns – two narratives, in fact.

The first is about geography:  Domestic migration to California between 2000 and 2015 was driven by movement from states east of the Mississippi – primarily the Mid-Atlantic states and New England, as well as Michigan, Florida, Illinois and Alabama.  Those moving away from California over that same period tended to stay in the west, heading in largest numbers to Texas (155,343), with Oregon, Nevada and Arizona not far behind.

The second narrative involves income. The Bee’s data reveal that the poor are leaving California while those with means are drawn to the state:

All told, California lost about 260,000 economically disadvantaged residents to the 10 states with the lowest cost of living (from 2000 to 2015), compared to a net gain of about 40,000 from the 10 states (other than California) with the highest cost of living.

These dynamics have consequences.  They mean a more socioeconomically segregated region.  They mean a hollowing-out of a middle and working classes that are essential to any community.  And they mean additional pressure on even successful companies to consider growing outside of California.

They are also not inevitable.  They are driven by many things, not least policy constraints on housing supply.  Our policymakers are facing many pressing challenges, but when Silicon Valley’s employment rises nearly 25% and population rises 6.4%, as it did between 2010 and 2015, while housing stock increases by only 2.6%, the outcomes are predictable:  an elite, segregated region with an unbalanced economy that drives too many away.


Dr. Brian Brennan is Senior Vice President at the Silicon Valley Leadership Group.

How Does Silicon Valley Compare With Other Global City-Regions?

By John Melville

Most would agree that Silicon Valley is one of the world’s leading innovation regions.  But what do the numbers say?  Unfortunately, comparable international measures are still not available in many issue areas covered by SVCIP.  That is why we have been able to develop comprehensive comparisons only across selected Innovation Regions in the United States.  However, we do recognize Silicon Valley competes in a global innovation economy, and should be measured against global regions whenever possible.

Here is what we do know: As we reported in the 2016 SVCIP Update, the Compass’ Global Startup Ecosystem Ranking of 2015 placed the region first based on a composite measure incorporating venture capital investment, start-up company exit valuations, talent pool, and entrepreneurial supports and networks. At the same time, other regions like Berlin, London, Tel Aviv, Chicago, and Boston scored higher on the Growth Index, meaning they are making up ground on Silicon Valley in these areas.

The Brookings Institution has just released a comprehensive analysis of the 123 largest metropolitan areas in the world (see Redefining Global Regions, 2016).  On a variety of indicators, the San Jose and San Francisco metropolitan areas rank among the top regions in the world.  In short:  Silicon Valley has the largest share of publications in the top 10% of cited papers (2010-2013), and generates the most patents per capita.  It is the most productive region, and attracts the largest venture capital investment per capita of any metropolitan area in the world.  It has among the highest percentage of people with bachelors’ or higher degrees, only exceeded by Singapore, London, and Washington D.C.

Despite being the birthplace of many founding internet technologies, one of the measures on which the region performs poorly is average internet download speed.  Silicon Valley is actually well behind several regions across Asia (e.g., Singapore, Tokyo, Osaka, Nagoya, Seoul, Hong Kong), Europe (e.g., Paris, Stockholm, Amsterdam, Barcelona, Copenhagen, Zurich), and the United States (e.g., Austin, Seattle, Boston, New York City, and Los Angeles, as well as Baltimore, Philadelphia, Kansas City, St. Louis, and Riverside).

Stay tuned for the 2017 SVCIP Update which will be released in February.

John Melville is Co-CEO of Collaborative Economics.

Pathways to Continued Prosperity – Expand the STEM Pipeline

By PK Agarwal

The 2016 Silicon Valley Competitiveness and Innovation Project reports that the Silicon Valley Region’s foundations of prosperity are showing some signs of stress. The report compares key data for innovation regions in the U.S. including the New York City metro area, Boston, Southern California, Seattle and Austin, as well as a select number of global areas.

The troubling indicators cited for Silicon Valley were an outflow of talent to other parts of the U.S., increased labor costs and slower growth in STEM degrees. The success of our Region is understandably tied to the availability of high quality STEM talent.   The slowdown of growth in STEM degrees is a particularly alarming indicator, as this is a harbinger of the increasing talent gap.  During the 2013-2014 period, growth in STEM degrees was the lowest in Silicon Valley, 4.8% compared to 11.4% in Seattle, 11.2% in New York and 9.6% in Boston. At the same time, our share of foreign born workers was the highest of any of the report’s identified innovation regions. This appears to indicate that we are starting to fall behind in the race for the STEM talent.  This indicator is all the more troubling considering that a Whitehouse report points out that the IT demand-supply gap is expected to continue to grow at least through 2020.

The STEM pipeline issues go a lot deeper than at the college level.  Take a look at the eighth grade math proficiency. In 2014, slightly less than half (49%) of students met or exceeded the state standards for math, based on the Common Core education standards. The “diversity challenge” in the STEM pipeline is illustrated by the fact only 20% of African American students and 21% of Latino students met these standards.  Eighth grade math proficiency is a crucial indicator of college preparedness and subsequent professional STEM pipeline.

One of the innovative answers to the region’s STEM shortage and diversity challenge is to re-skill non-STEM professionals into STEM fields.  A number of educational institutions are coming up with programs to open the STEM pipeline to people who have already obtained non-STEM college education. We, at Northeastern University- Silicon Valley, are one of those innovators.  Our ALIGN program addresses the talent issue by providing non-STEM undergrad degree holders a pathway to a Master’s degree in Computer Science or Cybersecurity.   It is well understood that people with a variety of multi-disciplinary skills bring a unique perspective to the workplace.  Accordingly these ALIGN students, with a wide range of academic and cultural backgrounds, bring new vistas to the STEM disciplines.  Plus, they tend to excel in soft skills, which differentiates them in the workplace.   Finally, programs such as ALIGN provide a tool to deal with the diversity issue in Silicon Valley.

The availability of skilled workforce is the critical asset that will keep Silicon Valley growing and thriving.   Industry and academia need to partner and innovate to solve the pipeline issue in the short-term as well as long-term.

P.K. Agarwal is Regional Dean and CEO of Northeastern University-Silicon Valley and former CTO for California under Governor Schwarzenegger.



Innovation Industries Drive Silicon Valley’s Economy

By John Melville

growth-of-innovation-industries-and-other-industries-12-5-2016The Silicon Valley Competitiveness and Innovation Project (SVCIP) focuses on a subset of industries in the regional economy that are important export-oriented sectors with positive ripple effects on other parts of the economy.  We call them “innovation industries” because innovation is their shared core business.  While their products and services vary widely—from software to hardware, internet-based services to biotechnology, and many more—what they also share is a core need to operate in a supportive community environment, including talent, financing, and other resources.   Thus, their success is an important measure of how well Silicon Valley and other regions are providing an effective “innovation ecosystem.”

So how are we doing?  Between 1995 and 2015, output in Innovation Industries rose by almost 150%, while that of the rest of the economy increased by less than 40%.  A decade ago output for the both sets of industries were actually rising at a comparable rate.  This situation changed significantly when Innovation Industry output accelerated rapidly beginning in 2010, a trend that has continued through at least 2015.

employment-in-innovation-industries-graphic-12-5-2016What about jobs?  Silicon Valley has the highest proportion of Innovation Industry jobs per capita compared to other Innovation Regions.  Be sure to stay tuned for the release of the SVCIP 2017 Update report to be released early next year to learn more about how jobs in Silicon Valley Innovation Industries are also growing faster than those in other Innovation Regions.




John Melville is Co-CEO of Collaborative Economics.