Silicon Valley Economy Has 'Recovered,' but No One Told Us

SAN JOSE – 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.

But there is one buzz-killing problem: for many people in the Valley, these economic good times feel eerily similar to the bad ones. Proclamations of economic triumph seem distant and unrelated to the lives of many people who live in the region but don’t partake of its Silicon riches.

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. Al Gore and Google CEO Eric Schmidt keynoted the conference, offering the unrelenting power of the Internet tapered with the enlightened compassion of liberalism — the image Silicon Valley has always hoped to evoke. In the report, Joint Venture CEO Russell Hancock announced that the Valley has “entered a new phase in its dynamic evolution.”

If this is evolution, call me a creationist, because I don’t understand all the self-congratulation.

Whenever the Silicon Valley economy gets diagnosed, the presumption is that the health of the tech sectors is a barometer for the whole Valley. That’s like a doctor declaring a patient fit after examining one limb. 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.

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