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Silicon Valley in 2018: More success, more pressure

Housing costs, disproportionate wealth still make life hard for many residents

• Watch "Behind the Headlines" for a discussion of the state of Silicon Valley, transportation and housing, and Palo Altans' views of the middle class.

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The Bay Area's fevered success is still rising, but its achievements continue to exacerbate the region's housing and transportation pressures, a new Joint Venture Silicon Valley report, the 2018 Silicon Valley Index, found.

The 92-page report, which was released on Wednesday, found that Silicon Valley has gained jobs, income, venture capital and commercial construction. But longer, more frustrating commutes, struggles to find affordable housing, and higher costs for necessities such as food, clothing and child care are affecting quality of life.

The annual study, which looks at trends in the region's economic development, housing, workforce, education, public health, land use, environments, government and other sectors, found that Silicon Valley is still a hotbed for economic growth. Unemployment is at a historic low, at 2.5 percent, the lowest since 2000. The region created 47,000 new jobs in the year between the second quarters of 2016 and 2017.

The index identifies the region as Santa Clara County plus adjacent parts of San Mateo, Alameda and Santa Cruz counties. Since 2009, however, it has added data for all of San Mateo county to reflect the geographic expansion of regional driving industries and employment. It also includes some data for San Francisco because of its influence on the tech economy.

The index found that people are making more money. About 36 percent of Silicon Valley households earn more than $150,000 annually, and 24 percent earn more than $200,000. Average annual earnings were $131,000 in 2017 and median household income outpaced inflation by up to $110,000, which is higher than any year since 2001, according to the report.

But the valley's success has a dark side that is disenfranchising many, and the report raises many questions about how the valley can provide necessary infrastructure to support its growth, including adding housing stock and encouraging young people to stay in the area by ensuring it is affordable.

"Our spectacular success has created a harsh environment for families. Housing is out of reach for all but a very few, Those who can't afford to are living challenging lives, or commuting from far-flung places, spending ghastly amounts of time in traffic," said Russell Hancock, CEO of Joint Venture Silicon Valley and president of the Institute for Regional Studies, which jointly authored the index, in a press release.

Silicon Valley has 9.6 percent of the state's jobs, 34.6 percent of initial public offerings, 47.5 percent of patent registrations and 40.2 percent of the state's venture capital. San Francisco alone accounts for 15.4 percent of those IPOs, 31.3 percent of the venture capital and 45.7 percent of angel investment.

Internet companies received 37 percent of all 2017 venture-capital funding in the valley, with health care companies coming in second at 29 percent, doubling between 2016 and 2017 to $2.7 billion. The losers, if one could call them that, were non-internet/mobile software companies, whose share of venture capital declined by 27 percent in 2017 from 2016; and electronics companies, which have declines from a 25 percent share in 2002 to less than 4 percent of investments in 2017.

While the region has continued to grow, it is doing so at a slower pace over the past two years compared to the three years prior. More than half of new jobs -- 53 percent -- are in health care, retail, construction and education. Health care accounted for 17 percent alone, according to the findings. The tech sector grew by 29 percent.

The total number of jobs has surpassed pre-recession figures for the region by 19 percent or higher and has continued to grow. Silicon Valley's job growth has risen 27 percent since the beginning of the recovery period in 2010 compared to 17 percent for California as a whole and 12 percent for the country. San Francisco beat out the valley with a jobs growth of 31 percent, according to the report. Tech-industry jobs have grown by 35 percent since the second quarter of 2010.

About 43 percent of all jobs were middle wage in 2017, but made fewer gains since the economic recovery, leaving top-earning and least-earning jobs with the biggest gains. The greatest jobs gains since the recession goes to black residents, whose unemployment rates dropped more than eight percentage points from 11.6 percent in 2011 to 3.4 percent in 2016.

Hancock said that middle-wage, middle-skill jobs are disappearing and income inequality is growing more pronounced each year.

"Today nearly a third of Silicon Valley households require some form of assistance in order to get by, and 10 percent of our residents are food insecure," he said.

Poverty rates increased by half a percentage point between 2014 and 2016 to about 227,000 residents, a trend that is the reverse of San Francisco, the state and the United States, which have all seen rates decline. Ethnic and racial groups continue to be the hardest hit, with rates nearly three times as high as for whites, who had about a 5 percent rate. Asians were at 7.9 percent in 2016, with Latinos being 13.6 percent and blacks at 14.6 percent living in poverty.

Housing costs remain one of the biggest drains on wallets. The median home price in 2017 rose 7.4 percent, nearly $67,000, and median apartment rentals have risen 37 percent since 2011. Child care rose by as much as 31 percent since 2012, the study found.

The valley's demographics are also changing. About 38 percent are now foreign-born and 51 percent speak a language other than English at home. Those residents also hold the lion's share of science, technology, engineering and mathematical (STEM) jobs.

Foreign-born residents hold: 66 percent of the computer and mathematical jobs; 60.7 percent of architectural and engineering positions; 44.8 percent of natural sciences; 45.2 percent of medical and health services and 41.8 percent of financial services occupations.

Nearly three-quarters of Silicon Valley's women ages 25-44 who are in STEM jobs are foreign born. A whopping 78.7 percent of foreign-born working women in that age group work in computer and mathematical fields.

For the second year in a row, people are moving out of the valley as quickly as they are moving in. Over a two-year period from July 2015 to July 2017, 44,732 foreign immigrants moved in while 44,102 residents moved to other parts of the state or country.

The valley is also aging, with residents older than 65 having risen 31 percent over a 10-year period, according to the index. The age shift is partially attributable to declining birth rates. In 2017, those figures were lower than in any year since the mid-1980s. Women with a bachelor's degree or higher are also waiting an average six years longer to have their first child.

Women with higher degrees also faced a higher disparity in their pay from men. A male with a bachelor's degree or higher earned 49 percent more than a woman with the same level of educational attainment, according to the report. That disparity is far worse than for men and women who have less education.

Jobs-wage differences remain significant. The median wage for a Silicon Valley high-wage worker was $118,000 in 2017 compared to about $55,000 for a middle-wage worker and $28,000 for a low-wage worker -- a disparity of about $90,900 per year, the report noted.

Silicon Valley incomes are higher than elsewhere in the state and the nation, but so are costs. The valley's average annual earnings of $131,000 far outstrip the state average of $78,000 and the nation's, which is $66,000.

But housing and other costs are also taking a large bite from those income gains. The median home sale price is 2.1 times higher than in other parts of California, with rents being 1.3 to 1.4 times higher. Child-care costs are 1.2-1.3 times higher and other essential costs, such as food, clothing and transportation, are 1.1 times higher. Inflation-adjusted median home prices rose 7.4 percent compared to 3.7 percent for the state.

Median apartment rentals have declined by 5 percent since 2015, but they are up 37 percent or $9,200 per year since 2011. Although household income has increased by $13,400 since 2011, the fast rise in rental rates represents a "burdensome share" of 69 percent of the income gains, the index noted.

The median home price is now $968,000, making home ownership nearly impossible for most residents to get into the market, the index found. Fewer than 34 percent of first-time home buyers can afford a home compared with 49 percent statewide. Multiple-family units represented 79 percent of new building permits, but only a small number are affordable for low-income residents. In 2016, the high cost of housing has pushed nearly a quarter of the region's residents into multigenerational households, and more than one-third live with their parents.

The share of the valley's wealth is also skewed in favor of whites, with some ethnic groups suffering poverty at nearly three times the rate of Caucasians. One out of every 10 children in the valley lives in poverty, and 30 percent of all Silicon Valley households still do not earn enough to cover basic needs without public or private assistance. More than one-third of Silicon Valley students ages 5 to 17 receive free or reduced-price school meals.

Latino and black residents are gaining in shares of higher educational attainment, but those levels are still below those of other racial and ethnic groups. Asians remain the most educated, with about 63 percent having attained a bachelor's degree or higher. That figure dips by a few percentage points from 2006.

Whites have shown a steady gain in higher education, with just under 60 percent having college degrees, a rise from about 51 percent a decade ago. Black residents have also made gains, with about 36 percent having higher degrees compared to about 27 percent a decade ago. Latinos have made smaller gains at about 18 percent in 2016 compared to 14 percent in 2006.

Women in general have not made gains in tech education. The percentage of women who received science and engineering degrees from educational institutions in the valley has not increased dramatically for the past 17 years and remains at 38 percent.

The study also noted the rise in traffic congestion, with scarce housing as the major culprit. Commute times have increased by 17 percent, adding an average travel time of 43 minutes per week per commuter. Delays have more than doubled on the past 10 years, reaching a record-breaking 66,000 wasted vehicle hours daily for commuters.

Ridership on private shuttles now represents the Bay Area's largest mass-transit system, with the majority of shuttles traveling between San Francisco, Santa Clara and Alameda counties, the study found.

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Comments

22 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Feb 8, 2018 at 10:59 am

From the article << Ridership on private shuttles now represents the Bay Area's largest mass-transit system, with the majority of shuttles traveling between San Francisco, Santa Clara and Alameda counties, the study found. >>

So why aren't we doing similar express bus routes run by private enterprise for non-Google/Facebook/Apple employees.

If the system works for them it should work for the general population. Express buses to airports along the 101 with stops at various off ramps would be a great help as well as all the way from SF to SJ on both 101 and 180. Park and ride lots with express bus service that is affordable, efficient, clean and reliable should be a no-brainer.


6 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 8, 2018 at 11:28 am

Posted by Resident, a resident of Another Palo Alto neighborhood:

>> So why aren't we doing similar express bus routes run by private enterprise for non-Google/Facebook/Apple employees.

Good question!

>> If the system works for them it should work for the general population.

Umm, nope. -Not in general.- The reason it works for Google is that the employer destination is "Google". (A few Google stops, including Google-internal shuttles to some small locations.) Throughout Silicon Valley, employers are distributed everywhere. Vanpools can sometimes provide service for people who live close together and who work close together, and, they get to use carpool lanes. The main disadvantage is the fixed schedule.

In the general case, workplaces are "everywhere".


6 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Feb 8, 2018 at 12:23 pm

Anon. Workplaces are everywhere, you are right of course. But so are the Google campuses, the Apple campuses, but it doesn't stop them from running efficient transit.

What is necessary is not a spoke and wheel type of transit, but a major transit route following the main highways with park and ride lots as well as shuttles for first and last mile. IOW, someone coming from say Morgan Hill, will park their car at the park and ride lot near 101, take a transit bus to say Mountain View using 85, or Palo Alto, being met by efficient dedicated shuttles to the localized business districts (iow, one to Cal Ave, one to downtown and one to Stanford campus). Likewise, the Palo Alto residents needing to get out of town will park and take the same routes further up and down the Peninsula.

I don't see why you think that buses have to pick up and drop off in neighborhoods where the riders live, or business areas where the riders work. Instead first land last mile should and can be done by bikes, by shuttles or private cars (at the home end).


3 people like this
Posted by Gale Johnson
a resident of Adobe-Meadow
on Feb 8, 2018 at 3:18 pm

Gale Johnson is a registered user.

Those company shuttle buses are obviously funded by the companies themselves and are designed to benefit only their employees. Public shuttles would have to be funded by ridership fees and taxpayer money.

I think the park and ride idea has some merit and potential of being successful in reducing traffic and parking problems in the areas of University Avenue, California Avenue, Stanford Research Park, Stanford Shopping Center, and even on the main campus of Stanford University itself. It would be primarily for the benefit of the employees who work at those places. It has been proposed before, by CC member, Cory Wolbach, when he ran for office back in 2014.

There are questions with it that need to be addressed, and answered, however: Where will the parking areas be located? How many shuttle buses will be needed and what will their schedules be? There will be people needing to go in different directions and at different times. That would normally bother me, but not anymore, knowing we have very smart people, the world's best and brightest here in SV. They have great abilities to gather data, analyze it, and develop algorithms from it, and to use it to solve problems like this.


Oh, but a couple more things ...and pretty important things...what will it cost and who will pay for it? What, in the plan will ridership fees cover? What will us taxpayers be held responsible for? There will be many costs: Purchase and development of parking areas, purchase of shuttle buses, hiring and training employees, maintenance of the buses, plus the administration costs at City Hall for all of this.

Add them up. I defer to our City Manager on the costs of those.

But, there is still a sad part to it. All this effort is just to alleviate/mitigate local travel issues...slow stop and go traffic congestion and parking issues. It does nothing to reduce the number of hours on the highways and freeways for people who will still have to travel, from far away places, to get to our wonderful park and drive parks, because they can't afford to live near where they work.

That is still the biggest, most challenging, and most insoluble issue we face in PA, and one that all of our wonderful neighboring Silicon Valley cities face also.


4 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Feb 8, 2018 at 3:41 pm

Gale

You are still thinking locally. This regionally. The efficient buses running along the highways will have stops every 5 miles or so at various places along the Peninsula. People will be getting off luxury buses at our offramps and onto our shuttle buses to get them to their places of work. One will be waiting for the other, not running to a timetable that doesn't coordinate. The buses will then be getting more riders who have either parked in that same park and ride lot or arrived by carpool or bike. They in turn will ride the luxury bus to points farther along the highway or even the airport or BART.

As for funding, well we have garages, lots and meters and some of that money should go towards funding local shuttles and the luxury highway buses can be funded by gas tax, bridge tolls, highway tolls, in part.

Getting solo driven cars off local roads is a local aim, but getting solo driven cars off highways should also be part of the equation. The amount of time spent by the population sitting idle in traffic has to have a monetary value. Even a Silicon Valley regional business tax paid by every employer of over 25 employees be they skilled or technical has to be seen to be put to work making everyone's commutes easier.

The school trips problem is very real also. The more people sending their kids to private schools only makes the problem worse. Many of the private schools in Palo Alto, Girls Middle School, International School, etc. are not even served by VTA or shuttles. They must also pay into the cost of offsets in public transportation by the number of staff and pupils that come to their campuses on a daily basis.

We are in a serious situation. Funding for public transportation and heavy penalties for those who continue to resist doing their bit have to be taken into account. A free parking spot at any place of employment in the urban setting has to be considered a perk and I would suggest taxing that also.

Serious measures have to be invoked to get our heads above water in this. We are not going to get ourselves out of this mess city by city, or even county by county. We are only treading water but beginning to sink. Drowning will occur unless we take seriously measures to prevent it.


1 person likes this
Posted by Resident
a resident of Midtown
on Feb 8, 2018 at 3:51 pm

I disagree with the above post 100 percent.


Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Feb 8, 2018 at 4:59 pm

Midtown Resident. You don't have to agree with me, but what solutions would you like to try? No complaints about how or why things are so bad, but positive ideas that might make a difference.

The situation is dire, solutions are going to be painful!


6 people like this
Posted by Resident
a resident of Midtown
on Feb 8, 2018 at 7:26 pm

I've posted on it in several other threads. Really tired of this topic, but if uou want density, overpopulation, inefficiency, socialism, and slow cultural degeneracy with a bloated ruling class that can solve all our problems through endless tax hikes and punitive measures, then I guess that is your preference.

Maybe technology and data collection has reached overflow. Do we really need so much technology in our lives? We are slowly giving away our minds to computers and it is bad for humanity and our physical health. We are becoming sclerotic with an over reliance on smartphones. With the exploding profitability of all these tech companies, the jobs-housing imbalance is really a cyberspace-living space imbalance and it is all concentrated in the Silicone Valley. It feels like a bubble that's going to burst soon, and it's already happening.


7 people like this
Posted by John Uebbing
a resident of Midtown
on Feb 8, 2018 at 8:12 pm

London and Singapore have electronic road pricing. Chicago has toll roads into and out of the city. By making solo commuting really expensive, the road crowding will be reduced. Lower income people would have a good incentive to car pool. Car pooling can be mediated by the internet. Uberpool is like this. When I was young, I car pooled to go to work in Chicago. It took longer, but the sociability was great. Empty VTA buses are not the answer. Empty car seats are not the answer.


2 people like this
Posted by chris
a resident of University South
on Feb 8, 2018 at 10:01 pm

Downtown Palo Alto has a TMA, Stanford Research Park has a TMA, and Stanford has been in this business for a long time.

These are the organizations that need to get funding from their constituents and ramp up their solutions.


29 people like this
Posted by Not a success - a growing disaster!
a resident of Downtown North
on Feb 8, 2018 at 10:48 pm

The entire premise that unbridled growth and congestion that lead to ever larger amorphous mobs of people collecting in one area is a "success" is ridiculous!

Success should not be measured by how much money developers can make, or by how many people an area can attract, but by the quality of life in an area and how the environment that includes the local people but also the other elements that make up life are treated.

When foolish government officials allow buildings are at the edge of the bay that will be underwater in a couple of decades, allow too many employers to attract workers who overwhelm the carrying capacity of the area and don't consider the amount of water, clean air and open space needed to support those who are here then we have major issues.

By any measure other than rampant greed Silicon Valley is not a success, but a present and enlarging disaster.


3 people like this
Posted by Tech Buses
a resident of Adobe-Meadow
on Feb 9, 2018 at 2:20 pm

The tech buses, on paper, are likely costing the company money, but the big "However" is that the company gets something in return: Employees working more hours. That, in the grand scheme of things, is a huge monetary gain to the company, even if not quantified on paper(though I'm sure it is somewhere).
A "Public" system run like the tech buses would also operate at that paper loss, but there is no benefit back to the parent "company", so....ffffft.


3 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 9, 2018 at 3:26 pm

Posted by chris, a resident of University South:

>> Downtown Palo Alto has a TMA, Stanford Research Park has a TMA,

"TMA"? Too Many Acronyms?


Like this comment
Posted by Stephen
a resident of Duveneck/St. Francis
on Feb 10, 2018 at 3:31 pm

I was curious too - after getting past "Tissue Micro Array" I got to TMA = Transportation Management Association


Like this comment
Posted by Gale Johnson
a resident of Adobe-Meadow
on Feb 11, 2018 at 1:57 pm

Gale Johnson is a registered user.

@Resident

Thanks, and sorry I didn't fully understand your plan on my first quick scan of it. My bad. I was only thinking about the local problem, as you pointed out, and not, as you proposed, a regional one. Your plan is worth a try, but I can see some problems in getting people to buy into it. And yes, I hate to say it, but this is another case where a poll might be needed to see how much support there is for the idea.

A scenario in the life of a commuter to a destination in PA with your plan: Most likely a drive in a car will be required to get to the luxury long haul bus stop near where they live. Most likely there will be a wait involved at the stop. Then there's time on the luxury bus with stops (those are time consumers), on the way to the local shuttle bus parking areas. Most likely there will be waiting time there also to get onto a shuttle bus which will take them near, but not necessarily to, their destination...their place of employment. Whew! I'm exhausted just thinking about that horrible commute, and it would probably add another 25-30 minutes to a one way commute, above a solo driver car trip. Good luck on selling your idea...but it has one wonderful benefit...our city planners and CC could stop talking about parking problems and the need to build more parking garages.

Our lives and life decisions are always based on 'pros' and 'cons'. Here's another opportunity. But, let the commuters decide, not us old comfortably retired guys.


Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Feb 11, 2018 at 4:48 pm

Gale, thanks for that.

In a previous life I commuted into a large city for work. My commute did indeed involve 3 separate modes of transport, my car, a commuter train then a city bus (or in nice weather a 25 minute walk). The whole commute generally took about an hour. Doing the same commute in off-peak traffic would have probably taken 30 minutes but I would still have had a short walk from public parking to my place of work. In peak hour traffic, which I never attempted, I wouldn't like to guess. The price of my train ride and bus ride as well as parking at the station, would have been about one third of the cost of all day parking in the city.

I say all this because I weighed up the pros and cons of my commute options. There were times that I got back to my car and drove part of the way back into the city for social reasons, and other times I did errands on the driving part of my commute. Having my car near where I worked would have been useful for about one third of the time. Even poor weather still did not outweigh the disadvantage of using my car for my full commute.

When a routine commute starts to take longer than efficient public transit and also costs more, what advantages are there to having a car near where you work? The thing about a routine commute is that it becomes a habit. I recently made the mistake of getting onto highway 101 NB at Oregon at about 4.30 pm. It took over 20 minutes to get across the bridge and to merge onto the highway. There are people who do this routinely every day as part of their normal commute home. Can we say that this is really a better way to get home after a busy day at work?


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