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Why Our Region Must Learn from Silicon Valley

By Bill Mueller

Silicon Valley is it’s own world. As much an idea as a place, it is our planet’s single most important tech innovation center. A place that contains companies with more cash reserves than whole countries; where cutely named firms that didn’t exist a few years ago are toppling whole industries. If you want to find the center for global business disruption, it is here, just 100 miles away from us. Yet more profound, Silicon Valley is also the place that, enabled by technology, is also disrupting cherished social contracts we have held between us for the past 300 years, and causing everyone to rethink them. Between employee and employer. Between student and teacher. Between residents and their government.

So when the annual “State of the Valley” conference comes each February, hosted by Joint Venture Silicon Valley, a Valley Vision-like organization led by my good friend Russ Hancock, I make a point to attend.  This is where I get a heavy dose of what’s coming – the future we want, and things with foresight we might avoid.

Over 1,000 attendees from business, government, education, nonprofits, and neighborhood groups sat at attention to hear the latest update of the Silicon Valley Index – a wide-ranging set of measures that look at the health of Silicon Valley from all angles.  It’s similar to checking your vital signs with your doctor each year, only it’s for a whole community.

The Bay Area added 107,000 new jobs since last year; 47,000 in Silicon Valley.  The unemployment rate is now 2.3%, a rate never seen in the 20-year history that Joint Venture has issued reports; effectively full employment.  Twenty-five percent of the Silicon Valley workforce is composed of tech company employers, but Russ acknowledged that business categories are blurring, making counts like these unreliable.  His example?  Uber is officially classified as a transportation company, not a tech company.

In the past 12 months Apple and Facebook alone account for half of all tech job growth.  It seems we are going back to the future, quipped Russ, when firms like HP and Intel dominated the Valley in the 70s and 80s.

As for life in Silicon Valley, a person’s average annual earnings (all forms of compensation) is now $130,000.  That’s double the national average.  Same for the median household income.  But with this stratospheric growth and wealth comes huge challenges.

Silicon Valley has the nation’s highest housing prices.  Five of the nation’s top 10 housing re-sale markets are in the Valley.  With the outlay required for just an average down payment, a family could buy an entire house in one of the square states, Russ said.  Silicon Valley cities permitted just 12,000 new housing units, yet the area added nearly 4x the jobs in the same period.  Sadly, just 287 of those 12,000 new units are affordable to median income residents there.  Most are high-end homes.

Mobility is the Valley’s other major challenge.  Daily traffic congestion continues to rise – it now takes the average commuter 58 minutes to get to work every day, one-way.  He explained that 117,000 people per day leave San Francisco for work in Silicon Valley, and 120,000 people leave Silicon Valley to work each day in San Francisco, crossing paths on deadlocked streets and highways.  Transit ridership is in decline but – in a bit of good news – CalTrain daily ridership has risen steadily each year.

This conference was not just a window into an advanced economy with all its societal opportunities and problems that we can learn from, but a message from a near neighbor whose forces directly affect us.  There’s evidence that our home and rental markets are feeling the effects of the Bay Area’s troubles.  Yet data also shows that our high quality of life, energetic urban spaces, desirable communities, and amazing recreation and open spaces are recruiting growth, especially from young professionals.

What does this mean for us?

Valley Vision is holding meetings with experts and bringing together business, government, and community leaders to grapple with these issues.  An example:  this week the Valley Vision board met with the leader from the Sacramento Area Council of Governments, James Corless, and his team, together with Barry Broome from the Greater Sacramento Economic Council, Darrell Teat from the Sacramento Metro Chamber, and Pat Fong Kushida from the Sacramento Asian Chamber.  The 3-hour discussion centered on the Blueprint for Transportation and Land Use and its agreements about growth, the upcoming $35 billion Metropolitan Transportation Plan, our region’s competitive growth strategy, and our connections to the Bay Area.

These discussions are being informed by data and evidence.  On behalf of the region, Valley Vision recently hired the Brookings Institute, a global research group based in Washington, DC, to conduct an “economic stress test” on our region to outline our competitive strengths and risks, both short and long-term.  GSEC, Valley Vision, the chambers, SACOG, and other workforce and community groups are supporting this shared effort, and banding together to use these findings to inform action.

I love the quote from Robert Kiyosaki that “your future is created by what you do today, not tomorrow.” It’s a truth we should all live by in this profoundly disruptive age, on full display at the State of the Valley this year.  This is also why Valley Vision exists – to help us plan and act to build the future we want.  We hope you join us.

To collaborate or stay up-to-date with Valley Vision’s work, please subscribe to Valley Vision’s newsletters or contact us.


Bill Mueller is Chief Executive of Valley Vision.