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November 3, 1991
"Job Growth is Slower in the Country, but Incomes are High"
San Jose Mercury News

By Timothy Taylor
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THE Silicon Valley is maturing, which is a nice way of saying that while it's still fundamentally healthy, it can't do everything it used to.

Even before the current recession, job growth in Santa Clara County was falling short of predictions. From 1980 to 1985, the number of jobs increased by 105,000, a robust rise of 15 percent. But although the number of jobs continued to grow during the late 1980s, the current recession has negated some of those gains. Since 1985, the number of jobs in Santa Clara County has increased only 4 percent.

Some of these job losses are to other parts of the Bay Area, especially East Bay counties like Alameda and Contra Costa. But the slowdown in job creation is affecting the entire Bay Area, according to recent estimates by the Center for Continuing Study of the California Economy, which predicts that job growth in the Bay Area as a whole will be slower than the Los Angeles, San Diego or Sacramento areas through the 1990s.

Of course, given traffic jams and population pressures, it's not clear that slower job growth is altogether a bad thing. Even at the slower pace, the center predicts that the rate of Bay Area job growth will exceed the U.S. economy as a whole during the 1990s.

Moreover, local income growth has remained very strong. Median household income in the San Jose metropolitan area was $45,662 in 1990, according to this year's survey by Sales and Marketing Management magazine. By comparison, the national median is $27,912. San Jose has the third-highest income of any metro area, lagging behind only two of the ritzier areas around New York City.

During the 1990s, income growth in the Bay Area will exceed the California average by a bit, according to the center.

Almost by definition, high-technology industry is the key to the Silicon Valley economy. Santa Clara County has about one- tenth of the entire nation's high-technology production.

It's no secret that many high-tech companies have seen some hard times during the last few years. But if you had to pick an industry to bet on for the future, knowledge-based, R&D- intensive industries would be a sensible place to put your chips. Despite its recent travails, the Silicon Valley remains one of the best places in the country -- indeed, in the world -- to find the combined expertise in finance, technology and business needed to launch a high-tech company.

Larger operations continue to be drawn here, as well. For example, Sony Corp. of America recently bought a 38-acre site in San Jose, which is expected to become a major R&D facility. Novell, a Utah company that makes workstations, recently bought a 48-acre site for similar reasons.

The big change in the Silicon Valley economy is that job growth, especially in manufacturing jobs, is happening elsewhere in the country and the world. This evolution is largely unavoidable. Because this area is such an attractive place for highly paid white-collar high-tech workers, they tend to drive up the price of industrial and residential space, which tends to drive out lower-paid manufacturing operations and workers.

This talk of seemingly inexorable economic pressures can be disconcerting. There are surely tradeoffs and problems: traffic jams, the high cost of housing, problems in the schools, air pollution, foreign competition, and more. But over the next decade, the problems in Silicon Valley should continue to be the side-effects of economic success.

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