For years Silicon Valley, the U.S. city at the forefront of innovation, has seen continued job creation, but the 2009 recession was too powerful for even the strongest of economies. According to the 2010 Index of Silicon Valley, a report released today from Joint Venture: Silicon Valley Network and the Silicon Valley Community Foundation, the city is seeing its worst declines in employment, venture funding, and government procurement in years.
In 2009, San Mateo and Santa Clara Counties lost 90,000 jobs, returning the area to employment levels not seen in 5 years. Silicon Valley jobs fell faster than the average national employment rate of 3.8%, but this could be because the region held out longer than others in terms of job loss. Emmett Carson, CEO of the Silicon Valley Community Foundation, says the downturn is due in part to a dwindling amount of foreign talent coming to the Valley.
“On the heels of the worst economic year since the Great Depression, our region has entered a new era of uncertainty in which our ability to attract top talent, fund innovation and preserve a decent quality of life is no longer guaranteed,” says Carson.
Echoing a national trend, innovation has lost steam in Silicon Valley also, as both venture funding and patent applications fell from 2008 to 2009. With substantial job loss and the construction of new office space, commercial office vacancies saw their highest numbers since 1998, rising 33% in 2009 from the previous year.
Adding insult to injury, government procurement also continued its slow decline in Silicon Valley, dropping 2% over the last 15 years, while other cities like Washington D.C. and Huntsville, Alabama, have risen 7.2% and 4.5% respectively over that same period of time. Russell Hancock, CEO of Joint Venture, says the future of Silicon Valley is for the first time uncertain and at risk.
“Silicon Valley’s innovation engine has driven the region’s prosperity for 60 years, but at the moment we’re stalled,” said Hancock. “What’s hard to say is whether we’re stuck in neutral, which has happened before, or whether it’s time now for a complete overhaul.”
With the global economic slide, it only makes sense that Silicon Valley is too feeling the pinch, and it also doesn’t help that California’s state government is struggling to provide economic stability for its citizens. While Silicon Valley is a strong economy that will likely rebound with the rest of the nation from the “Great Recession,” if these trends continue for too long, a new technological hotbed could one day dethrone the king.
