Silicon Valley in 2020: Indicators, Trends, and “Arriving” In the Future

Dear Friends and Colleagues:

It’s 2020… Welcome to the future!

Today we released the 2020 Silicon Valley Index, an annual publication that I’ve had the honor of preparing for the past seven years as the director of research for Joint Venture’s Institute for Regional Studies. In announcing this release, I wanted to provide some of my personal thoughts about how the region is changing, and what 2020 means not only for our economic and community health, but how we perceive them.

For many of us, this milestone year brings with it a sense of arriving in a new age. One has to wonder what Marty McFly would have said if he arrived expecting flying cars and hover boards, and instead found e-scooters and e-cigarettes. Millennials – now in their mid-twenties to early thirties – have come of age, and a generation of new leaders are starting businesses, influencing policy, and integrating the fabric of their childhoods into every part of our everyday lives. We’re seeing giant hair bows and scrunchies, remakes of 1980s classics, and DeLorean-type scissor doors on new model cars like the Tesla X.

But more relevant to our economic and community health, this millennial emergence is creating a paradigm shift that trickles down from fashion and entertainment to startup ecosystems, community and cultural events, ever-evolving forms of interaction via social media, and shifting societal norms. Doctors are making house calls again. You can order food to a picnic in the park. Mobility doesn’t depend on owning your own gas-guzzling car. The list goes on and on.

Here in Silicon Valley, this shift is perhaps most evident in things like the participation of women and minorities in the region’s tech economy and elected leadership, the integration of “technology” and “internet” into just about every other sector, the emergence of community choice aggregation programs which have nearly annihilated regional greenhouse gas emissions from electricity, and the growing need for speed. We want to track our friends on a map when we’re trying to meet up. We want to know when our Instacart shopper is picking out our pears. And we have little patience for delay; after all, very few millennials ever had to deal with dial-up internet or wait for their SAT test results to arrive in the mail.

We are entering into a different time for our region. Not only have we come out of the recession, grown jobs to higher than pre-recession levels with unemployment at an all-time low, but our economy continues to grow and show signs of increasing prosperity. Our population, while aging, is becoming continually more educated and diverse with a constant and substantial inflow of foreign immigrants. Regional GDP is up, incomes across a variety of measures are outpacing inflation, and rental rates have leveled out. Our homegrown startups are getting massive amounts of funding – then maturing and expanding here – while our big tech companies are booming, growing their real estate footprints, their headcounts, and the value of products and services that are changing the world.

Ninety-four billion dollars have been invested in Silicon Valley and San Francisco companies over the past two calendar years alone. For perspective, that amounts to nearly 20% of all U.S. R&D funding, and is greater than the GDP of 60% of the world’s countries. With economic successes, the region’s wealth continues to grow, and thus both wealth and income inequality have become mounting and critical issues facing our residents.

Amidst the prosperity in Silicon Valley, as residents we know on a personal level that the struggle is real here. Many people that work here can’t afford to live here, and many who do live here are struggling to stay (or have already left). Those earning low-incomes continue to struggle, and those with moderate incomes are encountering major difficulties, having to make decisions on a daily basis between necessities like housing and food, decent childcare and decent healthcare. What would be considered a very high income anywhere else in the country is not enough here, particularly for those with only one income-earner in the household, or those with young children who require costly childcare.

The U.S. Census Bureau standard tables max-out their household income levels $200,000+ (an amount that would represent “high-income” in almost every other part of the country). An annual income of $200,000 wouldn’t sustain the most basic needs of a single parent with three young children, or a two-parent household with four young children in Silicon Valley without governmental or other assistance. Four children didn’t used to be an obscure thing – but in 2020 in Silicon Valley, it’s almost unheard of now with only 6% of all mothers having four or more children in 2018. Our region’s birth rate is lower than any other year over the last half-century, and our young girls are growing up with increasingly greater and more impressive career aspirations in addition to their domestic ones.

So what do all these changes mean? What’s in store for the future-future of Silicon Valley? It’s difficult to answer… we may need to ask our Ouija boards for help on that one.

Interpretation aside, I’m honored to play a role in bringing this report to the community with a narrative meant to decipher what it means for our unique region. The Index digs deeper into the issues of displacement, inequality, and some of the societal problems that come from inequality like the inability to afford the growing costs of childcare, increases in certain types of property crimes, and medical issues that may stem inequities in access to healthcare. Also, it examines the significant housing crisis on our hands with the knowledge of how many vacant and underutilized units we have, deficient housing, and arguably less overcrowding than we might have thought given the number of multigenerational and multifamily households.

More than anything, I hope you will find the Index a useful basis for your own impactful work throughout our region.

Rachel

• Report: https://jointventure.org/publications/silicon-valley-index
• Press Release: https://jointventure.org/news-and-media/news-releases/1900-2020-silicon-valley-index-continued-expansion-mounting-challenges
• Online Data Hub: www.SiliconValleyIndicators.org