A recent report shows Silicon Valley’s economic growth faltered in the wake of the COVID-19 pandemic, though local experts say business has been recovering.
The Milken Institute, a global think tank, has ranked the San Jose metropolitan area 108th out of 200 large metro areas nationally in its 2025 Best Performing Cities report. The ranking is based on the region’s tech sector growth, labor market and access to economic opportunities. Silicon Valley plummeted 64 points from 44th in 2024. Ten years ago it was ranked No.1. The San Jose metropolitan area includes Santa Clara and San Benito counties.
Experts watching the local economy said the drop in ranking comes from a variety of factors, but does not translate to a drop in the region’s growth.
Joint Venture Silicon Valley CEO Russell Hancock said it’s exactly the opposite. Other metropolitan areas are trying to catch up to the growth Silicon Valley experienced over the past decade.
“In reality, what you want is for every metro on that chart to be growing, every single one,” Hancock told San José Spotlight. “That is good news for America and it is not bad news for San Jose. It means we’re finally getting out of this syndrome, where a couple of places were prosperous and all of the rest were in decline.”
He said growth in other metro areas likely comes from companies based in Silicon Valley, as companies began hiring remote workers who live elsewhere. Distributing operations like that helps grow the entire sector and, given the Milken Institute’s methodology, it’s likely measured as growth in other cities.
Along with San Jose’s steep decline, San Francisco dropped 102 rankings — from 27th in 2024 to 126th this year.
The Milken Institute weighs 13 factors while ranking cities, including quality of life metrics such as housing affordability and wage growth.
The 2025 report used 2023 metrics to determine its rankings. Ahmad Thomas, CEO of the Silicon Valley Leadership Group, said that shows the region’s standings at a specific point in time and doesn’t capture where the economy is now. The ranking breaks the Bay Area apart into multiple metropolitan areas, but Thomas said the region’s interconnectedness means artificial intelligence company growth in San Francisco has benefits in San Jose and elsewhere in the region.
Still, the report shows rapid growth in other areas nationwide, which Thomas said makes the industry more competitive.
“It is a race domestically that when we look at other regions across the country, these regions are working very hard to replicate our innovation ecosystem,” Thomas told San José Spotlight. “It’s imperative that we continue to build on our strengths and that we do so with policies that are as innovative as the companies that call this region home.”
Nanci Klein, director of economic development for San Jose, said the city itself has been growing, highlighting the growing employment rate and new data from security firm Kastle that shows San Jose’s return to office rate has increased to nearly 63%.
Multiple parts of San Jose’s economy separate from the tech sector have been on the rise, Klein said, highlighting the city’s entertainment economy and small business community. Other large events coming to the region, such as Super Bowl 60 and the FIFA World Cup in 2026, will continue bolstering the local economy.
“Our economy in San Jose is continuing to grow,” Klein told San José Spotlight. “We want to study more what Milken is speaking to. One of the things they note is cost of living, and it really hasn’t changed (with) cost of living (still) a challenge for us.”
While Silicon Valley’s tech sector remains highly competitive, other quality of life factors brought the ranking down. The San Jose metropolitan area has the highest concentration of tech industry, but ranks 192nd in job growth and 191st in wage growth, respectively. Other reports have found while Santa Clara County’s median income has gone up nearly 75% in the past 10 years, the price of a two-bedroom apartment has risen about 90% during the same period.
Hancock said that discrepancy came from the region’s steep wealth gap, where Silicon Valley has some of the nation’s highest earners and severe poverty levels.
“There’s no illusions here that we would ever come out on top on affordable housing, on the quantity of it or the sheer cost,” Hancock told San José Spotlight.
Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X.
Editor’s note: Ahmad Thomas serves on San José Spotlight’s board of directors.
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