Silicon Valley economy sees slow rebound post-pandemic

Silicon Valley is not experiencing the same booming energy and rapid growth it’s known for as the local tech economy continues adjusting to a post-pandemic reality — but researchers say the region is still a powerful hub of innovation that is fully recovering.

While Silicon Valley remains a place of massive wealth, longstanding disparities persist. With the majority of riches and resources concentrated at the top, many residents are struggling with the rising costs for housing, food and child care.

That’s according to the Silicon Valley Index, an annual high-level checkup report on the region from Joint Venture Silicon Valley, an organization that researches trends in the area. This year’s index examines how the valley fared in 2023.

CEO Russell Hancock said the region grew by nearly 8,000 jobs last year.

“We used to grow by 10,000 to 50,000. There were a couple crazy years when we were growing by 100,000. That’s clearly not happening. We’re not booming in Silicon Valley, but we’re not shrinking,” Hancock said Monday during a media call about the annual report.

Hancock underscored that while tech industry layoffs following the pandemic grabbed attention in the past year, he views the cuts more as a “recalibrating,” and said tech remains one of the region’s most powerful economic pistons.

“There was brisk hiring during the pandemic because that turned out to be a bonanza for these companies. That actually resulted in some over-hiring, so with the pandemic in the rear-view mirror, these companies have been right-sizing ever since,” Hancock said.

The Bay Area’s 20 largest tech companies dropped about 7% of the region’s workforce in 2023, or roughly 18,800 workers. But when the dust settled, about 37,000 more people were working for tech companies in the Bay Area at the end of last year compared to pre-pandemic numbers, the index report said.

“It’s almost like these tech companies have rediscovered efficiency as a path to profitability, and that’s totally happening,” Hancock said.

Another indicator of the region’s overall health is its population. Silicon Valley’s net migration started declining in 2015, but between mid-2022 and mid-2023, the region saw nearly 1,800 more people arriving than leaving. The report attributes the change to a 52% decline in the net number of people moving away paired with a roughly 37% rise in the net number of foreign immigrants.

Gaps in wealth and opportunity

However, even with a robust tech economy and low unemployment overall, an uneven playing field for opportunities and a dearth of affordable housing have widened the region’s wealth gaps and deepened the affordability crisis.

“There are glaring disparities by race,” Hancock said.

About 30% of all Silicon Valley households were not self-sufficient in 2023, meaning they did not earn enough money to meet their most basic needs without assistance either from the government or other informal networks of support such as friends, family or faith and community groups.

For white households, about 22% were not self-sufficient compared to about 50% for African American households, and about 54% for Latino or Hispanic households, the report said.

With the median home sale price in Silicon Valley of $1.76 million at the end of 2023, the report estimates a home purchase is “out of reach” for 74% of first-time homebuyers in the region.

The story isn’t much prettier for renters in Silicon Valley, who are more likely to be “burdened” by their housing costs than in other regions, meaning they spend more than 30% of their gross income on rent. About 41% of renters were burdened in 2023, the report said, and about 23% of renters spent more than half their income on rent.

Even as the region’s leaders promote equity measures, white workers make up approximately 59% of leadership roles and 49% of technical roles at Silicon Valley’s largest tech companies, while only accounting for 31% of the total workforce in the region. Asian workers represent 38% of technical roles at the largest tech companies and account for about 1 in every 5 employees.

“In stark contrast, Hispanic or Latino workers represent a disproportionately small share, 17%, of employees at these same companies despite making up 24% of the civilian workforce,” the report said. Without including Amazon, the share drops to 9%.

The share of African American workers at the largest tech companies is 6% without including Amazon, and 18% with Amazon. The report notes that 18% includes a 6% share of technical roles and a 7% share of leadership roles.

Overall, women make up 44% of Silicon Valley’s workforce, but only hold about 33% of leadership positions at major tech companies.

Staggering wealth for some

The top 10% of Silicon Valley households hold approximately 70% of the area’s wealth, the report said.

“Both income and wealth inequality have been affected by a rise in housing demand, along with an increasing share of ultra high net worth households, and the world’s largest concentration of billionaires outside of New York City and Hong Kong,” the report said.

The aggregate wealth in Silicon Valley of both liquid assets and real estate is roughly $1.7 trillion. The index report notes if that amount of wealth was evenly distributed among all of the region’s households, it would bring about $2 million to each.