SAN JOSE — The tech boom enabled Silicon Valley’s job market to rebound strongly in 2021 and banish much of the coronavirus job losses — but the region last year suffered sharply rising inflation, a new report has found.
The latest reading on the economy in Silicon Valley, defined as Santa Clara County, southern Alameda County, San Mateo County and the Scotts Valley region of Santa Cruz County, was released on Tuesday by Joint Venture Silicon Valley as part of its 2022 Silicon Valley Index report.
“We have recovered,” said Russell Hancock, president of Joint Venture Silicon Valley, a think tank. “Our unemployment figures are back down to where they were before the pandemic.”
The jobless rate in the multi-county Silicon Valley region was 2.9% at the end of 2021, which was a big improvement from Silicon Valley’s 12% unemployment level in April 2020 at the outset of the government-mandated business shutdowns, the Joint Venture report determined.
“That is full employment,” Hancock said of the 2.9% jobless rate.
Before the coronavirus outbreak, Silicon Valley reached a record low of 2.3% unemployment.
“All of the job recovery was driven by tech,” Hancock said. “Tech grew its share of employment.”
Before the coronavirus outbreak, the tech sector accounted for 25% of Silicon Valley’s job market. By the end of 2021, the tech industry generated 28.8% of Silicon Valley’s jobs, the San Jose-based think tank estimated.
Despite the huge upswing in job and wealth creation in Silicon Valley as the effects of the coronavirus begin to recede, a disturbing income gap has emerged in the region, according to the organization’s report, which was prepared by the Institute for Regional Studies.
The average income, including wages, salaries, bonuses and stock options, was $170,000 in Silicon Valley in 2021, the report estimated. That is far above the average of $71,000 nationwide. The region’s total wealth was $1.2 trillion in 2021, according to the report.
The top 25% of income earners in Silicon Valley held 92% of the region’s wealth. The top 10% of income earners held 74% of the region’s wealth, estimated Rachel Massaro, the institute’s director of research.
“We’re generating wealth faster than ever before, personal assets, real estate, private company valuations, public company market cap, and in a million other ways,” Massaro said. “This report shows us that many in our region working full-time are barely scraping by.”
The report used a combination of quarterly employment statistics from the federal government as well as estimates compiled from state labor reports to calculate that Silicon Valley might have had more jobs at the end of 2021 than it did in mid-2019, which was several before the coronavirus-linked job losses occurred.
Silicon Valley had 1.72 million jobs in December 2021, which was about 15,000 more jobs than the area had in mid-2019, according to the estimates produced by the Institute for Regional Studies.
One major challenge that faces the region’s residents and workers: Inflation has erupted, a surge in prices that has chewed up the balance sheets and pocketbooks for people in Silicon Valley.
Over two years consisting of 2020 and 2021, inflation, as measured by consumer prices, rocketed 6% higher, Hancock said. Food prices soared by 16% during the two years. Meat, poultry, fish and egg prices zoomed 29% higher, he added.
Despite all of the uncertainties, tech companies continue to lease office and research spaces as well as buy properties for expansion in Silicon Valley, according to the report.
Google, Apple, Amazon and Facebook app owner Meta Platforms are still expanding dramatically in the region.
“Our Silicon Valley companies are still growing here,” Hancock said.
