GROWING TOGETHER OR DRIFTING APART?

Growing Together, or Drifting Apart? provides a detailed statistical portrait of the daily life of residents of Silicon Valley. By evaluating data on wages, employment and poverty, and analyzing key indicators of social and community life, we are presenting a comprehensive overview of our regionÕs well-being.

This report comes at a critical time. Many leaders in both government and the private sector believe the Silicon Valley experience can provide important clues for an America anxious to succeed in a new, global economy. There is significant evidence to suggest they are wise to do so. As this report points out, over the course of the last two decades our regionÕs economy has prospered far more than most. Our success, fueled in large part by the growth of new, information technology industries, has recently given rise to a host of efforts by others in the U.S. and worldwide to create high-tech ÒcorridorsÓ in their own communities.

However, while there is no question that much of the Silicon Valley experience merits this enthusiasm, our report finds that the rewards of our regionÕs economic competitiveness are still not being shared by many residents of our community. Further, we find that despite our regionÕs successes, Silicon Valley is experiencing a dramatic growth in income inequality and economic insecurity.

The decoupling of economic competitiveness from the quality of life has disturbing implications. Economic development policies have long been guided by the assumption that the success of private employers accrues to the benefit of the community as a whole. To this end, local governments have routinely embraced an array of incentives to encourage the location, growth and retention of various industries. However, by examining a range of indicators our report suggests that, absent the presence of mediating institutions, the competitiveness of Silicon Valley industry has not resulted in a higher quality of life for local residents.

There is some validity to comparing the impact of the growth of the information technology industry on our community to that of the steel industry on Pittsburgh or the meat packing industry on Chicago. Though, in their time, both industries were dynamic and highly competitive, it was only after the wide scale organization of labor unions that this resulted in the creation of large numbers of middle-class wage earners. Similarly, the Silicon Valley experience suggests that, barring the development of similar wage-setting institutions, income inequality will continue to expand, even as local industry continues to prosper.

Responding to income inequality and building an economy where businesses and workersÕ wages do grow together, in fact, requires bold and innovative leadership from Silicon ValleyÕs policy makers, business leaders and community activists. Reaching a consensus will require each to challenge many traditional assumptions about the roles of both industry and public institutions in community life. While this will be difficult, failing will have enormous implications for the businesses and families who have made their home in Silicon Valley.

Major findings of this report include:

Growing Economic Inequality:
While incomes have been rising steadily for high-income wage earners, others have experienced only limited benefits from our areaÕs economic success. This disparity has persisted even in the face of growing productivity and sales in the regionÕs information technology industry.
  • In 1996, hourly wages for 75% of the workforce were still lower than they were in 1989, prior to the last recession. Wages for the bottom 25% of the workforce have actually declined by more than 13% in inflation-adjusted terms since 1989.
  • Five of the ten fastest growing occupations in our region pay less than $10 per hour for entry-level positions.
  • An estimated 19% of all area jobs pay less than a living wage for a single adult. Nearly 40% of all jobs pay too little to keep a single parent and child out of poverty. A full 55% of Silicon Valley jobs pay too little to support a family of four.
  • The ratio of earnings for top corporate executives to that of production workers in the electronics industry has climbed from 42:1 in 1991 to 220:1 in 1996.
Decaying Quality of Life:
Area housing costs have soared in recent years, far out-pacing income growth, while access to quality health care and education show dramatic disparities.
  • The average rent in Santa Clara County for a one bedroom apartment is now over $1,100. In the last four years, average rents have increased 28%.
  • The median purchase price of a home in Santa Clara County in 1996 was 7.6% above the 1995 level. The median price in August 1997 was $323,000, a nearly 20% increase over the same month in 1996.
  • Over 27% of Latina mothers in Santa Clara County have late prenatal care, or none at all. The teen birth rate for Latinas is nearly one-in-eight.
  • Nearly 13.6% of Santa Clara County adults report no health insurance coverage. For Latino residents, the rate of non-coverage is nearly 25%.
  • In one of the most disturbing trends, the high school drop out rate has been increasing and over 40% of Latino adults lack a high school degree.

Strained Public Sector Services:
Though both population growth and expanding wage inequality have placed new demands on public education and an array of public services, local government has continued to face severe financial constraints in providing them. Since the 1978 passage of Proposition 13, local tax burdens have shifted from property taxes and federal transfers, to an increasing reliance on sales taxes and service chargesÑregressive taxes which place an unfair burden on middle-income and lower-income residents. The result is that even though our community as a whole benefits from public education and the provisions of other public services, the cost of providing those services is increasingly being borne by those who can least afford to pay. This new reliance on the sales tax impacts local economic development strategies as local governments give preference to retailers and other sales tax generators over industries which may have greater value to the community.

Threats to Environmental Quality and Public Health:
While environmental threats posed by the electronics industry are not as readily apparent as those posed by heavy industries such as oil and steel, significant environmental problems such as groundwater contamination, high-volume water use, and serious toxic exposure in the workplace are hallmarks of high tech production. Our regionÕs heavy reliance on automobiles is also straining our transportation infrastructure while posing a growing hazard to public health and environmental quality.

Download Full Docoment

CONTACT INFORMATION Working Partnerships USA
2102 Almaden Road, Ste. 107 San Jose, CA 95125
p: 408.269.7872
f: 408.269.0183
e: info@wpusa.org

© 2008 Working Partnerships USA, All rights reserved.