Silicon Valley is emerging from the pandemic stronger than ever, according to a new report, with employment, venture capital, real estate and market capitalization among the benchmarks indicating the tech industry's growing power -- even as many in the region struggle.
Tech industry employment in the region, which had steadily stood at about 25% for years, has risen to 29%, according to the 2022 Silicon Valley Index, an annual report. The jump was caused by tech hiring that contrasted with cuts in the retail, services, hospitality, and arts and culture industries, which let people go as the pandemic weighed on business.
Employment was dominated by two giants, Apple and Alphabet, Google's parent company. Together the two companies employed 13% of Silicon Valley's workers, a consolidation of power the report's authors noted.
"We used to be lots of techies spread over small and medium companies," Russell Hancock, CEO of Joint Venture Silicon Valley, which runs the annual report. Now Silicon Valley employment is concentrated in "some really, really big companies."
The annual report comes after a year in which technology played a more central role in our lives as work and school moved online for many people during COVID. The report paints a picture of remarkable business success that chiefly benefits those in the tech sector. It sold more hardware, software and services, but often left others behind. The findings reflect a profound change within Silicon Valley and the broader San Francisco Bay Area, where people who aren't in tech jobs didn't benefit from the rapid shift to work and school from home.
The report found that the region's richest 25% holds 92% of the wealth, while the top 10% holds 75% of the wealth.
"If Silicon Valley were a country, that kind of wealth disparity would be considered politically unstable," Hancock said. "We're the most bifurcated economy in the United States. The income divide and the wealth gap is just mind boggling," Hancock said in a press briefing Tuesday, adding that the region's wealth disparity would be politically unstable for a country. "The pandemic only amplified these trends."
Joint Venture Silicon Valley, which tracks trends to help governments and businesses, is scheduled to release the annual index on Wednesday. The report covers Santa Clara and San Mateo counties, as well as parts of adjacent counties. It generally excludes San Francisco, though it offers some data from the city for comparison.
The report found that a third of Silicon Valley households can't get by without financial help from friends, family, churches or the government. It used the University of Washington's self-sufficiency standard to determine poverty.
The situation is worse for minorities. The figure increases to 61% for Latinos and 46% for Blacks.
In contrast, big tech generates incredible wealth. Tech companies in Silicon Valley and San Francisco saw their total market worth drop to $6 trillion when the pandemic hit, but quickly rebounded to $14 trillion. Apple, Alphabet, Tesla and Meta (formerly Facebook) account for nearly half (48%) of that value.
Venture capital provided $95 billion, an all-time high, to startups last year, with 257 deals for more than $100 million. San Francisco startups garnered a further $50 billion in 2021.