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Full Report [PDF] JOINT VENTURE’S workforce study AN ANALYSIS OF THE WORKFORCE GAP IN SILICON VALLEY Joint Venture: Silicon Valley Network Board of Directors Co-Chairs: Ron Gonzales, Mayor, City of San Jose Lew Platt, Chairman, President & CEO, Hewlett-Packard Company Ruben Barrales, President & CEO, Joint Venture: Silicon Valley Network Ann Bowers, Trustee, The Noyce Foundation Robert Caret, President, San Jose State University Robert Cavigli, President & CEO, Ehrlich-Rominger Architects Leo Chavez, Chancellor, Foothill-De Anza Community College District Jim Deichen, Senior Vice President & Tech. Industry Manager, Bank of America NT&SA Charles Dostal, Principal, Woodside Asset Management Katheryn Fong, Vice President-Customer Revenue Transactions, Pacific Gas and Electric Carl Guardino, President & CEO, Silicon Valley Manufacturing Group S. Reid Gustafson, President, Shea Homes Jay Harris, Chairman & Publisher, San Jose Mercury News Mark Hyde, President & CEO, Lifeguard, Inc. W. Keith Kennedy, President & CEO, Watkins-Johnson Company Paul Locatelli, President, Santa Clara University Judy Nadler, Mayor, City of Santa Clara John Neece, CEO, Building & Construction Trades Council Joseph Parisi, CEO, Therma J. Michael Patterson, Tax Partner, PricewaterhouseCoopers Condoleezza Rice, Provost, Stanford University Joe Simitian, Board of Supervisors, District 5, County of Santa Clara Steve Tedesco, President/CEO, San Jose Silicon Valley Chamber of Commerce John Vasconcellos, California State Senator, California State Senate Chester Wang, Chairman, Pacific Rim Financial Corporation Colleen Wilcox, Ph.D., Superintendent, Santa Clara County Office of Education Table of Contents INTRODUCTION . 2 EXECUTIVE SUMMARY . 3 REPORT METHODOLOGY . 4 THE WORKFORCE GAP . 5 HIGH-DEMAND SKILLS . 6 EMPLOYMENT COSTS . 8 CLOSING THE WORKFORCE GAP . 11 STUDENT AWARENESS OF SILICON VALLEY CAREERS . 12 IMPLICATIONS FOR SILICON VALLEY . 16 SILICON VALLEY’S 30 COMMUNITIES 1 Atherton SAN OAKLAND FRANCISCO 2 Belmont S 3 Campbell A N 4 880 Cupertino F 680 5 East Palo Alto R A 6 Fremont N 92 29 7 Foster City C 23 I 6 8 Gilroy 7 S C 9 84 17 Los Altos 2 O 21 10 Los Altos Hills 20 B 5 A 11 1 Y Los Gatos 280 12 13 12 Menlo Park 30 18 16 13 Milpitas 19 28 9 14 24 Monte Sereno P 10 22 4 15 Morgan Hill A 3 16 C Mountain View 26 I 14 85 17 Newark F 11 18 I Palo Alto C 101 19 Portola Valley 17 O 20 Redwood City C 15 21 E San Carlos A 22 San Jose N 23 San Mateo 27 24 Santa Clara 8 25 Santa Cruz 25 26 Saratoga 27 Scotts Valley 28 Sunnyvale 29 Union City 30 Woodside Silicon Valley is home to more than 7,000 technology-based companies which employ nearly 40% of the Valley’s workforce and indirectly support many more jobs in peripheral industries and businesses. 1 Introduction WhenWHY THE asked SILICON what VALLEY factors COMPARATIVE influence ANALYSIS? their business location decisions, high-tech executives most often citeThe accessSilicon toValley a diverse Comparative and skilled Analysis talentbenchmarks pool. As economicForbes magazine vitality recentlyand quality reported, of life whileattributes old economywith 10 other industry established clusters orformed emerging around technology suppliers, regions factories of andthe transportation,United States. new economy clusters are made out of brainpower.(1) To assess how well Silicon Valley is meeting the demand for a diverse and skilled talent pool, Joint Joint Venture developed the Comparative Analysis to: Venture: Silicon Valley Network joined with management consulting firm A.T. Kearney to produce this• Increase Workforce understanding Study. The of Siliconstudy analyzes Valley’s regionalthe supply strengths; of skilled high-tech workers within Silicon Valley and the demand created by area high-tech employers. The findings are distressing: the region’s • Educate community stakeholders about the interdependence of Silicon Valley’s economic vitality domestic workforce is not meeting the demand for high-tech workers. Looking farther down the and quality of life; and ‘pipeline’, the report finds that area high school students have relatively low understanding of high- tech• Focus careers discussion and even on thelower critical interest challenges in pursuing facing high-tech-related the region. majors in college. ThisWHY THESE study BENCHMARKS? is the latest in a series of reports and documents dealing with issues affecting the Valley’s commonThe benchmarks goals of promotingselected were an innovativethose found economy, to be measurable sustaining and a livable reliable environment, across multiple and regions. creating anFurther, inclusive they society have been through deemed regional critical cooperation. to the success Joint ofVenture: Silicon Silicon Valley’s Valley technology Network industries. views this reportThese asindicators part of its were long-term first outlined effort to in focus Joint onVenture’s and to helpAn Economy improve at the Risk economic,and the Blueprintsocial and for environ- the mental21st Century conditions Community in the(June region. 1992 and June 1993, respectively). They include measurements for innovation, entrepreneurial spirit, access to global markets, financial and intellectual capital and Clearly, if the Valley seeks to remain the world’s high-tech leader, aggressive actions will need to be quality of life. taken to provide more people in our region with the skills needed to participate in the new high-tech economy.Several of Joint these Venture attributes intends relate to to play technology an active industry role in clusters this process.–a geographic concentration of inter- dependent, internationally competitive firms in related industries. Using a “business ecosystem” To access the full library of Joint Venture reports, please visit us on the Web at www.jointventure.org. model, cluster industries represent the top of the “food chain.” They create interdependent linkages with each economic layer below–from contract manufacturing to specialized business services to general business services to retail. Industry clusters drive exports, create high-wage jobs and generate wealth for the region. And they cultivate the specialized support services, technological expertise and entrepreneurial spirit upon which a region’s global competitiveness is built. WHAT DOES THE COMPARATIVE ANALYSIS CONCLUDE? Ruben Barrales As a portrait in time, the Comparative Analysis paints the following picture: President and CEO •JointSilicon Venture: Valley Silicon compares Valley very Network favorably with other U.S. technology regions and is well positioned for continued economic success. • Silicon Valley’s economic vitality is supported by a world-class business infrastructure. • Silicon Valley must respond to deficiencies in housing, transportation and education if it is to sustain its competitive edge. • Silicon Valley’s current challenges are regional in nature and therefore can best be resolved through regional collaboration among people in business, government, education and the community. (1)TIM FERGESON, “SUN, FUN AND PH.D.’S TOO”, FORBES, MAY 31, 1999 2 Executive Summary The workforce shortage is an increasingly critical impediment to the growth of high-tech companies in Silicon Valley and threatens the economic vitality of the region. This Workforce Study found that the current workforce gap is 31 to 37 percent of the high-tech industry demand in Silicon Valley. Employers identified three key drivers of this shortage: • Limited supply of qualified candidates, • High housing costs in the Valley which affect attraction and retention of talent, and • High wages which hinder small and mid-size companies’ ability to hire. The study determined that the incremental cost of the workforce gap to the high-tech industry in the Valley is approximately $3–4 billion annually. The study results also demonstrate that Silicon Valley students, the future pipeline of skilled labor, lack a familiarity and interest in high-tech careers and are therefore not building the skills required for these job opportunities. Although many Silicon Valley stakeholders–companies, schools and colleges, non-profit organizations, and industry associations–have individually taken steps to address this issue, most efforts have not affected lasting improvements. Typically the efforts have been fragmented, short-term focused and not sustainable. The numbers of initiatives are insufficient to generate the needed momentum. It is critical to rally Silicon Valley resources around actions that ensure the development and full utili- zation of its regional “homegrown” talent. A collaborative approach of all Silicon Valley stakeholders will be required to provide a sustainable long-term impact on the workforce shortage and ensure the economic growth of the Valley. “The results of Joint Venture: Silicon Valley’s workforce study represent a reality that Silicon Valley employers cannot afford to ignore. To tap into and mine the potential workforce our young people represent, we must reach them at the state of development where formative educational and career decisions are being made. Silicon Valley represents a world of opportunity where employers and educators must share the responsibility of helping to prepare the future workforce for those exciting careers.” REBECCA GUERRA, VICE PRESIDENT HUMAN RESOURCES, EBAY 3 Report Methodology Joint Venture: Silicon Valley Network’s Council of Co-chairs asked the organization to define and quantify the cost of the workforce gap. Joint Venture engaged A.T. Kearney to spearhead a study to address these questions and to present a compelling
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