2014 SILICON VALLEY INDEX People Economy Society Place Governance SILICON VALLEY SILICON VALLEY INSTITUTE for REGIONAL STUDIES SILICON VALLEY JOINT VENTURE SILICON VALLEY COMMUNITY FOUNDATION BOARD OF DIRECTORS BOARD OF DIRECTORS OFFICERS CHAIR Chris DiGiorgio – Co-Chair, Accenture Thomas J. Friel Hon. Chuck Reed – Co-Chair, City of San José Former chairman and CEO, Heidrick & Struggles International, Inc. Russell Hancock – President & CEO, Joint Venture Silicon Valley VICE CHAIR DIRECTORS Tom Klein Neil Struthers C.S. Park Greenberg Traurig, LLP Santa Clara County Former Chairman and CEO, Maxtor Corp. International, Inc. George Blumenthal Building & Construction Samuel Johnson, Jr. Eduardo Rallo University of California, Matt Mahan DIRECTORS Trades Council Notre Dame de Namur Pacific Community Santa Cruz Causes Inc. Ivonne Montes de Oca Linda Thor University Ventures, LLC Steven Bochner Tom McCalmont Secretary/Treasurer Foothill De-Anza Robert A. Keller Tom Stocky Wilson Sonsini Goodrich McCalmont Engineering Community Leader Community College District JP Morgan Facebook & Rosati Jim McCaughey Jayne Battey Michael Uhl Dan’l Lewin Sanjay Vaswani Ed Cannizzaro Lucile Packard Children’s Miramar Environmental McKinsey & Company Microsoft Center for Corporate KPMG LLP Hospital Inc. and the Miramar Environmental Center Innovation, Inc. Linda Williams David P. López, Ed.D. John Ciacchella Jean McCown Planned Parenthood The National Hispanic Thurman V. White, Jr. Deloitte Consulting LLP Stanford University Emmett D. Carson, Mar Monte Ph.D. University Progress Investment Fred Diaz Dan Miller CEO, Silicon Valley Patricia Williams Anne F. Macdonald Gordon Yamate City of Fremont Juniper Networks Community Foundation Merrill Lynch Frank, Rimerman & Co., Knight Ridder Bank of America Stephan Eberle Curtis Mo Nancy H. Handel LLP SVB Financial Group DLA Piper Applied Materials, Inc. Daniel Yost Lynn A. McGovern Orrick, Herrington & Ben Foster Mairtini Ni Dhomhnaill Rose Jacobs Gibson Seiler, LLP Sutcliffe, LLP Optony Accretive Solutions Former Board of Catherine A. Molnar Supervisors, San Mateo SENIOR CHS Management, LLC Judith Maxwell Greig Jim Pappas County Notre Dame De Namur Hensel Phelps ADVISORY University Joseph Parisi COUNCIL Paul Gustafson Therma Inc. John C. Adams TDA Group The Honorable Dave Pine Wells Fargo INDEX ADVISORS Chris Augenstein Stephen Levy Michael Teitz Jeff Hamel San Mateo County Frank Benest Electric Power Research Santa Clara Valley Center for Continuing University of California, Mo Qayoumi City of Palo Alto (Ret.) Institute (EPRI) Transportation Authority Study of the California Berkeley San Jose State University Eric Benhamou Economy Bob Brownstein Will Travis Steve Hemminger Benhamou Global Robert Raffo Working Partnerships Rocio Luna Bay Area Joint Policy Alston & Bird LLP Ventures Hood & Strong LLP USA Santa Clara County Committee Dave Hodson Harry Kellogg Public Health Department Bobby Ram JoAnna Caywood Lynne Trulio Skype/Microsoft SVB Financial Group SunPower Lucile Packard Andrea Mackenzie San Jose State University Eric C. Houser Chris Kelly Foundation for Children’s Santa Clara Valley Open Susan Smarr Kim Walesh Wells Fargo Entrepreneur Health Space Authority Kaiser Permanente City of San Jose Minnie Ingersoll Jo Coffaro Connie Martinez John Sobrato, Sr. William F. Miller Google, Inc. Hospital Council of Silicon Valley Creates E. Chris Wilder Sobrato Development Stanford University Northern & Central Valley Medical Center Companies Dennis Jacobs Kim Polese California Sanjay Narayan Foundation Santa Clara University Sierra Club Gautam Srivastava ClearStreet, Inc. Leslie Crowell Linda Williams LSI Corporation Jim Keene County of Santa Clara Dan Peddycord Planned Parenthood City of Palo Alto Santa Clara County Mar Monte Michael Curran Public Health Department Erica Wood SILICON VALLEY INSTITUTE FOR REGIONAL STUDIES Ben Foster Jeff Ruster Silicon Valley Community Optony, Inc. work2future, City of San Foundation ADVISORY BOARD Jose Jeff Fredericks Gordon Yamate George Blumenthal Judith Greig Stephen Levy Colliers International AnnaLee Saxenian Silicon Valley Community University of California, Notre Dame de Namur Center for Continuing Study University of California, Foundation Santa Cruz University of the California Economy Tom Friel Berkeley Silicon Valley Community William Dodge Dennis Jacobs Mo Qayoumi Foundation Susan Smarr National Association Santa Clara University San Jose State University Kaiser Permanente Santa of Regional Councils Corinne Goodrich Clara Medical Center SamTrans Prepared by: Designed by: Kris Stadelman Tom Klein NOVA Greenberg Traurig, LLP Rachel Massaro Jill Minnick Jennings Anandi Sujeer Alesandra Najera James Koch Santa Clara County Santa Clara University Public Health Department 2 ABOUT THE 2014 SILICON VALLEY INDEX Dear Friends: There is much to celebrate in the 2014 Silicon Valley Index. We’ve extended a four-year streak of job growth, we are among the highest income regions in the country, and we have the biggest share of the nation’s high-growth, high-wage sectors. Our innovation engine is driving this prodigious growth. Once again we registered more patents than any previous year, increased our share of venture capital and angel investment, saw more IPOs emanating from our region, and have large and growing shares of merger and acquisition activity. By just about any measure our performance is remarkable, and it leads the nation. So why does the Index also make us feel uneasy? There are two reasons, at least. One is that growth has its challenges, and despite recent efforts on the housing and transportation fronts, our region is not making enough progress. Our infrastructure isn’t keeping pace with the demand placed upon it, and we haven’t found a way to adequately increase the stock of housing. Though we’re reporting the high- est number of residential units permitted in recent years, it is discouraging that it doesn’t even come close to meeting demand. As a result, housing prices continue to soar, rental expenses outpace income gains, and fewer than half of our first-time homebuyers can afford the median-priced home. Without doubt, Silicon Valley’s success has also made it a less hospitable place. The second reason why the Index is troubling is because our prosperity is not widely shared. It is a story the Index has been telling for many years, but in this 2014 installment the gaps and disparities are more pronounced than ever. These are the hard facts: our income gains are limited to those with ultra high-end skills. Median wages for low- and middle-skilled workers are relatively stagnant and the share of households with mid-level incomes has fallen in Silicon Valley more than in the state and nation. Disparities by race are more persistent than ever. We also saw a sharp increase in homelessness. While job growth is important, it can never be the single measure of our region’s health when it is confined to a limited number of sectors. The ultimate measure is a steady increase in real income, raising the standard of living for all of our residents. Our two organizations are committed to providing analysis and action on these vexing problems, even as we celebrate our region’s incredible dynamism. Sincerely, Russell Hancock, Ph.D. Emmett D. Carson, Ph.D. President & Chief Executive Officer CEO and President Joint Venture Silicon Valley Silicon Valley Community Foundation Silicon Valley Institute for Regional Studies SILICON VALLEY SILICON VALLEY INSTITUTE for REGIONAL STUDIES 3 WHAT IS THE INDEX? The Silicon Valley Index has been telling the Silicon Valley story since 1995. Released early every year, the Index is based on indicators that measure the strength of our economy and the health of our community—highlighting challenges and providing an analytical foundation for leadership and decision making. WHAT IS AN INDICATOR? Indicators are measurements that tell us how we are doing; whether we are going up or down, going forward or backward, getting better or worse, or staying the same. GOOD INDICATORS... • are bellwethers that reflect fundamentals of long-term regional health. 2014 SILICON VALLEY INDEX People Economy • reflect the interests and concerns of the community. Society Place Governance • are statistically measurable on a frequent basis. • measure outcomes, rather than inputs. SILICON VALLEY SILICON VALLEY INSTITUTE for REGIONAL STUDIES Appendix B provides detail on data sources for each indicator. THE SILICON VALLEY INDEX ONLINE The Silicon Valley Index is also available online, with additional data and interactive charts allowing you to further explore the Silicon Valley story. You’ll find all this and more at www.siliconvalleyindex.org. 4 TABLE OF CONTENTS PROFILE OF SILICON VALLEY ................................................................................................... 6 2014 INDEX HIGHLIGHTS .......................................................................................................... 8 PEOPLE Talent Flows and Diversity...................................................................................................................10 ECONOMY Employment ......................................................................................................................................14 Income .............................................................................................................................................18 Innovation & Entrepreneurship ............................................................................................................24