Silicon Valley economy rebounding

SAN FRANCISCO -- A report released on Sunday said the Silicon Valley region added new jobs in 2005 for the first time in four years, providing evidence that an economic resurgence is under way in the region.

While the number of new jobs -- 2,000 -- was modest, the data suggested that the "jobless" economic recovery of the last two years in Silicon Valley may be evolving into one that creates jobs as well as revenue.

The report, issued by Joint Venture Silicon Valley, a nonprofit organization, found that Silicon Valley companies employed 1.15 million people in 2005, a 0.2 percent gain over the previous year.

"Finally, there's an uptick," said Russell Hancock, president and chief executive of the organization, based in San Jose, Calif. "All the signs are that this will hold up."

The employment figure is still substantially lower than the number of people employed in the region in 2000, at the height of the dot-com bubble, but Hancock said comparing the two periods was unrealistic.

"You're never going to see the kind of job creation that you did during the dot-com boom," he said. "That was Silicon Valley's job factory overheating. It wasn't real."

During the dot-com era, Silicon Valley gained 350,000 new jobs, only to lose 200,000 of them in the early 2000s. "We're a region that's always been tied to boom-bust cycles," Hancock said. "We've reinvented ourselves five or six times."

The report, which is issued annually, said most of the new jobs were high-end positions. "They are particular kinds of jobs -- creative and knowledge-intensive," Hancock said. He added that much of the growth was in consumer electronics and software. By contrast, job growth in Silicon Valley during earlier periods was largely driven by business technology sales.

As they have struggled to grow in recent years, technology companies have learned to make do with fewer people, said Stephen Levy, director of the Center for Continuing Study of the California Economy, an economic research organization. He said the region's job numbers were not anywhere near the employment levels that existed even before the boom and were not likely to reach that level. "Production is up, sales are up, and all that can exist without job growth," Levy said.

The challenge for Silicon Valley now is to provide the training and education necessary to ensure that it has workers who are prepared for new jobs. Graduation rates among high school students in the region declined in 2005, and disparities persist among ethnic groups.

In the Joint Venture report, Hancock wrote, "Not everyone is benefiting from the changes we're experiencing, and too many of us are unprepared to participate in a more demanding economy." Legal immigration rose 56 percent in Silicon Valley in 2005, compared with 2004, more than three times the increase for the United States as a whole. While the overall population of Silicon Valley grew by less than 1 percent in 2005, that was the largest increase since 2000, the report said.

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