Today’s Wall Street Journal reports: “Market Is Hot For High-Skilled In Silicon Valley”. But, as the story explains, the news is not so good for lower-skilled tech jobs:
Past tech recoveries tended to bring new lower-skilled jobs as well as high-skill jobs. This time, tech firms — from big companies like Hewlett-Packard Co. to mid- and small-size firms such as Netflix, Adobe Systems Inc., and SanDisk Corp. — have moved lower-skill jobs out of the Silicon Valley area to cheaper locations, or outsourced them to foreign countries. The new jobs they are creating locally often require specialized skills in engineering and design. Young companies like Google Inc. are simply starting out hiring at the high end, further shifting the overall balance.
A study last month by Joint Venture Silicon Valley, a nonprofit group representing businesses and government agencies in the area, found the nation’s tech capital had a net increase in jobs in 2005 for the first time in four years. Most of the growth came in the category of creative and innovation services, including firms in research and development, scientific and technical consulting and industrial design. In total, the number of Silicon Valley jobs in these areas grew 4% from 2002 to 2005, reaching 72,734. At the same time, the number of jobs in electronic-component manufacturing — which tend to involve assembly and other repetitive tasks — dropped 28% to 23,772, while jobs in semiconductor-equipment manufacturing fell 23% to 58,133.
Overall, 14% of all the jobs in Silicon Valley today belong to a sector called core design, engineering and science. That exceeds the comparable 9.3% slice of the work force in Austin, Texas; 8.7% in Seattle; and 8.3% in San Diego, according to the study.
Doug Henton, an economist and co-author of the report, says with the growth in these creative engineering jobs, a new face of Silicon Valley is emerging. “Ten years ago, this was an engineering Valley that pumped out chips and computers,” he says. “Now it’s all about creative tech and staying on the cutting edge.”
It is true that Silicon Valley is famous for re-inventing itself with each new technological wave. But, as the story points out, there is a downside:
What’s more, as operations and lower-skill tech jobs leave the region, Silicon Valley has a narrower base of industries. That makes the area more vulnerable should another downturn occur, says Steve Levy, an economist at the Center for the Continuing Study of the California Economy in Palo Alto, Calif. “Los Angeles has a far more diverse economic base, with Hollywood, biotechnology, plastics and toys,” says Mr. Levy. “But high-skill tech is all we’re left with.”
(FYI – the full study is available at the Joint Venture website).
The so-called “creative/innovation sectors” are key to economic prosperity in the I-Cubed Economy. But so are operations – which can also be innovative and creative.
And, as operations moves elsewhere, so will the “creative/innovative” sectors. This is exactly what is happening as China and India ramp up their design capabilities.
So — good news that jobs are growing again in Silicon Valley. Bad news that they are growing in such a narrow base.