5 reasons Silicon Valley might stumble coming out of recession

Nonprofits find some chinks in the local tech armor

Cisco CEO John Chambers' optimism on tech's rebound from the lagging economy was tempered this week by the findings of a group of Silicon Valley nonprofits.

Cisco CEO John Chambers' optimism on tech's rebound from the lagging economy was tempered this week by the findings of a group of Silicon Valley nonprofits.

A report by the Silicon Valley Community Foundation and Joint Venture concluded that The Valley will enter a "new phase of uncertainty" coming out of the recession due to high unemployment, global competition and curtailed investment. Chambers said technology would be among the first industries to recover coming out of the downturn. Cisco even plans to hire 2,000 to 3,000 employees -- perhaps more than the number recently cut loose from the router king.

Cautious optimism shapes New Year 

Technology is global, but Silicon Valley is the Ellis Island of digital tech. So here are the report's five sobering reasons tech might stumble coming into the turnaround:

* The region lost 90,000 jobs from November 2008 to November 2009. Unemployment in the Valley is higher than national levels, and the worst regionally since 2005.

* Venture capital funding plummeted, and office vacancy rates were up 33% percent in 2009.

* Workers took a 5% cut in income between 2007 and 2009.

* Competition for talent with China and India, among other geographies.

* A high rate of high-school dropouts, resulting in fewer students meeting basic state college entrance requirements. There are also lingering racial disparities in education, the report found.

The groups propose the government fund research in defense, medical technology and, yes, computer and Internet technologies that will result in start-ups and usher in a new wave of invention and innovation -- like it did 40 or so years ago. The groups noted federal funding in biotech, and like the look of green around town: clean technologies could be key to the region's recovery, they noted.

Join the discussion
Be the first to comment on this article. Our Commenting Policies