New report flags new challenges for Silicon Valley

Silicon Valley is consistently working on attracting and retaining a highly skilled, highly educated workforce in order to keep its edge within the various industries it is currently a leader in. A new report by the Manhattan Institute published in August, however, identifies new challenges the Valley may face in the near future.

Shifts in population, job decline and education levels are key indicators to a city’s success. The widely-held belief that American cities experiencing population and/or employment decline also suffer from a “brain drain,” defined by the report as “the flight of highly educated residents to other, more hospitable locales,” was proven inaccurate by the data gathered within this report. What was found instead was that “brain gain, not drain, is the reality.” Brain gain represents the inverse effects of brain drain, namely a net positive migration of the highly educated to a particular location.

The report analyzed 28 metro areas nationwide that experienced either population or job decline between 2000 to 2013 and included both the South Bay (San Jose-Sunnyvale-Santa Clara) and North Bay (San Francisco-Oakland-Hayward) metro areas because “… through 2013, neither San Francisco nor San Jose had recovered from its dotcom-era employment peak. (This also remained true for San Jose through 2014.)”

What the report found was that the San Jose metro area increased their percentage of college-degree attainment amongst all adults age 25 and older during these years by 6.8%, outperforming the San Francisco metro area by .4%. The increased percentage of residents 25-34 with a bachelor’s degree or higher was even more tilted in San Jose’s favor: an 8% increase versus 5.8% in San Francisco.

One warning sign, however, appeared on the horizon for the Bay Area region: “… of the 28 metros, roughly half improved their location quotient (LQ) scores – making them more educated, relative to the U.S. average, in 2013 than in 2000 – while roughly half lost ground, including San Francisco and San Jose.”

Other cities falling behind in this category included Austin, Denver, Minneapolis, Seattle and Washington, DC. Pittsburgh, long-considered a declining Rust Belt city, ranked highest in all three categories—bachelor’s degree attainment or higher for all adults over 25; for those 25-34; and in location quotient.

So what does this all mean for businesses within Silicon Valley? The study makes note that “this brain gain is cause for celebration,” but also points to the need for further advocacy in this space.

“None of this is to suggest that America’s shrinking cities do not face serious problems, but brain drain is not one of them … Rebuilding core public services that confer broad benefits to the whole community, not just to the most educated, should be the main policy focus.” –Manhattan Institute report

Why should this be of interest to San Jose Silicon Valley Chamber of Commerce members? Vice President of Public Policy Derrick Seaver explains.

“Our Chamber members are uniquely aware of the benefits of a highly educated workforce, and San Jose and Silicon Valley continue to be national leaders in this space,” Seaver said. “However, we also need to be cognizant of the coming challenges and cater our workforce development advocacy towards broad-based community benefits. Strive San Jose, a new program of the Chamber, is aiming to do this by working to improve career pathways for our region’s middle-skilled employees.”