Job and Population Trends, What’s Ahead
for San Jose and Silicon Valley
Center for Continuing Study of the California Economy
May 27, 2008
A Turnaround in Silicon Valley
• Job and population growth resume in Santa Clara County
• Our economic base shifts toward information and professional services
• Venture capital funding on the rise
• The Bay Area is again a job growth leader in California
Recent Job Growth Trends
-200
-150
-100
-50
0
50
100
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(Tho
usan
ds o
f Job
s)
Santa Clara County Bay Area
Recent Population Growth Trends
0
20
40
60
80
100
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(Th
ou
san
ds
of
Res
iden
ts)
Santa Clara County Bay Area
Key Economic Base SectorsShifting Trends in Santa Clara County
0
50
100
150
200
250
300
1990 1995 2000 2005 2007
(Tho
usan
ds o
f Job
s)
Manufacturing Information Prof. & Tech. Services
The Bay Area and Silicon Valley Economy Today—Bottom Line
• A job growth and venture capital leader• Wage and income growth above the
national average• Population growth reemerged despite high
housing prices• A good economic base with lingering
challenges of housing affordability, transportation and quality of life
The Framework for Projecting the Future Economy
• Understanding national demographic and economic trends—the foundation for Bay Area growth
• Developing plausible projections of how the national trends will affect Bay Area growth.
• Analyzing the implications for Santa Clara County and the City of San Jose
Projecting the Future—The U.S. Growth Outlook
• Despite a delay in retirement for many workers, overall labor force participation rates will slow
• The baby boomer aging and eventual retirement will lead to lower national job growth rates
• And job levels will grow more slowly than population for at least 2 decades
Aging of the Baby Boomers
• All baby boomers will turn 65 during the next 20 years—profoundly affecting labor force and housing market trends in the nation and here
• In the Bay Area, baby boomers will be largely replaced by the children and grandchildren of foreign immigrants plus new foreign immigrants
U.S. Labor Force Participation Rates—Later Retirement Ages
0%
20%
40%
60%
80%
55-59 60-64 65-69 70-74 75+
(% in
Lab
or F
orc
e)
1990 2005 2030
Still, Aging Causes a Decline in Overall Labor Participation
66.5% 66.0%
61.7%
55%
60%
65%
70%
Population 16+
(% i
n U
.S.
La
bo
r F
orc
e)
1990 2005 2030
Which Causes a Slowdown in U.S. Job Growth After 2015
1.2%
0.6%
1.1%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1995-2005 2005-2015 2015-2030
(Jo
b G
row
th p
er Y
ear)
Bay Area Job Growth—What Will Push Our Economic Base
• Manufacturing job levels will decline
• Growth will be led by professional and technical services
• Internet-related jobs will grow
• Will a new industry emerge to push job levels higher?
• Will we grow faster than the nation?
Bay Area Manufacturing
• 350,000 jobs in 2007 (10% of the total)
• Largest sectors are semiconductors (58,000), computers (40,000), electronic instruments (29,000), fabricated metal products (24,000) and food (22,000)
• Most sectors projected to see job losses except pharmaceuticals
Bay Area Professional Services
• 430,000 jobs in 2007• Major sectors are computer services
(98,000 jobs), management services (54,000), architecture & engineering (48,000) and scientific R&D (45,000).
• All sectors will see large job growth. Internet services is also a major growth sector in the region’s economic base
Projecting Bay Area Job Growth
• Focus on the economic base—those sectors that sell goods and services across the nation and around the world
• Look at the “opportunity pot” – the projected national growth rate for key economic base sectors
• Project the share of these jobs likely to be captured by Bay Area firms—old and new
Bay Area Economic Base—Key Sector Growth 2007-2017
24.5
96.2
-37.5
-100
-50
0
50
100
150
Manufacturing Prof., Tech.Services
InformationServices
Industry X
(Tho
usan
ds)
???
Bay Area Job Growth to Slightly Outpace Nation to 2017
10.6%
13.3%
0%
5%
10%
15%
United States Bay Area
(Pe
rce
nt
Ch
an
ge
)
Annual Bay Area Job GrowthSlows After 2017
22.9
49.0
0
10
20
30
40
50
60
2007-2017 2017-2030
(Th
ou
san
ds
per
Yea
r)
Bay Area Projected to Get Slowly Rising Share of U.S. Jobs
2.3%
2.4%
2.5%
2.6%
2.7%
2.8%
1990 1995 2000 2005 2020 2025 2030 2035 2040
ABAG—The Source for Projecting the County’s and
City’s Share of Regional Growth
• ABAG is the only source for analyzing the projected Santa Clara County share of regional job growth
• And the only source for projecting San Jose’s share of county job growth
• ABAG analysis incorporates some local land use data and local input
ABAG Projected Job Shares
• ABAG projects that Santa Clara County will get a rising share of Bay Area jobs
• And San Jose will capture an increasing share of County jobs—more than 50% of new jobs in the County
• CCSCE used the ABAG share projections• But the City should review these projections
with ABAG staff based on this project
San Jose Share of Santa Clara County Jobs
40%
42%
44%
46%
48%
50%
1990 1995 2000 2005 2020 2025 2030 2035 2040
Annual Job Growth
0
2
4
6
8
10
12
14
2007-2020 2020-2030 2030-2040
(Th
ou
sa
nd
s)
San Jose Santa Clara County
Total Jobs in San Jose+81,000 to 2020; +172,000 to 2040
398
456 479516
570
0
100
200
300
400
500
600
700
2000 2007 2020 2030 2040
(Tho
usan
ds)
Projecting Population Growth
• Regional population growth projected by CCSCE based on job growth trends
• The Santa Clara County share of regional growth was based on ABAG share projections
• The San Jose share of Santa Clara County growth was based on ABAG share projections
Components of Population Growth• Recent County population growth has been
split fairly evenly between natural increase (births - deaths) and foreign immigration.
• There was also a substantial out migration to other areas, which lessened in 2006, 07
• ABAG projects an increasing share of Bay Area population growth will come from migration, the reverse of what is expected elsewhere in California.
Santa Clara County Population Growth
-30
-20
-10
0
10
20
30
Natural Increase Foreign Immigration Domestic Migration
(Tho
usan
ds)
2000 2001 2002 2003 2004 2005 2006 2007
ABAG Projects San Jose and Santa Clara County To Grow
Faster Than the Bay Area• Santa Clara County had 25% of Bay Area
population in 2005—projected to get 30% of regional growth to 2035.
• San Jose had 54% of County population in 2005--projected to account for 67% of county population growth to 2035
San Jose Population Growth
• Projected to add 13,400 residents per year to 2020 and 14,900 residents per year between 2020 and 2040
• San Jose added 11,800 residents per year since 2000 and 17,300 residents in 2007 according to just released DOF estimates
• Population projected to increase by 471,000 residents or nearly 50% by 2040
San Jose Population+174,000 to 2020; +471,000 to 2040
974
1,148
1,216
1,2941,367
1,445
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
2007 2020 2025 2030 2035 2040
(Th
ou
san
ds)
DOF—The Source for Population Change by Age and
Ethnic Group• The only source for county projections by
age and ethnic group
• No city projections
• CCSCE will use the DOF pattern of change for Santa Clara County in developing population projections for the City of San Jose
San Jose Population Growth by Age Group 2007-2030
4
29 33 36
96
123
0
20
40
60
80
100
120
140
0-4 5-19 20-34 35-54 55-64 65+
(Tho
usan
ds)
San Jose Population Growth by Ethnic Group 2007-2030
-6
0
175
92
59
-40
0
40
80
120
160
200
240
Hispanic Non HispWhite
Black Asian Other
(Th
ou
san
ds)
SJ Population Growth by Age and Ethnic Group 2007-2030
-40
-20
0
20
40
60
80
0-19 20-34 35-54 55+
(Th
ou
san
ds)
Hispanic Non Hisp White Asian
Implications of Projections for Housing
• 2/3 of household-age growth in 55+ age groups; 1/3 in 20-34 age groups
• Virtually no growth in 35-54 age groups—a dramatic reversal of recent trends
• Age trends favor smaller units and favor access to dynamic urban settings
• Expect the market to respond to these trends
• Implications for city services??
Implications of Job Growth
• San Jose is projected to get 50% of the total county job growth so the city and county economic future are linked.
• The city’s economic base will be in the R&D and “services” side of technology innovation—more detailed industry projections in the next project phase.
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