Road to the Summit: A good problem to have – Silicon Valley wrestles with its growth

150 150 Justin Ewers

Steve Heminger, Executive Director Metropolitan Transportation Commission, Supervisor Scott Wiener, San Francisco Board of Supervisors, Preston Smith, CEO, Rocketship Education (Photo Credit: Angel Cardenas)

It’s a good problem to have. At an economic forum on Friday in Silicon Valley, more than 400 business, environmental, and community leaders from across the Bay Area wrestled with the region’s preeminent challenge: Finding a way to handle its spectacular economic growth, while ensuring the entire region reaps its rewards—from Silicon Valley’s red-hot tech companies to the many far-flung Bay Area communities still struggling to emerge from the recession.

“I couldn’t be more bullish on Silicon Valley right now,” Carl Guardino, president and CEO of the Silicon Valley Leadership Group, which co-hosted the forum, one of sixteen meetings being held in regions across the state in advance of the second annual California Economic Summit in November. “We have our challenges, but we can solve them by thinking regionally and not parochially.”

With the Bay Area poised to add 2 million people over the next 25 years—bringing its total population to nearly 10 million—leaders in this region face a very different challenge from other parts of California. Instead of struggling to hold on to workers and jobs, much of the focus in Silicon Valley is on ensuring the economy’s rising tide lifts all boats. The event featured a range of speakers, from the CEOs of clean tech leaders SunPower and Recurrent Energy to the mayors of several large cities and several members of Congress, all of whom used the opportunity to highlight the Bay Area’s successes.

“People 200-300 years from now will say Silicon Valley was to this era what Florence was to the Renaissance,” said Jed York, owner of the San Francisco 49ers, who touted the regional collaboration that not only drew his team to a new stadium in Santa Clara—but allowed it to win its Super Bowl bid for 2016.

Regional leaders discussed a range of steps the Bay Area must take to accommodate the region’s growth—from investments in workforce development and infrastructure to reforming state rules and regulations they believe are hindering job creation.

Workforce development

Preparing the Bay Area workforce for the region’s wealth of technical jobs emerged as a top priority—particularly improving partnerships between the K-12 system and regional industry, keeping public college affordable, and increasing investment in STEM (Science, Technology, Engineering, and Math) education.

Immigration reform, too, is viewed as a vital first step toward meeting the region’s workforce needs. “We have tens of thousands of jobs unfilled because we don’t have the skilled workers,” said Rep. Eric Swalwell, who represents a Congressional district in the East Bay. “We can send [those jobs] overseas, or reform our H1B laws here. There’s an economic benefit to having comprehensive immigration reform.”

Regional leaders also grappled with challenges the region faces in its early-education system. “Let’s be honest about this,” said Emmett Carson, president and CEO of the Silicon Valley Community Foundation: “Sixty percent of kids of color in third grade are not reading at grade level in Silicon Valley today. If we want to get to the future of STEM [and other workforce development programs], we’ve got to deal with the reality of today: Our kids can’t read. If they can’t read, they can’t fill these job openings.”

Preston Smith from Rocketship Education, a network of K-5 charter schools in Silicon Valley, highlighted an approach one city has already adopted to take on this challenge: SJ2020, an effort to eliminate the achievement gap in San Jose. Smith pointed to statistics showing 40,000 San Jose students can’t read at grade-level and thousands drop out of middle school and high school each year.

“It’s a huge challenge for our region, but we’re taking it on,” Smith said, “And this gathering has given me a lot of optimism that together, we have the resources to do it.”

Infrastructure investment

Training workers is one thing; getting them to their jobs quite another. With Bay Area’s population only growing—and rising congestion becoming a serious problem in parts of Silicon Valley—transportation infrastructure investment continues to be a pressing issue.

“It took me twenty minutes just to get off the freeway to come to this event,” says Muhammad Chaudry, CEO of Silicon Valley Education Foundation. “The recession is clearly behind us, but now what are we going to do?”

While the region has invested for decades in public transit, from BART to light-rail, there is clearly a desire to do more—and to support a range of public and private financing options that may be necessary to get the job done in tight budgetary times.

“Seventy-five percent of the region’s jobs are located within a half-mile of a freeway off-ramp,” said Leah Toeniskoetter, director of SPUR San Jose, an urban development group that promotes sustainable planning. “That means only 25 percent are near transit. That’s something we have to work on.”

Innovation economy

Silicon Valley leaders like to describe their region as the “capital” of the innovation economy, and the forum’s speakers—both business leaders and elected officials—spoke urgently about the need to update state rules and regulations they believe are hindering job creation. They focused on two areas, in particular:

  • CEQA: The 43-year-old California Environmental Quality Act (CEQA) was widely viewed as an obstacle to the Bay Area’s goals to create more sustainable, transit-oriented communities. “It’s a rare project that isn’t delayed by CEQA challenges,” said Mayor Chuck Reed of San Jose. “The problem is relatively simple. CEQA is no longer what it sounds like. It’s the ‘California Extraction Quantification Act.’ It’s a tool to extract concessions from developers, none of which has anything to do with the environment. It’s time to put the environment back in CEQA.” (The Summit’s CEQA Action Team has developed a set of principles for reforming the law, and changes this year seem likely, with the state Senate last week unanimously passing a major piece of reform legislation.)
  • Advanced manufacturing: While regulatory reform proved popular, so, too, did efforts to improve business opportunities for startups seeking to move into advanced manufacturing fields like solar power and electric vehicles. “Manufacturing is a four-letter word here,” said Dan Gordon, co-founder of the Gordon-Biersch Brewing Company, pointing to the state’s 10 percent sales tax surcharges on purchases of manufacturing equipment. “That just increased my construction costs over anywhere else in the country. As a business, we’re in the midst of making the decision about whether to spend money now because interest rates are low. I’m vested in San Jose, but if we were starting over, I’d be shocked if we located here.”

There was optimism from some quarters about state leaders’ willingness to address these issues—with credit given in particular to Gov. Brown and his newly-empowered Office of Business & Economic Development, led by Kish Rajan.

“Gov. Brown created our office to grow the economy, improve the business environment, and inspire broad-based job growth,” Rajan said. “He’s given us a lot of responsibilities, but we can make a difference. We’re rolling up our sleeves, and we hope you’ll be our partners.”

When it comes to creating jobs in Silicon Valley, the governor certainly seems to have one.


Justin Ewers

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