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The party is over in Silicon Valley.
After 12 years of growth, the tech sector has slowed, ushering in a period of “flux and uncertainty” in a region with deepening social divides, a growing cost of living and a shrinking labor force.
Those are the sobering conclusions of the newly released Silicon Valley Index, an annual report released by Joint Venture Silicon Valley that tracks economic, population and employment trends in the region. While the report concludes that venture capital continues to fuel the regional economy, it also highlights the growing chasm between the haves and the have-nots in the region, which encompasses San Mateo and Santa Clara counties as well as small portions of Alameda and Santa Cruz counties.
The report paints a picture of growing inequality. Housing costs in Silicon Valley remain the highest in the nation, with the median home price hitting $1.92 million last year, making the dream of home ownership out of reach for the vast majority of residents, according to the report. Fewer than 26% of first-time home buyers can afford a median-priced home.
Meanwhile, housing production remains lethargic, with just 4,900 housing units permitted in 2024, the lowest number in 12 years. Nearly half of the region’s residents spend more than 30% of their income on rent and the number of homeless people has shot up by 17% in a year. More than 12,520 individuals are homeless, which includes 700 unaccompanied minors living without a shelter, the report found.
Incomes in the area remain relatively high, but unevenly distributed. The report notes that per capita income reached $157,000 last year, an all-time high, and the region boasts 89 billionaires and 145,000 millionaires. At the same time, about 30% of Silicon Valley households are not self-sufficient and 37% of children live in households at risk for food insecurity, according to the report. The top 1% of households now hold about 15% of the region’s collective assets, while the bottom 50% “struggle to claim even a fraction of that pie,” the report states.
“In fact, a mere nine households control more wealth than the entire bottom half,” the Index states.
Strikingly, billionaires saw their investable assets grow by 30% in the past year, the report found, while those with less than $25,000 had an average gain of $41. And nearly a third of Silicon Valley’s residents do not earn enough to meet their basic needs without assistance.
“All but the highfliers are slammed by soaring costs and stagnant wages, and there is scant progress on our most pressing issue, housing,” Russell Hancock, CEO of Joint Venture Silicon Valley wrote in a letter summarizing the report’s findings. “The market remains out of reach for all but a few, creating deep social divides, ballooning our wealth gaps, and factoring heavily into the continuing growth of homelessness. We’ve long lamented this but in truth we’ve also shrugged it off, observing that somehow the region defies gravity and remains an economic superpower.”
While inequality is hardly unique to Silicon Valley, the report notes that the region’s income divide has grown twice as quickly as that of the state and the nation since the 2012. Billionaires who live in San Mateo and Santa Clara counties have an estimated $195 billion in liquid wealth, which the report notes is four orders of magnitude higher than that of the 447,000 in the bottom 50%.
Meanwhile, about 201,000 households in the region have less than $5,000 in total investable assets. More than half of these have zero – or near zero – net assets, according to the report. The report notes that a Silicon Valley family of four – with two adult income earners and two school-aged children – could have earned five times the federal poverty level in 2024 and would still “struggle to afford anything other than the most basic necessities (e.g., eating at restaurants, going to the movie theater, taking a family vacation, or saving for retirement) without seeking outside support or incurring debt.”
The Index underscores the continued dominance of the tech sector in the Silicon Valley economy and its job market. Software developers representing the region’s largest labor group, with more than 147,000 employees, were followed by engineers, with 116,000. One in five tech workers are employed in the region’s largest tech companies: Google, Apple, Meta, Amazon, Cisco and Tesla, according to the report.
Across the region, job growth had stagnated, with a decline of about 1,200 positions between mid-2022 and mid-2024, according to the report. One sector that has seen growth was health care and social services, which added 28,000 jobs between mid-2023 and mid-2024. Meanwhile, the retail sector lost 16,500 jobs during the same period.
The region’s unemployment rate at the end of 2024 remained relatively low at 3.7%, particularly when compared to the pandemic peak of 12.2% in April 2020. Yet it has also risen from 2.2% in May 2022, according to the report.
The tech sector has borne the brunt of this downturn. In 2023 and 2024, more than 87% of the staffing reductions that were reported under the Worker Adjustment and Retraining Notification Act came from tech companies, which collectively laid off at least 33,000 workers over those two years. Companies with the most layoffs were Meta, Cisco, Intel, Google, Broadcom and Cepheid. Each has eliminated at least 1,000 jobs, according to the report.
“Since 2020, the composition of WARN-reported layoffs has shifted dramatically from sectors such as hospitality, entertainment, and recreation — all greatly affected by pandemic-era disruptions — to tech,” the report states. “In 2020, only 16% of layoffs were in the tech industry; this share rose to 88% in 2024.”
On the brighter side, the region’s culture of innovation remains strong. Even though San Diego led the state with 5,494 patents in 2024, the next seven cities on the list are San Jose, San Francisco, Mountain View, Cupertino, Santa Clara, Palo Alto and Sunnyvale. The report notes that 2024 marked the first time in at least the past two decades that San Jose was not at the top of the list.
The new report also highlights the changes in Silicon Valley’s population, which is stable but aging and, increasingly, foreign-born. Since 2013, the number of residents 65 or older has grown by 28% while the number of children under 18 dropped by 14%, driving a 9% decline in public school enrollment since 2020, according to the Index.
Immigration remains one of the region’s defining features, with 41% of the population foreign born, a historic high, according to the Index. In the tech sector, 66% of the employees were born outside the United States, with 70% coming from India or China. The influx of immigrants has helped hold the population level steady at a time when residents are leaving the region. Since 1993, Silicon Valley has added 472,000 people from abroad while losing 641,000 residents to other parts of the state and nation, according to the Index.
While immigration remains a divisive topic around the nation, with the Trump administration pledging to increase immigration enforcement and shutting down avenues for foreign-born individuals seeking asylum or legal assistance, the new report argues that increasing the region’s diversity “enriches the fabric of the community.”
“Diversity — the coming together of people with different backgrounds, cultures, genders, races, and ethnicities — is critical to the success of businesses and the region as a whole,” the report states. “These backgrounds shape the perspectives from which tasks are undertaken. Inclusive communities and workplaces enable people of all backgrounds to build, succeed, and grow together.”
The Silicon Valley divide is playing out on the national stage, with some of the nation’s most prominent tech titans donating money to Trump for his January inauguration and then changing their policies to align with the new administration’s agenda. Meta and Alphabet both reportedly responded to Trump’s election by ending their respective diversity programs. Tesla CEO Elon Musk, who in 2023 opened the company’s engineering headquarters in Palo Alto, is leading Trump’s effort to cut costs and reduce the federal workforce as part of a newly created taskforce known as the Department of Government Efficiency.
Meanwhile, city and county officials in the region are bracing for budget challenges and a fraying safety net as a result of threats and actions by the new administration. Santa Clara County and San Francisco last month sued the federal administration over an executive order that sought to freeze funding in “sanctuary” jurisdictions, which don’t cooperate with federal agencies on immigration enforcement.
In Palo Alto, local officials are trying to protect themselves from the tech leaders in Trump’s orbit by considering a resolution later this month that reaffirms the city’s commitment to climate action, diversity and measures that protect immigrants from “unlawful or inhumane deportation efforts.” The resolution also raises an alarm about executive orders that “severely reduce funds and grants upon which Palo Altans rely and diminish federal agencies providing services to Palo Alto, are likely illegal, and are in conflict with our stated values.”
By and large, Silicon Valley remains a Democratic stronghold, with 52% of the voters registered as Democrats, 16% as Republicans and 26% indicating no party preference. That said, 27% of Silicon Valley voters supported Donald Trump in 2024, up from 20% in 2016 and 24% in 2020.
Hancock noted in his introduction that various external forces are at play in creating the atmosphere of uncertainty, including “political upheaval, market instability and a tightening regulatory grip.”
“Not surprisingly, the tech sector has shifted out of high gear, ending a twelve-year run of aggressive expansion and focusing instead on efficiency and profitability,” Hancock wrote. “That strategy is working and handsomely, but it spells a new period of low or no growth in the Valley.”
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