Silicon Valley’s economic ‘paradox’ scrutinized

Job growth surges, but housing and transportation lag

SAN JOSE >> The good, bad and ugly of Silicon Valley’s dynamic economy endured scrutiny on Friday at a San Jose conference that examined the region’s job boom, housing crisis and traffic mess.

“The paradox of our prosperity is we are the envy of the nation in our economic growth and job creation,” San Jose Mayor Sam Liccardo said during an interview, after speaking at the annual State of the Valley Conference organized by Joint Venture Silicon Valley. “At the same time we have this boom, thousands of families are struggling to survive in a Valley with rapidly rising rents and housing costs. We’ve got a lot of work to do.”

Officials formally released the Silicon Valley Index for 2018, an annual report card on the region’s economy at Friday’s event, which had been scheduled to feature an appearance by U.S. Sen. Kamala

Harris, D-California. The organization late Thursday announced that Harris had to cancel her appearance due to “the protracted government-funding debate in Congress” and would address the audience in a brief video instead.

While job growth is robust, with employment gains for eight straight years, housing and transportation have lagged far behind the economic surge in the Santa Clara Valley and much of the rest of the Bay Area.

In 2017, Silicon Valley — defined as Santa Clara County, San Mateo County, southern Alameda County and northern Santa Cruz County — added 47,000 jobs. Yet just 12,000 residential units were built, although

that was double the 6,000 housing units added in 2016.

“We’ve gotten to the point where we have a disaster on our hands,” said Carol Galante, director of UC Berkeley’s Terner Center for Housing Innovation. “We are not building enough housing and we are not building the housing in the right places.”

Somehow, residents of a neighborhood must be coaxed into allowing a greater pace and density of housing near where they live, Galante urged during a panel discussion.

“We have to make room,” said Steve Heminger, executive director with the Metropolitan Transportation Commission. “We have to say yes in my backyard.”

Heminger suggested that the Bay Area doesn’t charge enough for transportation.

One solution might be

variable pricing for using roads or crossing bridges, depending on the time of day, Heminger said.

“The price could go up in the peak hours, to discourage demand in that time period, and go down in non-peak hours, to encourage demand,” Heminger said.

Galante and Heminger suggested that a regional financing pool could be instituted as a way to pay for affordable housing.

During a panel discussion, Hancock asked the experts who or what are the villains that have contributed to the housing crisis. Heminger and Galante agreed that developers aren’t to blame.

“There are plenty of villains to go around,” Heminger said. “Everyone has a non-negotiable demand.”

Heminger said that cities want local control; labor leaders demand prevailing wages, which can raise construction costs; and environmentalists demand strict curbs on where residential and commercial development can occur.

Despite the obstacles, the experts insisted that the housing woes must be tackled even more aggressively than they are now.

“We are at risk, we are at an inflection point, and we ignore the housing problem at our peril,” Galante said during the conference.

Otherwise, the region’s economy could buckle, or at least turn sluggish, longterm. But it won’t be easy.

“Change is not painfree,” Heminger said. “We cannot have this rip-roaring economy forever without the housing to support it. Eventually, that engine breaks.”