Between 2001 and 2008, the number of high tech industry employees dropped by approximately 17%, while high tech jobs rose by 4% across the nation. Those industries in the valley rebounded at a slower pace than the rest of the nation. With statistics like these, is the valley still the place to be for high technology?

The 11 Industries
It depends on your specialty. Within the "high tech" job category, there are 11 industries labeled by the NAICS: computer system design, semiconductor manufacturing, scientific research, architecture, computer equipment manufacturing, control instrument manufacturing, software publishers, pharmaceuticals, aerospace, communication equipment manufacturing and internet, telecommunications and data processing. (Evaluate the past performance before investing in Technology Sector Funds.)

Based on the number of jobs in each industry, only three industries within the high tech category posted employment gains in Silicon Valley: pharmaceuticals, aerospace, and scientific research.

That leaves eight out of 11 industries with declining jobs. This may not sound appealing, but another way of looking at things can reveal some attractive spots remaining in the valley.

The location quotient examines the concentration of industry jobs in a small geographic location, relative to that of a larger base. The location quotient is measured using a base of 1.0; areas with a quotient of greater than 1.0 exceed the national average. Areas with a quotient of less than 1.0 trail the national average.
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Of the 11 job categories under the high tech realm, just one has a location quotient below 1.0. So even though overall employment is down, Silicon Valley is still a relatively strong location for high tech industry jobs. The industry jobs listed below have posted location quotient increases between 2001 and 2008. All data has been provided by the U.S. Bureau of Labor Statistics.

  • Semiconductor Manufacturing - There are 34% fewer semiconductor manufacturing jobs in Silicon Valley, however the location quotient rose and remains high above the national average.
    (2001) Number of jobs: 87,424, Location Quotient: 5.5
    (2008) Number of jobs: 57,490, Location Quotient: 5.9

  • Scientific Research - Scientific research is one of three industries that posted gains in employment and location quotient. Between 2001 and 2008, the number of jobs in this category actually rose by 24%.
    (2001) Number of jobs: 40,756, Location Quotient: 3.1
    (2008) Number of jobs: 51,361, Location Quotient: 3.7

  • Computer Equipment Manufacturing - Silicon Valley saw a sharp decline in computer equipment manufacturing jobs. Local industry lost 26% of its jobs, however the location quotient showed a marked increase.
    (2001) Number of jobs: 57,833, Location Quotient: 8.1
    (2008) Number of jobs: 42,893, Location Quotient: 10.4

  • Pharmaceuticals - The number of jobs in the pharmaceutical industry increased by almost 32%, and the location quotient rose as well.
    (2001) Number of jobs: 11,189, Location Quotient: 1.6
    (2008) Number of jobs: 14,728, Location Quotient: 2.3

  • Aerospace - This industry began with the smallest number of jobs in 2001, but it has since posted the largest employment increase of all high tech job industries. Almost 50% more jobs were added between 2001 and 2008. Even with the relatively enormous addition of jobs, the industry's location quotient sits just above the national average.
    (2001) Number of jobs: 8,349, Location Quotient: 0.7
    (2008) Number of jobs: 12,503, Location Quotient: 1.1

  • Communication Equipment Manufacturing - The communication equipment manufacturing industry posted one of the largest losses in the high tech realm. There are 41% fewer jobs, but the location quotient has risen significantly.
    (2001) Number of jobs: 19,524, Location Quotient: 3.3
    (2008) Number of jobs: 11,583, Location Quotient: 4.0

Conclusion
Employment overall is down, but the greater concentration of job opportunities makes Silicon Valley an attractive location for high tech hopefuls. One more bonus: while jobs were on the decline, compensation in Silicon Valley was on the rise. Wages grew by about 36%. (Despite paying one of the highest minimum wages in the world, the minimum wage is a perpetual hot potato among politicians in the United States. Find out more in The Minimum Wage: Does It Matter?)

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