Silicon Valley shines as jobs bounce back

The tech center in northern California is one of the nation's healthiest employment markets.

By TheStreet Staff Aug 6, 2012 11:25AM
By James Rogers


Even in the midst of a rocky economy, Silicon Valley is one of the nation's healthiest job markets, according to the latest employment data.


With the major U.S. indices boosted by Friday's better-than-expected jump in July payrolls, there was also good news for the country's technology epicenter in northern California.


Information released earlier this week by the Bureau of Labor Statistics highlights robust employment growth in California's southern San Francisco Bay area during June. With a 3.8% year-over-year rise in employment, the San Jose, Sunnyvale and Santa Clara area led a host of other U.S. metropolitan areas in job growth. The Houston, Sugarland and Baytown region in Texas enjoyed the second-most robust growth, increasing employment by 3.3%.


Labor officials based their analysis on the 37 U.S. metropolitan areas with average employment levels above 750,000 in 2011.


There are plenty of fast-growing companies in Silicon Valley, most notably Menlo Park-based Facebook (FB), which recently reported its first quarterly results since its eventful IPO. Speaking during the conference call to discuss the results, Facebook CFO David Ebersman said the company had just under 4,000 employees at the end of the quarter, an increase of about 50% from the same period last year.


Mountain View-based Google (GOOG), which, prior to Facebook, was the biggest U.S. tech IPO, ended the second quarter with 54,600 employees, up from 28,768 in the same period in 2011, although that was largely due to the acquisition of Motorola Mobility. Google itself added around 1,200 employees during the quarter.


Increasingly, Silicon Valley is reaping the benefits of broader U.S. economic trends. Jordan Levine, director of economic research at Beacon Economics, said in an interview that many businesses across the U.S. are opting to boost productivity via new software and computer hardware.


"It has been good for areas like San Jose and other tech-heavy sectors," he said. "Places like San Jose, where companies are providing these productivity-enhancing products, are the ones that are seeing big expansion in their payrolls and employment base."


VMware (VMW), which recently beat analysts' second-quarter estimates, is a good example of this trend.

Virtualization, which lets users make virtual versions of their hardware and software, has been one of the key technology trends of recent years, as companies look to consolidate their data centers and reduce IT gear. Set against this backdrop, Palo Alto-based VMware has emerged as a key beneficiary of the cloud computing boom.

A thriving Silicon Valley sends a ripple effect through the local economy, according to Jeffrey Michael, director of the Business Forecasting Center at the University of Pacific, in Stockton, Calif. "Incomes that have been generated by the tech industry finally are fuelling growth in areas like restaurants and real estate," he said. "You can really see the impact in the whole economy -- it's boosting the whole region."


The San Francisco Chronicle, for example, reports that the median list price for a home in Palo Alto was $2.88 million in June, a 50% increase on the same period last year.


This is also proving to be a good year for tech companies taking the public plunge, even with the Facebook-induced lull in the IPO market. Recent examples include Santa Clara-based Palo Alto Networks (PANW), which enjoyed a successful IPO last month, and San Francisco-based Splunk (SPLK), which burst out of the blocks on its debut in April.


It's not just in northern California, though, that tech firms are on the hiring trail. John McAdam, the CEO of Seattle-based F5 Networks (FFIV), said in an interview that he's expanding his workforce. "This last quarter, we hired just under 100 people," he said. "This [current] quarter, we're hoping to exceed that, probably [hiring] about 125."



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Aug 6, 2012 5:36PM
This article is extremely misleading. I've been working in Silicon Valley for nearly 30 years and  the employment situation continues to be grim, with "official" unemployment rate in Santa Clara county above 10%. Companies like Facebook get a lot of press because they are hiring some young software engineers. Most companies have frozen hiriing and have not increased hiring for the past 3 years at least. Some valley stalwarts such as HP and Cisco have been reducing their local workforce.
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