Silicon Valley: Fewer jobs at higher pay

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The Bureau of Labor Statistics has a new report (pdf) out comparing employment in the Silicon Valley tech sector in 2001 and 2008. The gist: Employment is down by a lot (17%), but wages are up by even more (36%). I’ll let Tom Abate of the SF Chronicle explain:

The report documents a stunning shift in the region’s high-tech workforce, as Silicon Valley cements its position as the global headquarters for innovation by bidding up the price of talent while using automation and offshoring to cut clerical and factory work.

So are we supposed to be heartened by this or frightened? Both, I guess. Silicon Valley remains a center of technological innovation and entrepreneurial activity. But the direct benefits of this are flowing to fewer people (wages in non-high-tech industries in Silicon Valley didn’t rise at nearly the tech industry’s pace).

If the big rise in income inequality over the past couple of decades were purely a Wall Street phenomenon, the solution would be relatively simple (in theory, at least). Force a ratcheting down of risk in the financial sector—which clearly was taking way too much risk up through mid-2007—and profits (and paychecks) will shrink. But the BLS report makes clear that rising income equality isn’t just about investment bankers hedge fund managers. And we probably don’t want do anything that would prevent Silicon Valley firms from being as innovative and flexible and lean as they want to be.