San Jose and its surrounding cities topped a list of best-performing metro areas thanks to its booming tech industry, which thrust it from 51st to numero uno in the nation just a year ago. San Jose Mayor Chuck Reed snapped up the chance to discuss the story, releasing a statement that credited at least some of the region’s job growth with the city’s help.
“San Jose remains committed to helping our local companies stay here and grow here, and I look forward to helping facilitate their growth in the years ahead,” Reed boasted in a statement emailed out a quick minute after the Milken Institute released its Best-Performing Cities index.
Ross DeVol, who co-authored the report, says quality job creation, wages for those jobs created and technology—the biggest engine for economic growth in recent years—drove the increase. San Jose and its surrounding cities house one of the biggest tech innovation ecosystems, he adds.
Other cities leading the index included: Austin, Texas; Raleigh, North Carolina; and Houston—also seen as centers for technology and related manufacturing.
San Jose’s recovery spurred a trickle-down blessing for the rest of the region, the report says, adding that for each job gained in the tech sector, another five were created in other industries. Companies like Apple in Cupertino drove the dramatic leap to the top of the list this year, says the report titled “Silicon Valley is Back.” Apple reportedly employs about 34,000 people, but creates another 170,000 jobs across the region, the report notes.
“San Jose’s recovery has spread throughout the regional economy, thanks to the high multipliers associated with the tech industry,” the report reads. “For each new job added to the field—exemplified by growing social media firms such as Facebook and Twitter—two professional positions (doctors and accountants, for example) and three nonprofessional jobs (waiters, hairstylists and store clerks) are created.”
Social media, mobile devices, “big data” analytics and clean-tech companies played the biggest role in boosting the valley to its top spot, according to Milken. The U.S. Department of Labor Statistics concludes the same. Apparently businesses started investing more in equipment—mainly IT and software—after putting it off for because of the recession.
DeVol seems to think that unlike the dot-com bubble that led to San Jose’s No. 1 ranking in 2001, this tech-driven boom won’t bust anytime soon.
“We used to have companies that were funded, managed to issue shares, to go public, that didn’t even have profits, let alone revenue,” he told Yahoo! Finance. “It’s different today. You have social media companies—the Facebooks, the Twitters—they have proven business models. So I don’t think we have to worry about a tech bubble.”