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BOOM OR BOMB?

Utah's Silicon Valley Alliance

Last May, Gov. Mike Leavitt launched an initiative that, if successful, will significantly impact future jobs for Utah's children. But will its boom become a bomb for other facets of Utah life?

The Utah Silicon Valley Alliance (USVA), a joint effort of civic, private, educational and industrial leaders, is making inroads to paving out-roads for Silicon Valley companies to expand to Utah. The USVA also hopes to foster continued high-tech related entrepreneurial development and extend technology activity to Utah's rural areas.

"We are creating more than just jobs. We are creating 21st century careers so our children and grandchildren can flourish in the New Economy," said Leavitt in a press release.

It is clear why Silicon Valley's New Economy appeals to local leaders. In the past eight years, Northern California's Silicon Valley has created a net of 250,000 new jobs. Average pay for the software industry is $95,000 a year, according to a 1999 report by Silicon Valley Joint Venture (SVJV), a nonprofit civic incubator.

The e-industries also tend to raise the overall economic prosperity of a region. Chuck Klingenstein, president of the Utah chapter of the American Planning Association and senior project manager at Psomas, a Salt Lake City office engineering consulting firm, describes the "multiplier effect" that high-paying jobs have on an area. With people spending more money in the local economy, the community as a whole benefits, he says.

But just as Silicon Valley serves as an excellent model for high-tech growth, it also serves as an example of the fallout from the fast-paced growth connected with it. The northern California "techno-mecca" has faced workforce shortages, digital divide discrepancies, soaring house prices, snarled traffic and shrinking open spaces.

While underscoring high-tech's positives, Praveen Madan, principal consultant at A.T. Kearney, a Silicon Valley management consulting firm, warns of the drawbacks. A community "needs to sit back and decide what they're willing to sacrifice in return for jobs and economic prosperity."

Cross Pollination

In Silicon Valley, several non-tech industries have benefited from high-tech's multiplier effect. In 1999, for example, construction, transportation and public utilities added 9,200 jobs, and visitor and local services added 4,650, according to SVJV.

But there are drawbacks, as well. High-tech's generous salaries have boosted overall salary expectations. John Neece, CEO of the Santa Clara Building Trades Council, says its union had to raise its starting pay of $9 an hour to compete with hightech's starting wages of $12 to $15 an hour.

According to Steve Tedesco, president of the San Jose Silicon Valley Chamber of Commerce, the service industry is struggling to keep up with salaries of the high-tech industry. While software industry employees can average $95,000 a year, service industry workers average just under $23,000, the SVJV reports.

"There's no doubt that we're challenged by a shrinking workforce because our industries are not accustomed to paying the wages and salaries of the high-tech industry," says Patricia Morreale, director of marketing for Hilton in San Jose. The hotel has had to be creative in its employee retention, beefing up benefits packages, hosting staff events, and deploying other feel-good tactics to compensate for wage deficiencies.

On the home front, the USVA says it's committed to balance. Rod Linton, director for the Governor's Office of Technology, says, "We need to have a relatively stable balance between entrepreneurship, retail, construction, banking, support services and legal services. My belief on that subject is that's a problem that tends to solve itself. If you have a strong economy with lots of people working in high technology jobs, those people will demand those kinds of services."

Workforce Issues

Linton emphasizes the USVA's primary goal is to bring high-tech's high-paying jobs to Utah's local workforce, a segment that continues to increase with birthrates twice that of the nation's.

Future initiatives include the governor's call for doubling the number of engineering and computer science graduates in the next eight years.

However, filling high-paying technology jobs with a local workforce may not prove as easy as it seems. In Silicon Valley, for example, demand in high-tech alone exceeds the local supply by 160,000 positions a year, a shortage that costs the industry $3 to $4 billion annually. While the goal is to fill the need with local residents, Holcomb says, "There has been an increase in commuters coming into the valley to fill these high-paying high-tech jobs."

Moreover, a recent SVJV workforce study shows that students, the future pipeline of skilled labor, "lack a familiarity and interest in high-tech careers and are therefore not building the skills required for these job opportunities."

Affordability and Quality of Life

Utah's affordability and quality of life are attractive to many Silicon Valley companies. While the average price of a home in Salt Lake County in 1999 was $172,070, according to the Wasatch Front Regional Multiple Listing Service, homes in Santa Clara County recently averaged $599,432, according to statistics compiled by Title Tech of Oakland.

Escalating housing costs are forcing many people who work in Silicon Valley to move as far as 75 miles away to find affordable housing, says Neece. Susan Moffat, communications director for Greenbelt Alliance says cities such as Palo Alto are now subsidizing commuter-van pools from Modesto, some three hours away.

The subsequent suburban sprawl has consumed thousands of once-agricultural acres throughout the Santa Clara region and beyond. The result has been auto congestion, pollution and catch-up transportation planning.

Groups such as the nonprofit Greenbelt Alliance urge a better approach to urban planning, including commercial and residential growth along transit lines, planned open spaces and higher-density development. Growth is such a pivotal issue that voters decided 18 growth-related issues on the recent November ballot.

Linton says the USVA will work with groups such as Envision Utah to plan wisely. "We recognize the potential for serious problems (in affordability). Any time you have an area with a significant number of people who are wealthy, costs will be driven up, particularly in the housing area."

While not officially involved in USVA planning, the Utah Transit Authority recommends high-impact growth along current and future transit lines, says Chris McBride, UTA spokesperson. "We would encourage high-tech companies to establish good clusters of destinations, in other words, not to locate way out in the middle of a new area, then expect to have efficient mass transit," she says.

Planning with Purpose

"I think it's imperative to look at the gaps and opportunities that arise in other regions, such as Silicon Valley, in which the increase of disparities are basically a formula for future instability -- economic, social and otherwise. If growth is to happen, all facets of the community need to be considered," advises Holcomb.

The USVA is doing just that, asserts Linton. Its 10-plus committees, comprised of private and public experts, have begun planning for the pros and cons of growing Utah's high-tech industry.

"Anyone who says there won't be some challenges wouldn't be honest, but if we allow our economy to stagnate, if we don't put emphasis on high-technology opportunities, then we'll have a society that won't have the opportunities with high-tech economy," says Linton.

Heather Beers is a Salt Lake City-based freelance writer.

Average annual salary in Silicon Valley

High-tech workers: $95,000

Service industry workers: $23,000

1999 Average Home Price

Santa Clara County: $599,432

Salt Lake County: $172,070

Starting Wages Silicon Valley, Calif.:

High-tech Worker (avg) $12-15 per hr.

Union Trade Worker $9 per hr.
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Title Annotation:Utah Silicon Valley Alliance
Author:BEERS, HEATHER
Publication:Utah Business
Geographic Code:1USA
Date:Feb 1, 2001
Words:1246
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