Tech companies blamed for 20 years of falling wages in Silicon Valley

Despite being more productive, workers in the Silicon Valley region get less pay.
Written by Liam Tung, Contributing Writer on

Research into real wages in Silicon Valley has found that 90 percent of jobs in the region are paying less than 20 years ago.

That's according to two related studies published by Working Partnerships USA and the Everett Program, which blame the growing income inequality on Silicon Valley tech industry business models.

Working Partnerships USA petitions companies like Google and Apple to support contract workers and devises policy campaigns on behalf of low-wage workers.

The reports note that since the 1970s productivity growth in the region has become "decoupled" from wage growth.

So while Silicon Valley has the highest per-capita economic growth, most workers are getting a smaller share of the gains. Only the top 10 percent of the best-paid jobs have seen real incomes rise in that time.

Workers would have received an extra $8,480 in pay and benefits in 2016 if their share of GDP had been equivalent to their share in 2001, according to the study.

As it is, the gains are going to venture capitalists, financiers, executives, and top-earning employees.

And the researchers argue the disconnect between productivity and wages growth is being exacerbated by the tech sector's winner-take-all attitude and the "near-monopolistic" nature of the industry, citing the dominance of Google, Facebook, and Amazon in select markets.

SEE: Special report: IT jobs in 2020: A leader's guide (free PDF)

The study found that GDP per person in the San Jose area increased by 74 percent over the past 16 years, yet the median wage for workers in Silicon Valley declined by 14 percent during that time.

The share of total output from certain industries has also fallen dramatically in the past 20 years. In 2001, workers making computers and semiconductors received 76 percent of total output, but that figure had fallen to 58 percent in 2016.

Looking at Silicon Valley's mix of low-wage, middle-wage and high-wage jobs since 1997, the study found the share of low-wage jobs had increased nine percentage points, while middle-wage and high-wage jobs declined by three and four percentage points, respectively.

The one group of employees whose wages rose across the board are those working in the high-tech sector in Silicon Valley, with median pay up 32 percent compared with 1997. The median wage in non-tech industries fell by 12 percent.

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