Silicon Valley Economy Rebounding as Housing, Traffic, Health Care Top Issues of Concern for Employers in Major CEO Poll

Annual Silicon Valley Leadership Group CEO Business Climate Survey Reveals Upswing in Jobs, Living Costs, Traffic Congestion, Regulatory Satisfaction

U.S. Senator Hillary Clinton to Unveil Major Innovation Agenda at CEO Business Climate Summit May 31 at Applied Materials in Santa Clara

Silicon Valley’s economy continues to improve as employers add new jobs amid related concerns over affordable housing, traffic congestion, health care costs and education, according to the 2007 CEO Business Climate Survey released today by the Silicon Valley Leadership Group.

While more than 60 percent of employers reported adding new jobs in the past year, the high cost of housing remains the top cost-of-living challenge for Silicon Valley workers, cited by an unprecedented 99 percent of the CEOs. Housing costs also came in as the top business challenge for employers, named by 84 percent.

“It is crystal clear that the economic outlook in Silicon Valley is getting brighter, but that glow is dimmed by the daunting challenges of recruiting and keeping employees in this expensive housing market,” said Carl Guardino, CEO of the Silicon Valley Leadership Group.

“At the same time,’ said Guardino, “economic growth exacerbates our traffic congestion and transit problems, which placed second in the survey in both the cost-of-living challenges for workers and business challenges for employers. Rising health care costs placed third in both areas.”

The survey will be formally released tomorrow at the Leadership Group’s annual CEO Business Climate Summit at Applied Materials in Santa Clara, where U.S. Senator Hillary Clinton is expected to announce a major innovation agenda.

In conjunction with her address, the Summit will include a “CEO Solutions Panel” on the pressing business climate issues facing our region, state and nation with five top CEOs: Mike Splinter of Applied Materials, Bill Watkins of Seagate Technology, Bruce Chizen of Adobe, Jonathan Schwartz of Sun Microsystems and Aart de Geus of Synopsys.

This is the fourth year of the CEO Business Climate Survey, which represents responses from seven major Silicon Valley industry clusters: high-tech manufacturing, software, general manufacturing, internet, communications and utilities, financial and professional services, health care and biotechnology, and education. Responses came from 115 companies, with combined annual revenues of $650 billion.

Adobe, Applied Materials and Seagate Technology sponsored the survey, with additional support from Intel, Lockheed Martin Space Systems, Synopsys and Varian Medical Systems.

Highlights of the 2007 CEO Business Climate Survey:

Economy: Silicon Valley’s rebounding economy is reflected in the 63 percent of companies that reported adding jobs in 2006, an 18 percent growth over the previous two years, and that only 11 percent subtracted jobs, down from 24 percent over the same two-year span.

Housing: The high cost of housing remains the top cost-of-living challenge for Silicon Valley workers, cited by 99 percent of the CEOs, and is the top business challenge for employers as well, cited by 84 percent of respondents.

Transit: Traffic congestion and transportation grow increasingly burdensome, placing second among the top cost-of-living challenges facing Silicon Valley employees, cited by 47 percent of corporate executives, up from 33 percent just a year ago. It also placed second among the top five business challenges for employers.

Health Care: Concern about health care costs is rising, as CEOs indicated that increases are affecting them as well as their employees. The issue ranked third highest in both of the major policy questions posed in this year’s survey. Fifty-nine percent cited it as one of the top business challenges (a 13 percent jump over 2006) and 45 percent named it as a top cost-of-living challenge (six points higher than in last year’s survey).

Other cost-of-living challenges cited by the executives were K-12 education (35%), high taxes (35%), energy costs (15%), child care costs (13%), higher education (9%) and other (1%).

Other business challenges cited included business regulations (44%), immigration (37%), high taxes (34%), worker skill level/appropriate workforce (32%), energy costs (27%), and workers compensation costs (23%).

Asked for the top five actions state government could take that would improve the business climate, the CEOs said: help create more affordable housing (65%), improve K-12 education (59%), invest in traffic relief and transportation improvements (59%), continue the Research and Development tax credit (45%), and limit frivolous lawsuits (35%).

The 2007 CEO Business Climate Survey can be viewed in its entirety on the Silicon Valley Leadership Group site at www.svlg.net/ceosurvey.