Why Some Minorities Lag Behind in Silicon Valley

Feb. 11, 2013— -- A recently released report on everything from the economic to cultural health of Silicon Valley paints an encouraging picture. In this region, the economy is improving, employment is up and students are doing better than their peers in the rest of California.

But the report also tackles the Valley's distinct challenges. A major one is that African-American and Hispanic students are performing worse in school than their white and Asian peers, and minority entrepreneurs face widening wage gaps among other obstacles.

"A large and growing education deficit keeps too many residents from sharing in the new prosperity," wrote Joint Venture Silicon Valley President and Chief Executive Officer Dr. Russell Hancock in the report's introduction. "Incomes continue to slip for our Hispanic and African American populations, while rising for other groups."

Silicon Valley represents a broad geographic section of the Bay Area that shifts along with the tech industry. While it typically excludes San Francisco, the build-up of tech companies such as Google and Twitter in the city have led more people to include the region's hub in the definition. The 2013 report acknowledges the growing role San Francisco plays in the tech industry, but defines Silicon Valley as ranging from just south of the city in Brisbane, down the peninsula to San Jose, and up the lower part of the East Bay to Union City.

The report, which has been published annually for more than 15 years, analyzes the state of the Valley using five categories – people, economy, society, place and governance. Because of a diverse mix of immigrant entrepreneurs, technological innovation and art, Silicon Valley is faring much better than other parts of the state. But African-American and Hispanic members of the community are getting left behind fpr several reasons.

Silicon Valley residents of all races and ethnicities are more educated than Californians overall, and most are more educated now than they were five years ago. That doesn't hold true for African-Americans and Hispanics, however. While nearly 60 percent of Asian adults in the region have a bachelor's degree, only 23 percent of Hispanics have some form of higher education.

According to the Hispanic Foundation of Silicon Valley, a Latino-advocacy organization based in San Jose, California, there are a number of reasons for the low rates of higher education. Hispanics are less likely to attend preschool than other demographics, they have lower rates of English-reading comprehension, and they often have parents who are not familiar with the American education system, particularly when it comes to applying for college. By the time Hispanic students reach high school, they are less likely to take the classes they need to apply for higher education. So while they might graduate from high school, they are not necessarily qualified to attend a state university.

The Hispanic Foundation is looking to change that, however. The organization has held Saturday algebra review programs and routinely sponsors events to encourage young Latinos to pursue science and math careers.

There is also a widening gap between the wealthy and poor in the region, and the middle class is also shrinking. Food stamp participation for the region beat a previous decade high of five percent. And while per capita income increased for most people, it went down five percent for Latinos in the region, and a startling 18 percent among blacks.

The housing situation in the Bay Area also paints a bleaker picture for African-Americans and Hispanics than whites and Asians. The former are more likely to rent than the latter, and while homeowners are faring better than they have in years, rent has increased and affordable housing is at an all-time low.

Forbes reported that, according to Movoto, a real estate brokerage based in Silicon Valley, Hispanics accounted for only about six percent of home buyers in 2011, while whites made up 85 percent. And according to the National Association of Hispanic Real Estate Professionals, more than half of Hispanics rent. Competition for rentals is particularly fierce in the Valley, with many young, highly paid tech workers moving to the area and snapping up apartments as the economy picks up speed and companies like Facebook go public. According to the index, "approvals for construction of new affordable housing in 2012 dropped to the lowest levels of the 15-year reporting period, compounding housing affordability challenges for Silicon Valley's middle and lower income residents. The 83 newly approved affordable housing units represented only two percent of total new residential units in 2012, a 68 percent drop from 2011."

Also troubling is the increasing disengagement of young people in the region. High school dropout rates increased from 2010-11, juvenile felony drug offenses edged up, and the percentage of eighth graders scoring at an advanced level on an Algebra test fell for the first time in four years.

"As our economy continues to grow, and as that growth takes on a wider footprint," Hancock wrote, "the 2013 Index challenges us to think more expansively about all the associated challenges, to become more regionally integrated, and to ensure that our growth is more widely shared."