Silicon Valley's tribulations have widespread ramifications

Don't let a recent surge in the financial performance of high-tech companies fool you: Silicon Valley continues to hemorrhage jobs and talent. Lingering frailty threatens to hurt the local economy and damage the innovative culture that defines the region, according to the 2010 Silicon Valley index, released today.

"The Valley's innovation engine has stalled," says Russell Hancock, CEO of Joint Venture Silicon Valley Network. The annual study on the economic state of the Valley paints a region battered by state legislative gridlock, increased competition from other countries, and a drain in venture funding and foreign-born talent. The region lost 90,000 jobs between the second quarters of 2008 and 2009, dropping total employment to 2003-05 levels of 1.3 million. Many employers are moving technical jobs overseas, where wages are lower and running a business is cheaper.