Collapse of Silicon Valley Predicted - Film at 11. No, this isn't about earthquakes - it's about the economy.

Assume - for every person in the primary industry, you need five people in the 'normal' things.

This may sound odd, but look around at a city and identify the industries - those things that bring in money to the area from the outside. It could be a government center, university, or a classic industry. Madison, Wisconsin for example has the major industries of state capitol and the university. Dodgeville, Wisconsin has Lands' End and is a company town. The same images can be seen in Las Vegas with tourism and gambling, and Detroit with cars.

The other five people do things like work in fast food restaurants, grocery stores, and classic retail. However, retail is not it - there are police, firemen, doctors, dentists, and tow truck drivers... The list goes on and on.

While industries bring in money to the area from outside, commerce keeps it circulating and makes certain that everyone who is there has what they need.

The problem with Silicon Valley is that as the demand for people working in the industry rises, so does the amount that those workers get paid. Within Silicon Valley, this has grown to absurd proportions (I know, I'm one of them). With all of this money, and a limited amount of resources (primarily space aka housing) the amount people are willing to pay has skyrocketed. Houses go for 10x (or more) the amount the similar house would cost in the Midwest (a starting house in the San Francisco Bay Area may well start bidding at $1M - yes, thats million... and thats where the bidding starts). The rent I pay for a one bedroom apartment is $1560/month - which is actually low for the area because I've been in that apartment complex for almost 5 years now - my neighbor pays $1830/month.

Just do the math on that for a moment. Now think back to the people working in other industries. In order to afford a one bedroom with something less than a 1 hour commute, you need to make about $60,000/year or about $30/hour. This is more than a teacher makes. This is more than a tow truck driver makes. This is more than the guy at the fast food place makes. This is just for a one bedroom apartment - the classic American dream of owning your own house - Ha! Unless you made it big in stock options where you work you're going to have to buy something way out of the area.

Until the absurd cost of living for the Bay Area drops, things will be difficult for anyone who is not in high tech to live out here. When the police department can't pay enough to keep its police officers, and the teachers can't afford to live in the area - it is certainly time to start looking somewhere else.

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