Tens of thousands of high-paying engineering jobs have emigrated to lower-cost countries, and economists say they wont return. Cynthia Kroll, senior regional economist at the University of California, Berkeley, said one in six jobs in Silicon Valley—one in nine nationwide—could be vulnerable to offshoring.

That means residents cant rely on bellwethers—Hewlett-Packard Co., Intel Corp., Cisco Systems Inc. and Adobe Systems Inc.—for job creation.

"We hope were seeing at least a bottoming out," said David Vossbrink, Gonzales spokesman, who noted that the county has lost only 13,500 jobs in the past year. "These days, that counts as optimism."

What state and city officials should do is lower the cost of living, bolster the University of California and community college systems, and otherwise welcome entrepreneurs and small businesses, said Sean Randolph, president and chief executive of the Bay Area Economic Forum. But Californias latest budget only narrowly avoided steep cuts to higher education.

"In the next rebound, the jobs wont be created here in the same proportion as the tech industry as a whole," Randolph said. "We need to get our act together. Theres no room for complacency."

Diane Greene, president of Palo Alto-based software company VMware Inc., acknowledged that consolidation in her industry has shrunk the job market. But like other executives, she points to the expected initial public stock offering of Mountain View, Calif.-based Google—which will likely make hundreds of employees millionaires—as an example of the valleys irrepressible resilience.

"I know I exist in a fairly sheltered high-tech world, but to me all the signs are optimistic," said Greene, whose company was acquired by Hopkinton, Mass.-based EMC Corp. "Certainly in the tech community people have good reason to believe that, even if the economy is still a bit difficult, people executing valuable new technology will not hit any roadblocks."