Two points:
1 - plenty of stem surveys (lumping all of stem together, as you did) show plenty of available candidates as calculated by the percentage of domestic stem graduates working in stem post graduation. see, eg,
http://www.usnews.com/opinion/articles/2014/09/15/stem-gradu...
2 - if you wish to limit the discussion to sf/valley type jobs, a honest claim is there aren't sufficient already trained engineers who wish to live in sf/valley at the prices employers wish to offer who already have the desired skills. There are lots of ways to address it: pay enough so that living here isn't a financial disaster (compare housing prices in sf/nyc (much cheaper than sf!), seattle, chicago, boston, etc), solve transport problems making san jose and sf essentially separate cities, figure out remote employees, hire women (and even retain them!), train engineers, etc.
2b - even a smidge of economics will tell you it's very hard for an actual shortage to exist; there's a clear lack of evidence of wage increases (over cost of living increases) that would accompany an actual tightening of the labor market
Higher salaries and higher employment levels seem to correlate with higher, not lower, housing prices.
> solve transport problems making san jose and sf essentially separate cities
How would you even address that? It's run by public agencies controlled by three counties (San Francisco, San Mateo, Santa Clara). You need to get financial commitments from all three counties, railroad unions, state agencies like CalTRANS, etc. They're bringing BART to San Jose, so maybe things are already slowly progressing in that regard.
