Bay Area employers have cut thousands of jobs amid a troubling economic downturn, suggesting that layoffs in the struggling tech industry are also hurting employment prospects in the region as a whole.
Much of last month’s job losses in the Bay Area were due to massive layoffs in the South Bay and greater San Francisco, according to a new state report released Friday.
“The Bay Area economy is in trouble, and monthly job growth has been unstable for nearly two years,” said Scott Anderson, economist at BMO Capital Markets. “Layoffs in the technology industry are a consistent and relentless theme.”
Across the Bay Area, 3,400 jobs were lost in July, marking the second consecutive month of workforce cuts for the nine-county region, according to figures from the state Department of Employment Development.
Marin’s unemployment rate was 4.1% in July, the fourth lowest in the state. The county’s unemployment rate was 3.7% in June and 3.3% in July 2023. 132,600 people were employed last month.
The worst job losses in the Bay Area last month occurred in the two metropolitan areas with the largest concentrations of technology companies, according to the state’s monthly report on California’s labor market.
In the South Bay, 1,300 jobs were lost last month, but the region’s worst job losses were in the San Francisco-San Mateo metropolitan area, where 2,000 jobs were eliminated, the state report showed.
The East Bay saw only a 300-job gain, suggesting that the Alameda County-Contra Costa County region is losing momentum.
Technology companies cut a total of 2,300 jobs in the Bay Area in July, according to a compilation of seasonally adjusted Bay Area industry numbers that Beacon Economics derived from the state report.
“Layoffs in the technology sector continue to slow job growth in the region,” said Steve Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.
According to the Beacon assessment, the San Francisco-San Mateo region suffered the worst job losses in the tech sector in July. The greater San Francisco area lost 900 tech jobs overall. The South Bay lost 800 tech jobs in July, while the East Bay lost 700 tech jobs.
“Our driving industries like technology are still in the process of realigning and streamlining as they advance clean energy, electric vehicles, battery technology and artificial intelligence,” said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank.
During two years of coronavirus-induced business shutdowns ordered by state and local authorities, hiring of technicians boomed to meet demand for telecommuting and distance learning.
However, as workers gradually returned to the office, demand for remote devices and services decreased. Technology companies found they had a surplus of employees.
At the same time, technology companies were pushing into the promising field of artificial intelligence. This shift triggered even more layoffs as technology companies cut unwanted units and employees to capitalize on the opportunities offered by AI.
“The tech layoffs in 2022 and 2023 were expected and the result of high levels of overstaffing by companies,” said Michael Bernick, an employment attorney with the Duane Morris law firm and former director of the state Department of Labor. “The current level of tech layoffs exceeds expectations and may represent structural changes. It’s too early to tell.”
The brutal labor market in the greater San Francisco area is putting a strain on the entire Bay Area.
In the first seven months of 2024, the Bay Area added 1,600 jobs. The East Bay is the Bay Area’s strongest region, adding 7,000 jobs. The South Bay added 3,800 jobs. The San Francisco-San Mateo region lost 11,200 jobs, while the San Francisco metropolitan area lost 1,000 jobs every month this year.
“The San Francisco region has reported a decline in jobs in each of the last six months after some modest gains in late 2023, and is the only metropolitan area in California that has not seen any job gains in the last 12 months,” said Jeffrey Michael, a Stockton-based economist at the University of the Pacific.
Compared to the Bay Area, the employment situation in the rest of the state is significantly better, the EDD report said.
California added 21,100 new jobs in July, marking five consecutive months of employment growth in the nation’s largest state.
The national unemployment rate remained unchanged from June at 5.2% in July. However, the current numbers for California are far worse than the state’s record-low unemployment rate of 3.8% in August 2022.
With the technology industry set to struggle in the near future, economists suggested that the Bay Area should use the current downturn in the industry to plan for the future.
“The key for the future is to make the region competitive for the upcoming renewed growth of jobs in the technology sector,” Levy said.
Of particular concern is the inability of political and economic decision-makers to make real progress in ensuring adequate housing supply and finding solutions to the region’s seemingly intractable transport problems.
“In the long term, we are well placed to be competitive,” Hancock said. “If people really want to worry about the economy, I suggest they should focus on our chronic housing shortage.”
In the short term, however, employment problems in the Bay Area could persist for a while.
“We expect little to no growth for the remainder of the year as the technology economy reorients itself and the state’s overall business climate continues to be scrutinized by business leaders,” said Jeff Bellisario, executive director of the Bay Area Council Economic Institute.
Marin working data
The unemployment rate in July for Marin County and selected areas therein.
Marin County 4.1%
Corte Madera 5.2%
Fairfax 9.6%
Inverness-11.2%
Delphinium 1.9%
Mill Valley 2.8%
Novato 4.1%
San Anselmo 3.7%
San Rafael 3.9%
Sausalito 4.8%
Tamalpais/Homestead Valley 2.6%
Source: California Employment Development Department
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