Bay Area employers cut hundreds of jobs in July, a troubling economic setback that means waves of layoffs within the struggling tech industry are also hurting employment prospects within the region as a complete.
Much of last month's job losses within the Bay Area were attributable to massive layoffs within the South Bay and greater San Francisco, in line with a brand 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, chief U.S. economist at BMO Capital Markets. “Layoffs in the technology industry are a consistent and relentless theme.”
The Bay Area lost 3,400 jobs in July, marking the second consecutive month of job cuts for the nine-county region, in line with figures from the state Department of Employment Development.
The worst job losses within the Bay Area last month occurred within the two metropolitan areas with the biggest concentrations of technology firms, in line with the state's monthly report on California's labor market.
The East Bay saw only a 300-job gain, suggesting that the Alameda County-Contra Costa County region is losing momentum.
Technology firms cut a net 2,300 jobs within the Bay Area in July, in line with this news organization's compilation of seasonally adjusted industry numbers, which 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.
Here's how the Bay Area's three largest metropolitan areas fared by way of net changes in total tech jobs, in line with the Beacon assessment:
— The San Francisco-San Mateo region saw the worst job losses within the tech sector in July, with a complete of 900 jobs lost within the greater San Francisco area.
– The South Bay lost 800 technology jobs in July.
– 700 technology jobs were cut within the East Bay.
“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 native authorities, hiring of technicians boomed to fulfill demand for telecommuting and distance learning.
However, as staff progressively returned to the office, demand for distant devices and services decreased. Technology firms found they’d a surplus of employees.
At the identical time, technology firms were pushing into the promising field of artificial intelligence. This shift triggered much more layoffs as technology firms 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 within the greater San Francisco area is putting a strain on your complete Bay Area.
This is how the Bay Area and its three largest metropolitan regions developed in the primary seven months of 2024:
– 1,600 jobs were added within the Bay Area.
– The East Bay is essentially the most stable region within the Bay Area and creates 7,000 additional jobs.
– 3,800 jobs were created within the South Bay.
– The San Francisco-San Mateo region lost 11,200 jobs, while the greater San Francisco area lost jobs every month this 12 months.
“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 on the University of the Pacific.
Compared to the Bay Area, the employment situation in the remainder of the state is significantly higher, the EDD report said.
California added 21,100 recent jobs in July, marking five consecutive months of employment growth within the nation's largest state.
The national unemployment rate remained unchanged from June at 5.2% in July. However, the present numbers for California are far worse than the state's record-low unemployment rate of three.8% in August 2022.
With the technology industry set to struggle within the near future, economists suggested that the Bay Area should use the present downturn within the industry to plan for the longer term.
“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 lack 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, nonetheless, employment problems within the Bay Area could persist for some time.
“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.
Originally published:
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