The Bay Area's shaky tech industry is showing signs of stabilizing after suffering years-long waves of painful layoffs sparked by the sector's push for greater efficiency.
While job losses at major firms like Tesla are still ravaging the region's tech industry, which is affected by layoffs, factory closures, consolidations and restructuring, the cuts are actually less severe overall.
In the one-year period ending March 2024, the Bay Area lost 36,000 tech jobs — a decline of three.9%, in accordance with a Beacon Economics estimate based on state employment reports. In 2023, the 12-month period ending in December, the Bay Area lost 49,700 tech jobs, a decline of 5.2%.
Large firms similar to Meta, Google and Cisco have laid off employees in recent times.
“Last year’s tech layoffs, which followed overstaffing in tech in 2022 and early 2023, have slowed,” said Michael Bernick, an employment lawyer on the Duane Morris law firm and former director of the state Employment Development Department.
The long-term outlook for the region's economy and tech industry stays healthy, in accordance with Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank.
“Downsizing is not the same as a downturn,” Hancock said. “Despite the layoffs, we still have low unemployment in Silicon Valley and the greater Bay Area, which suggests people are on their feet.”
Additionally, a number of the recent high-profile bank implosions haven’t changed into a doomsday scenario for the local tech sector, as some East Coast experts had predicted.
“The good news here is that tech job losses have not increased following the collapse of Silicon Valley Bank and First Republic Bank,” said Scott Anderson, chief U.S. economist at BMO Capital Markets. “After the first episode it was more of a constant drip, drip, drip. However, there is no real end in sight.”
It can be clear that the tech sector decline has been most severe within the San Francisco-San Mateo region, where the biggest tech job losses are within the Bay Area and much greater tech job losses than within the South Bay, as shown by the news organization's evaluation of state workforce numbers compiled by Beacon Economics.
In 2023, the San Francisco-San Mateo region suffered a lack of 26,000 tech jobs – 52% of the 49,700 tech jobs lost across the Bay Area. In contrast, the South Bay lost 20,600 tech jobs, or 41.4% of all jobs within the region. The East Bay, whose reliance on high-tech jobs is way lower than that of its neighbors to the west and south, lost 2,900 tech jobs in 2023, or 5.8% of the whole.
San Francisco has been gripped by what some experts call an economic “bad luck cycle” triggered by a retail exodus, crime problems, office and hotel foreclosures and record-breaking office emptiness rates.
But some experts imagine Silicon Valley will give you the option to ease the pain of tech layoffs within the North.
“People who are losing their jobs in San Francisco or on the Peninsula are finding new opportunities in the South Bay,” Hancock said. “Start-up activity and venture investments are quite robust. Many companies are downsizing some areas of their business while expanding others.”
Nevertheless, cuts continued to occur in 2024. In the primary three months of this 12 months, tech firms shed 11,000 jobs within the Bay Area. March 2024 is the most recent month for which state employment agency figures can be found, although layoffs have continued since then. In recent weeks, Tesla has announced plans to chop greater than 3,000 jobs within the Bay Area.
“The technology industry is not immune to the same negative economic forces hanging over the current economy,” Bernick said.
These macroeconomic problems include high rates of interest and budget deficits that plague federal and state governments.
And “conditions for the tech industry remain challenging as long as interest rates remain as high as they are,” Anderson said.
Nevertheless, some experts see reason to be optimistic concerning the way forward for the industry.
“The continued loss of tech jobs is disappointing, but there are some hopeful signs emerging,” said Steve Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “The rents for vacant office space are falling and attracting new tenants.”
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