It seems like every few weeks there’s news of Silicon Valley tech workers getting hit by wave after wave of mass layoffs. So why doesn’t it feel like the Bay Area is in a recession? After all, it’s just as hard as ever to buy a house in San Francisco and the region is still the powerhouse for the state’s economy.
Earlier this month Oracle cut more than 500 jobs in the Bay Area as part of a wider workforce reduction totaling roughly 30,000 workers globally. In July, Meta will begin laying off 3,000 workers in Menlo Park, Sunnyvale, Burlingame, San Francisco and Fremont. LinkedIn will also slash more than 500 jobs in Sunnyvale, where it’s headquartered, as well as San Francisco and Mountain View. Last October, Cisco eliminated over 200 Bay Area jobs, and in May the San Jose-based company began eliminating about 4,000 additional jobs globally, despite posting record earnings.
But this is actually a slower pace of layoffs than 2022, said Sarah Bohn, the vice president and director of the Public Policy Institute of California’s Economic Policy Center. She said the Bay Area economy has remained stagnant in terms of employment and job growth over the past year or so. Though that sounds underwhelming, it’s a relatively promising sign that the industry has moved forward from its post-pandemic cutbacks.
The unemployment rate within the tech industry also remains the lowest across the broader economy, and those who get laid off within the sector often find other work “in pretty quick succession,” said Bohn.
- Bohn: “The layoffs announcements are striking and it sounds like a lot of people are affected, but we’re talking about a really large sector. … If you’re laid off or things are changing at your tech firm, there are nonetheless other opportunities in the California economy for a lot of those folks.”
Jeff Bellisario, the Bay Area Council Economic Institute’s executive director, also told me that generous severance packages from tech companies and investments in the well-performing stock market allow laidoff workers more buffer and disposable income, respectively, as they look for new work.
But that doesn’t mean things will always be steady: If large layoffs continue, we could in time see a notable drop in the Bay Area job market, said Bohn.
Finding a new job has also become more difficult in certain tech sectors, now that the industry is “growing through other means that’s not tied to human capital,” said Bellisario, such as data centers and artificial intelligence.
- Bellisario: “Tech employees have opportunities. But now that the labor market is more challenging, it’s not the frothy tech labor market that we had just a few years ago.”
