Huge job cuts for tech and biotech companies fail to dampen Silicon Valley economy.
“Remote work is here to stay. It is not a passing fad.”
The exterior of the new Google Bay View campus, May 2022.
By GEORGE AVALOS | email@example.com | Bay Area News Group
PUBLISHED: February 14, 2023 at 12:40 p.m. | UPDATED: February 14, 2023 at 5:05 p.m.
SAN JOSE — Silicon Valley’s economy and job markets remain sturdy despite being jolted by a steady drumbeat of Bay Area layoffs orchestrated by tech and biotech companies, according to a report released Tuesday.
Yet the region has come to rely disproportionately on just a few companies, according to researchers for the 2023 Silicon Valley Index, who determined that three firms — Google, Apple and Facebook owner Meta Platforms — account for nearly one out of every five tech jobs in Silicon Valley.
Despite the widening reports of tech and biotech layoffs in the Bay Area, the Silicon Valley region, defined as Santa Clara County, San Mateo County and the Fremont area, is still adding jobs, according to the new report from Joint Venture Silicon Valley, a San Jose-based think tank.
“You might think there is a crisis in Silicon Valley” as a result of “gloom and doom” regarding tech layoffs, said Russell Hancock, president of Joint Venture Silicon Valley.
Yet Hancock disagrees with the notion that a grim future looms over Silicon Valley.
“Tech is going through a painful period,” Hancock said. But he added, “There is no way to construe what is happening as a crisis” for the tech sector.
Silicon Valley tech companies, as well as those in San Francisco, launched a hiring boom during the coronavirus pandemic, when numerous people began to work, shop and learn from home or other remote locations away from their workplaces and retail centers.
“The region recovered from pandemic job losses by April 2022,” the Silicon Valley Index report stated, and “unemployment hit a historic low.”
Now, tech companies have begun to scale back hiring and staffing levels as demand for the industry’s products and services has ebbed.
“It is a readjustment,” Hancock said.
Over the one-year period that ended in June 2022, Silicon Valley added 88,000 jobs of all categories, the Silicon Valley Index report determined. Of those, tech companies added 16,000 jobs during those 12 months.
However, the tech and biotech layoffs began to hit their worst patches in 2023, after the timeframe covered by the report.
Since July 1, 2022, tech and biotech companies have disclosed plans to eliminate at least 19,500 jobs in the Bay Area. Some of those cutbacks have occurred and others are upcoming.
As the economy shifts, it’s clear that just a few tech titans are providing huge chunks of jobs in Silicon Valley, the researchers found.
An estimated 30 tech companies employ 42% of the tech workers in Silicon Valley and San Francisco, the Silicon Valley Index researchers found.
Just three companies, Google, Apple and Facebook owner Meta, account for 19% of the tech jobs in that area, according to the report.
“We look a lot more like Detroit,” Hancock said, in a reference to that region’s iconic Big Three automakers from a bygone era of American industrial dominance.
The researchers, citing the U.S. Census Bureau’s American Cities Survey, also found that the coronavirus-spawned trends of working remotely are starting to become more ingrained in the region’s economy.
In 2019, 5% of the Census respondents said they worked from home “most days of the week,” according to the Silicon Valley Index report. In 2020, that number had soared to 28% of the respondents. In 2021, the number hopped higher to 35%. the index report found. That covered people in Santa Clara County and San Mateo County.
“Remote work is here to stay,” Hancock said. “It is not a passing fad.”
The rise of remote work — and the exit of workers from their regular offices — has eroded the respective economic bases of the downtown districts in San Jose, Oakland and San Francisco, the report determined.
“We are seeing the effects on our downtowns,” Hanock said. “This is a significant development.”
Numerous office workers simply are no longer present in many offices that are located in downtown areas.
San Jose city officials have told Joint Venture Silicon Valley that sales tax revenue, specifically in the downtown district of the Bay Area’s largest municipality, is only at about 35% of what the revenue was prior to the pandemic, according to Hancock.
“The downtowns are where we are seeing a crisis,” Hanock said.