Santa Clara County and the East Bay suffered their worst two-month stretch of job losses since the Great Recession during January and February, state jobs data showed Friday, raising questions about the region’s economic strength.
The technology industry, which has long fueled the Bay Area’s economy, has begun to shed jobs after showing slower growth throughout much of 2016. High-tech companies slashed 2,700 jobs in the Bay Area last month, according to an analysis by Beacon Economics and the UC Riverside Business School of state job numbers.
“The Bay Area’s job-growth engine, Silicon Valley, slipped a gear in February,” said Scott Anderson, chief economist with San Francisco-based Bank of the West.
Santa Clara County lost 5,700 jobs in February, and it shed 8,100 jobs over the first two months of 2017 — its worst such stretch of job losses since June-July 2009, according to seasonally adjusted numbers from the Employment Development Department.
Those losses contributed to the Bay Area as a whole losing 4,400 jobs in February and 8,600 jobs in the first two months of the year — its worst two-month stretch since June-July 2010.
The downturn comes after the Bay Area logged job growth of just 2.7 percent in 2016, the first time this region failed to top 3 percent growth in five years.
Some experts suggested the Bay Area’s slump in venture capital funding has contributed to the sluggish job trends in the region’s tech sector. During 2016, the VC sector provided $24.9 billion in financing, down 27.6 percent from the $34.4 billion in venture investing in 2015, according to the MoneyTree Report by PricewaterhouseCoopers and CB Insights.
“We are living in a hope-and-pray environment in tech,” said Trip Chowdhry, managing director with Global Equities Research. “Investors are seeing the problems with a lot of these tech companies. And at some point, tech companies have to cut jobs.”
The East Bay — Alameda and Contra Costa counties — shed 2,400 jobs last month and lost 5,600 jobs in the first two months of the year, its worst two-month stretch since July-August, 2009.
The San Francisco-San Mateo County region added a scant 900 jobs last month.
“It’s been a long time since I called a Bay Area jobs report ‘ugly’, but this one is ugly,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at University of the Pacific.
The South Bay’s weakest industries last month were retail, which lost 1,600 jobs; tech which lost 1,300; wholesale trade, which eliminated 1,200 positions; and administrative support, which lost 1,100 jobs.
The East Bay lost 1,200 hotel and restaurant jobs, 800 manufacturing jobs and 800 administrative support jobs. Tech employers added 100 jobs in that area. Wholesale trade was the East Bay’s strongest industry in February, adding 900 jobs.
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The San Francisco-San Mateo region lost 1,700 tech jobs, but it also gained 2,200 hotel and restaurant jobs.
In Silicon Valley, some workers have expressed frustration that tech companies want to assess them through contract positions before awarding job candidates a full-time gig.
“Right now it’s tough to find a job in I.T.,” said Steve Satariano, a San Jose resident who has been working in contracted, temporary information technology jobs in recent years. “I’d prefer to find a full-time, permanent job, but in I.T., beggars can’t be choosers. It’s a little frustrating because tech companies always want to try before they buy.”
Other tech job seekers, despite the robust hiring trends of recent years, said they believe the availability of foreign workers through the H-1B visa program diminishes their chances of finding full-time tech work.
“My feeling is tech companies prefer younger and less expensive employees, and a lot of times that means immigrants,” said Nick Longo, a Berkeley resident and software worker. “I still can’t get a permanent job. It just seems easier for tech companies to hire people through the H-1B visa system.”
The Trump administration, however, has announced it will suspend fast-tracking of H-1B visas.
Global Equities Research’s Chowdhry believes the squeeze on the region’s tech sector is only beginning.
“Silicon Valley is bracing itself for literally a repeat of 2001,” Chowdhry said, referring to the dot-com meltdown that erupted with mammoth job losses that year. “This time it’s a social media bubble that will blow up.”
Other experts, however, said the Bay Area’s overall economy remains in good shape, despite the struggles in February.
“The sky is not falling by any means,” said Robert Kleinhenz, executive director of economic research with Beacon Economics. “Unemployment rates throughout the Bay Area are among the lowest in the state. Almost anywhere else in the country, the Bay Area’s job trends would be the envy of that region.”
The Bay Area’s job-market weakness in February contrasted sharply with a sturdy performance in the rest of California.
Employers added 22,900 jobs in California during February, improving the jobless rate to 5 percent for the first time in 10 years.
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