The once-robust Bay Area shed 5,200 jobs last month amid a faltering job market, and even worse, the nine-county region has now tallied employment drops for three straight months, an unsettling new report shows.
Job losses in the South Bay, East Bay and San Francisco-San Mateo County led the regional decline, state labor officials reported Friday. September’s setbacks in the Bay Area were driven by a loss of well over 4,000 tech jobs.
“The Bay Area economy may have shifted from just treading water to a period of backsliding under the weight of higher for longer interest rates, slowing consumer and business demand, and weaker growth in Asia and around the globe,” said Scott Anderson, chief U.S. economist and managing director with BMO Capital Markets.
The worst September losses came in the San Francisco-San Mateo metro area, where employers chopped a net total of 4,100 jobs, the state Employment Development Department reported.
The South Bay lost 1,800 jobs while the East Bay shed 1,600 jobs, the state reported. All the numbers were adjusted for seasonal volatility.
California’s employment engine has ground to a near halt. The state added just 8,700 jobs in September, marking the fourth straight month the state gained fewer than 10,000 jobs.
The statewide unemployment rate worsened and rose to 4.7% in September, up from 4.6% in August. In September 2022, the California jobless rate was only 4%.
Here’s just one example of how badly California’s job market has faltered as the year advanced. Over the first five months of 2023, California added an average of 41,800 jobs a month. But over the four most recent months, that state has averaged a feeble gain of 7,700 jobs a month – – a jaw-dropping plunge of 81.6% in the monthly average.
Following revisions of prior preliminary job reports, the Bay Area wound up losing jobs in July, August and September, the latest estimates show.
“The Bay Area economy, which has been gliding above other parts of the state since 2021, is now feeling the forces of rising interest rates, the commercial real estate collapse, and high inflation,” said Michael Bernick, an employment attorney with law firm Duane Morris and a former director of the EDD.
Ominously, the current trend suggests that job losses have become steadily worse in recent months.
“With the revision of previous months and the new September job losses, the employment trend is now clearly downward for the region,” said Jeff Bellisario, executive director of the Bay Area Council Economic Institute.
The Bay Area lost 700 jobs in July and 3,700 in August, capped off by the loss of 5,200 jobs in September, the updated government figures show.
Anderson warned that the Bay Area job market appears to have morphed from a gradual slowdown to something more dire. “The shift to outright net job losses and accelerating job declines in the South Bay, East Bay and San Francisco-San Mateo area in September paints a darker picture of the near-term economic outlook,” Anderson said.
The big culprit in the steadily weakening Bay Area job market appears to be the tech sector, according to details on industry job trends provided to this news organization by Beacon Economics.
“The tech sector is in a transition, right-sizing in some segments of their business, adding employment in lower-cost metro centers, and getting poised for lift-off around artificial intelligence,” said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank. “We’re also cornering the market in electric vehicles, clean energy and biotech.”
Bay Area tech companies in September shed 4,800 jobs, according to this news organization’s review of the Beacon-provided job totals. Beacon derived its numbers from the EDD report and adjusted the industry numbers for seasonal variations.
Here’s how the tech industry fared last month in the Bay Area’s three largest metro areas, according to the Beacon estimates:
— The San Francisco-San Mateo region was hardest hit, losing 3,200 tech jobs.
— The South Bay shed 1,700 tech jobs.
— The East Bay was the lone bright spot in the Bay Area for the tech sector in September, adding 500 tech jobs.
“This data is showing a clear decline in tech jobs over the summer,” said Jeffrey Michael, executive director of the Stockton-based Center for Business and Policy Research at the University of the Pacific.
The hotel, restaurant and drinking establishment sector also tumbled in September, losing 2,500 jobs last month, Beacon Economics reported.
The San Francisco-San Mateo region lost 3,000 hotel and restaurant jobs while the East Bay shed 800 positions in this segment of the leisure and hospitality industry. The South Bay, however, added 600 hotel and restaurant jobs.
Retail was one of the few bright spots for the Bay Area job market in September. Retailers added 1,200 jobs in the Bay Area, with gains of 500 retail jobs both in the south Bay and the San Francisco-San Mateo region, the Beacon assessment showed. The East Bay lost 300 retail jobs last month.
“We can expect the job growth slowdown to continue, as the period of easy job growth, like the period of easy money, comes to an end,” Bernick said. “The layoffs in the tech sector are of the highest profile, but the fuller narrative is the job slowdown in nearly all of the other sectors.”
The Bay Area might not bounce back immediately from the current spate of employment reductions, some experts warn.
“A quick reversal of this trend appears unlikely with much of the tech sector slowing hiring plans, the service sector experiencing labor force constraints, and manufacturing and construction both facing headwinds from high interest rates,” Bellisario said.
The current sour job market in the Bay Area is simply a feature of the region’s boom-bust-boom economy, in Hancock’s view.
Venture capital funding continues in a big way in the Bay Area generally and Silicon Valley in particular, and tech, biotech and other advanced technology startups continue to launch, he said.
“The Bay Area has always had ups and downs,” Hancock said. “It’s the price you pay when you’re an innovation economy. But we’ve always been resilient. Slowdowns don’t necessarily mean there’s something fundamentally wrong.”
