Job Losses Pile Up at Tech & Social Media Companies in San Francisco & Silicon Valley after

A reckoning with budding parallels to the Dotcom Bubble & Bust, while other sectors continue to grow. Unemployment rate rose to 3.9%.

By Wolf Richter for WOLF STREET.

In San Francisco and the northern part of Silicon Valley, one of the epicenters of tech jobs in the US, has seen large scale declines of jobs in tech, social-media, and finance since the end of the pandemic hiring boom in mid-2022 despite the AI-related hiring boom.

And August made it a lot worse with large month-to-month drops of jobs in Information (-1.2%) and in Professional, Scientific, and Technical Services (-1.1%), according to the Establishment Survey by the Bureau of Labor Statistics for the metropolitan division “San Francisco-Redwood City-South San Francisco,” which spans San Francisco County and San Mateo County. The data was released on Friday.

Even growth in other segments – such as Healthcare; Leisure & Hospitality; Education; Other Services; and Trade, Transportation, and Utilities – has not been able to make up for the sharp declines in the tech and social media-rated jobs.

Jobs in the Establishment Survey are tracked by business location, regardless of where the worker lives. If a worker commutes from the East Bay to an office in San Francisco, it counts as a job in San Francisco, though the worker lives elsewhere. Same with remote workers. An employee assigned to an office in San Francisco but working remotely somewhere else counts as a job in San Francisco. Conversely, workers who live in San Francisco but are assigned to an office somewhere else count as jobs at those locations, and not in San Francisco.

So a large portion of these jobs that got cut could have been remote workers — people living somewhere else — but not all because the overall unemployment rate of people who actually live in the metro also rose. More in a moment.

Information: -1.2% in August from July; -8.2% year-over-year; -20% (-26,100 jobs) from the peak in August 2022, down to 105,300 workers, the lowest since January 2020.

The sector includes facilities where people primarily work on web search portals, data processing, data transmission, information services, software publishing, motion picture and sound recording, broadcasting including over the Internet, and telecommunications.

This sector still accounts for over 10% of private sector employment in the metro, but down from a share of 12.5% in mid-2022. It plays an outsized role in the metro: In the US overall, it accounts for only about 2% of total nonfarm payrolls.

The chart goes back to 1998 to encompass the effects of the Dotcom Bubble and Bust. The bubble was swift, the bust was long. By the time it was all said and done in 2011, eleven years after the bust began, the Information sector had lost 45% of its jobs! That was more than double the rate of the job losses so far (20%).

This time around, the hiring boom was long and huge and culminated with a helter-skelter hiring frenzy – instead of mass layoffs – during the pandemic when workers were hired to work remotely doing who knows what, perhaps multiple full-time jobs simultaneously, because companies were losing control during the frenzy.

Then reality re-cropped up in mid-2022, and companies began to shed the excesses, famously Twitter, headquartered in San Francisco, which fired over half its global staff and thousands of contractors in one fell-swoop after Elon Musk took over.

Professional, Scientific, and Technical Services: -1.1% in August from July; -3.4% year-over-year; -8.1% (-18,200 jobs) from the peak in June 2022, down to 211,100 workers, the lowest since August 2021.

This sector accounts for about 21% of total employment in the metro. It includes legal advice and representation; accounting, bookkeeping, and payroll services; architectural, engineering, and specialized design services; computer services; consulting services; research services; advertising services; photographic services; translation and interpretation services; veterinary services; and other professional, scientific, and technical services.

The Dotcom Bubble and Bust are also apparent here. The Bust took out 28% of the jobs in Professional, Scientific, and Technical Services – the entire number of jobs that had been added during the last two years of the Bubble, plus some. But given how much broader the sector is, it recovered much faster than Information.

Financial Activities: Since the peak in 2001, employment in the sector is down by 20%, with a big trough in between.

Since the mini-peak in August 2022, employment has fallen by 6.1%. In August, employment ticked up by 0.3% from July, to 80,800 jobs.

The big financial exodus started in 1998 when NationsBank, headquartered in North Carolina, acquired BankAmerica, headquartered in San Francisco. The combined bank changed its name to Bank of America and was headquartered in North Carolina. Over the years, the activities in San Francisco were moved to North Carolina. So that was that.

Wells Fargo is still headquartered in San Francisco, but it has many employment centers around the US, and has been building a major campus in Texas to open in 2025. Rumors have been flying for years that it would move its headquarters out of San Francisco. In October 2022, the San Francisco Business Times reported that no one from the bank’s 17-member “senior leadership team” was still based at the headquarters in San Francisco. Employment at its headquarters has been shrinking for years. In June 2023, Wells Fargo sold a 13-story office tower near its headquarters building at 60% below its 2005 purchase price.

Charles Schwab, which used to be headquartered in San Francisco, and had spent years trimming its staff in the City, announced in 2019 that it would move its headquarters to a new campus in Texas, confirming years of rumors that it would leave San Francisco. And it made that move in 2021.

Then, in the spring of 2023, two regional banks failed that the tech and startup scene had relied on – Silicon Valley Bank, headquartered in Santa Clara (not part of this metro), and First Republic, headquartered in San Francisco. First Citizens bought some of the assets of SVB and assumed all customer deposits from the FDIC, and began operating the SVB branches. JPMorgan acquired some of the assets of First Republic and assumed all of the deposits and has been trying to retain its clients.

Overall private-sector nonfarm jobs: -0.3% in August from July; roughly unchanged year-over-year; -3.4% from August 2022 which had been the recent high; and -5.6% from the peak in February 2020, to 1.01 million jobs.

Government jobs — such as teachers, first responders, and employees of the federal government — are excluded here from this measure of private-sector jobs. They account for 12% of total jobs in the metro, compared to 14.7% for the US overall.

The big plunge during the pandemic occurred when jobs in Leisure & Hospitality, Retail, and other sectors subject to lockdowns suddenly vanished, even as Information spiraled into a hiring frenzy of remote workers:

Unemployment rate: The above data of nonfarm jobs is based on the Survey of Establishments by the BLS, tracking jobs by the business location the workers are assigned to, though these workers may not live in the area; they may be working remotely or commute.

But the unemployment rate is based on the Household Survey by the BLS that tracks employment and unemployment by the location of the household.

The unemployment rate in the San Francisco-Redwood City-South San Francisco metropolitan division jumped to 3.9% in July, the latest data available from the BLS, up from 3.6% in June, and back where it had been in January this year. Roughly 38,700 people who live in the metro and didn’t have a job were actively looking for a job.

This 3.9% is high for local conditions, higher than it had been in 2022 and in 2018 and 2019, when it ranged from 2% to 3%. But it is still lower than the overall US unemployment rate of 4.2%.

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