Tech Layoffs and Higher Than Average Unemployment: A Close Look at the Bay Area’s Job Market

California now has the highest unemployment rate in the country at 5.5%. While the Bay Area’s rate is a bit lower than the state’s, it is still higher than the national average, and continued tech company layoffs and threats to jobs from AI, have workers worried. We look at the shifting Bay Area labor market. Where are jobs disappearing and what could replace them? Will AI be a net boom or loss for local employment? If you’re in the market we want to hear about it. How is the Bay Area labor landscape looking to you?

This partial transcript was computer-generated. While our team has reviewed it, there may be errors.

Alexis Madrigal: Welcome to Forum. I’m Alexis Madrigal. Anecdotally, the Bay Area job market is not great. Perhaps it’s just relative to some of the recent boom times, when it seemed like tech job openings were endless and that trickled down into all kinds of fields.

Now the tech companies are still highly profitable, but they’re not hiring like they used to. But tech is only a slice of the overall Bay Area job market. Hospitality and leisure, construction, government work, nonprofits, health care — there’s so much to our landscape here that is exposed to budget cuts, tariffs, and other uncertainties.

Here to help us make sense of it all: we’re joined by Aki Ito, chief correspondent with Business Insider, covering the tech industry and workplace issues including burnout, hustle culture, and the end of workplace loyalty. Welcome, Aki.

Aki Ito: Hi. It’s great to be here.

Alexis Madrigal: We’re also joined by Enrico Moretti, professor of economics at UC Berkeley and author of The New Geography of Jobs. Welcome, Enrico.

Enrico Moretti: Good morning.

Alexis Madrigal: And we’re joined by Jeff Bellisario, executive director of the Bay Area Council Economic Institute. Welcome, Jeff.

Jeff Bellisario: Yeah, thanks for having me.

Alexis Madrigal: So, Jeff, let’s start with you just to lay some groundwork here. What does the general job picture in the Bay Area look like now?

Jeff Bellisario: Well, I think we usually talk about this in terms of temperature. So I’m thinking somewhere between lukewarm and room temperature is the best way to put it. I think you called it “not great.” But if you’re, you know, in the shower — maybe this is the fourth shower of the morning, maybe the water heater has a pinhole leak — there’s a lot of reason for concern.

We look back over the last 36 months or so since tech companies started making large layoff announcements, and the region really has contracted. Not massively. Unemployment is not that high regionally, around five percent. But it’s elevated compared to the nation. California is at five and a half percent.

We continue to see this phase of not many new job postings. Firings out of tech and other industries have continued, and we’ve just slowly contracted. So I think “not great” is the best way to put it. It’s not like alarm bells are ringing, but we’re not really growing like other places are.

Alexis Madrigal: I mean, is it really just the tech layoffs?

Jeff Bellisario: That’s a huge part of it. But those tech layoffs also contribute to our offices not filling up. They contribute to our downtowns being weaker. The retail scene continues to be weak. The construction market has been weak given where we are in the interest rate cycle.

You can look across basically every industry and see it down in our region compared to where we were pre-pandemic — except for health care and education. That’s been the one bright spot. But overall, tech and manufacturing are really driving these numbers for us here.

Alexis Madrigal: Enrico, your work is famous for looking at this multiplier effect, where one tech job translates into “x” other jobs throughout the rest of the economy. Does it work the other way too? If one new tech job means five new jobs elsewhere, does losing a tech job mean losing those five jobs too?

Enrico Moretti: It does. One of the main reasons the Bay Area was thriving before the pandemic was not that everybody was employed in tech. At its peak, depending on your count, only about 20 to 25 percent of workers were employed in tech. The vast majority of workers were in local services — construction, real estate, health, education, retail.

When the tech sector expanded, those incomes were spent in local services, creating many more jobs. When the tech sector cools down, like it is now, there’s less demand for workers in stores, restaurants, real estate, and so on. By my estimate, that’s actually the main effect of tech on our economy: there are many more jobs in local services created by tech than there are in tech itself.

Alexis Madrigal: Aki, I’m curious from your perspective. Historically, when the tech job market was hot and it was difficult to find employees, tech companies increased the perks. You got your dry cleaning done, you could play volleyball all day and still do your job. How is the culture inside tech changing in response to this labor market?

Aki Ito: Oh, absolutely. It’s night and day compared to just a few years ago. You can see this in the way executives talk about and to their employees. A lot of times now they’re just saying, “If you don’t like it here, get out.” You never would have heard a CEO say that a few years ago.

It also translates into fewer perks, fewer raises, fewer promotions. You see it across the board. That’s one of the reasons morale is so low in the tech sector right now. Talk to any tech worker out there, and chances are they don’t like their job, because their employers aren’t treating them well. And because the job market is so bad here, they don’t have anywhere else to go.

Alexis Madrigal: I literally can’t believe the “great resignation” was just 2022, 2023. Whether or not it was a real phenomenon, it resonated with people at the time as something that was real and going on.

Aki Ito: Yeah, absolutely. It’s amazing.

Alexis Madrigal: And you were still in the same job.

Aki Ito: Yep.

Alexis Madrigal: Which in media is a shock.

Aki Ito: Yeah, exactly.

Alexis Madrigal: We’re talking about the Bay Area job market with Aki Ito, chief correspondent at Business Insider; Enrico Moretti, professor of economics at UC Berkeley; and Jeff Bellisario, executive director of the Bay Area Council Economic Institute.

Of course, we also want to hear from you. Many people are looking for jobs. Many are hiring. Many are feeling these cultural changes inside companies. We’d love to hear from you and your experience.