The Bay Area tech sector soared for three years in the wake of a global pandemic, but the industry’s jobs boom has since nosedived into a bust.
“In the last half of 2020, and throughout 2021 and the first part of 2022, the major Bay Area technology firms went on wild hiring sprees that were never sustainable,” said Michael Bernick, an employment attorney with law firm Duane Morris and a former director of the state Employment Development Department.
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In that time, tech companies have fundamentally shifted their hiring strategies, said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank.
“Silicon Valley has entered a state of uncertainty and flux,” he said. “It’s driven employers to focus on efficiency and sustainable profits.”
The contrast between the boom and the subsequent bust in the Bay Area is stark, according to this news organization’s analysis of seasonally adjusted industry totals that Beacon Economics culled from the state EDD.
“Tech employment has been on a roller coaster since the pandemic started in 2020,” said Scott Anderson, BMO Capital Markets’ chief U.S. economist and managing director.
The plunge has affected the jobs of tens of thousands of workers, including employees at a slew of industry icons.
In 2020, Bay Area tech companies added workers when the world abruptly shifted to remote work and distance learning. Tech extended the gains into 2021 and 2022.
The tech sector scrambled to hire people quickly enough to meet the fevered demand for working from home.
In 2020, 2021 and 2022, the Bay Area added 74,700 tech jobs, Beacon’s compilation shows.
But in 2023 and 2024, employers slashed a net total of 80,200 tech jobs in the region.
“The tech employment resurgence was short-lived,” Anderson said. “Tech industry over-hiring earlier in the pandemic likely aggravated the tech job losses.”
Despite shedding jobs, tech companies are seeking to fine-tune hiring as they scout for fertile new fields in artificial intelligence, in the view of Tim Bajarin, principal analyst with Campbell-based Creative Strategies.
“Demand for tech workers is still strong, but more focused and targeted toward AI, high-speed computing and integration of AI into business processes,” Bajarin said.
For now, however, the tech industry must cope with more immediate challenges, such as the region’s brutal housing woes and uncertain federal policies.
“Deportations, tariffs and continuing lack of enough new housing will present challenges,” said Steven Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “We must come together to overcome and preserve our unique advantages as an innovative economy.”
The first yellow flags for tech surfaced in late 2022 when Facebook app owner Meta Platforms encountered a rare event in its corporate history: a decline in revenue.
Mark Zuckerberg, Meta’s top boss, pursued ways to streamline the social media network’s operations. Layoffs quickly became a prime solution.
In November 2022, Meta announced it would eliminate 11,000 jobs worldwide, including 2,565 jobs in the Bay Area, state EDD WARN notices showed.
Before long, it became clear that the tech industry woes weren’t confined to Facebook. Amazon, Cisco, Salesforce and Tesla followed suit, turning a trickle of cuts into a stream and then a flood of layoffs.
Still, it took one more significant event to make it clear that the tech’s bust wouldn’t immediately yield to yet another boom. In January 2023, Google chopped 1,600 Bay Area jobs.
Suddenly, efficiency and streamlining became industry watchwords as AI beckoned from the horizon.
“We think the last two years are the result of more than the economic cycle,” said Jeff Bellisario, executive director of the Bay Area Council Economic Institute. “The region and the state need to do more to attract and retain all types of employers.”
By the end of 2024, the tech industry in the Bay Area had shriveled to just 880,200 jobs, far below the peak level of 960,400 that it had reached by the end of 2022.
The Bay Area tech sector is even smaller than it was in 2019, when it accounted for 885,700 jobs.
The tech industry’s job losses are particularly pronounced in the South Bay and the San Francisco-San Mateo metro area, sometimes touted as a trendy spot for fledgling tech firms.
The tech downturn has hammered the San Francisco metro area the hardest, with a loss of 39,600 tech jobs in 2023 and 2024, or an 11% plunge in that urban center’s tech jobs.
The South Bay hasn’t fared much better. Over the same two years, the South Bay lost 33,300 tech jobs for a decline of 8.1%.
The tech industry’s fading fortunes have also jolted the East Bay, but to a much lesser extent. The East Bay lost 6,500 tech jobs over the last two years, a 3.9% decline.
While the Bay Area remains a primary hub for the worldwide tech industry despite recent job losses, the sector’s faltering job market could erode some of the region’s dominance.
“It’s hard to say anything for certain, but we may be looking at a tectonic shift, where Silicon Valley becomes one node in a more dispersed innovation ecosystem,” Hancock said.
One thing seems certain: The once high-flying tech industry has come back to Earth.
“The past two years, economic reality has set in,” Bernick said.
