SF still losing tech jobs, but is a rebound on the horizon?

The San Fran DOOM LOOP is continuing.  Those with blinders on, still think welcoming illegal aliens, drug dealers, homeless, high taxes, failed education, constricting cars and parking—all means a success.

“The combined tech workforce of San Francisco and San Mateo counties is now smaller than it was at the onset of the COVID-19 pandemic, and it has continued to shrink in recent months. Tech companies have done little hiring lately, and trends in the industry and in the economy at large could keep hiring depressed for the time being.

But the number of people San Francisco’s tech and venture-backed companies have cut in mass layoffs has slowed in recent months. Venture investment, which often provides fuel for hiring at startups, has started to bounce back after plunging over the last two years.

Slowed, but continuing.  This is like inflation, slow but continuing.  It is a dying city that refuses to admit reality.

SF still losing tech jobs, but is a rebound on the horizon?

By Troy Wolverton, SF Examiner, 7/16/24   https://www.sfexaminer.com/news/technology/san-francisco-tech-layoffs-slowing-before-possible-rate-cuts/article_2e9753a4-4304-11ef-8a54-1f250240a54f.html

When it comes to employment levels, San Francisco’s tech industry might not have reached rock bottom yet — but it could be getting closer.

The combined tech workforce of San Francisco and San Mateo counties is now smaller than it was at the onset of the COVID-19 pandemic, and it has continued to shrink in recent months. Tech companies have done little hiring lately, and trends in the industry and in the economy at large could keep hiring depressed for the time being.

But the number of people San Francisco’s tech and venture-backed companies have cut in mass layoffs has slowed in recent months. Venture investment, which often provides fuel for hiring at startups, has started to bounce back after plunging over the last two years.

The public stock markets — where a selloff in late 2022 triggered a spate of layoffs in the sector — have more than rebounded from their lows then. And the Federal Reserve is widely expected to cut interest rates sometime in the next year, a move that could spark new hiring in the tech sector and beyond.

“I think we’ve started to bottom out,” said Abby Raisz, the research director at the Bay Area Council Economic Institute, the business association’s in-house think tank.

While the area has continued to see layoffs in the tech sector in recent months, those cuts are nothing like what it saw in 2022 and last year, Raisz said.

“As an economic researcher, these [latest layoffs] are not numbers that make me go, ‘Oh my goodness, these are really bad,’” Raisz said.

The San Francisco metro area saw a surge in tech employment in the long economic expansion that followed the Great Recession. The combined tech workforce of San Francisco and San Mateo counties swelled from 45,600 in January 2010 to 154,800 in March 2020, right as the pandemic hit the Bay Area, according to data from the state Employment Development Department.

Industry employment shrank marginally in the next two months during the lockdowns, then surged amid the ensuing tech boom even as many other industries were shedding workers en masse. With many people confined to their homes, demand for tech-related products and services — including computers, streaming video and app-based grocery delivery — soared. Tech companies in San Francisco and elsewhere hired to meet that growing demand.

By August 2022, tech industry employment in the two-country San Francisco metro area hit 184,800, according to EDD data.

And then things started to turn. The stock market plunged. Inflation soared. And the Fed started to raise interest rates to cool the economy.

In response, the tech industry announced massive layoffs, including 12,000 by Google parent Alphabet, more than 20,000 by Meta, and 8,000 by Salesforce. At the same time, venture firms started to curtail their investments, forcing the startups they backed to conserve cash and cut their own workers.

In the year ending June 30, 2023, San Francisco’s tech and venture-backed companies released a combined 8,032 people in mass-layoff events, according to EDD data analyzed by The Examiner. That was up from just 477 cuts in tech-sector mass layoffs, or those involving at least 50 workers statewide, in The City the prior year.

And those cuts have kept on coming. In the year that just ended June 30, San Francisco’s tech and venture companies announced plans to let go 4,071 people in mass layoffs. By contrast, in the year ending June 30, 2019 — that last complete period before the pandemic — just 1,502 of The City’s tech workers were cut in mass layoffs.

Among the companies that have announced big cuts recently are Checkr, which in April announced plans to lay off 260 workers in The City, and Planet Labs, which announced last month plans to let go of 98.

Those layoffs have been showing up in the EDD’s employment numbers. As of May, the number of people who work in tech in San Francisco and San Mateo counties combined was 150,300. That was down by 1,200 from April and at a level not seen since the summer of 2019.

“We lost virtually all of our pandemic-era tech hiring,” said Ted Egan, San Francisco’s chief economist. “The glass is really empty.”

While there’s little sign that the tech industry is about to embark on a hiring spree, there are indications that the worst of the cuts might be over. Since January, employment in the tech sector in the two-county region has fallen by about 5,000, according to EDD figures. That’s a lot, but the region lost 5,000 jobs in the sector from just December to January and more than 7,000 between June and September last year.

Additionally, layoffs have started to abate. From the beginning of April until the end of June, tech companies in The City cut 672 workers in mass layoffs. That was well off the pace set in previous quarters over the last two years.

And there’s reason to think the City’s tech industry could rebound in the coming year. Despite elevated interest rates, the national economy has remained strong and unemployment nationwide has stayed low. The stock market is up, reducing pressure on companies to cut costs and workers.

Meanwhile, the venture industry is starting to see a resurgence. The amount that venture outfits invested in startups was up in the second quarter from the first, both in San Francisco and nationwide. That could bode well for hiring by such companies.

And then there’s the promise of a rate cut in the not-so-distant future.

“I think the outlook is good for the economy,” Egan said. He said interest-rate cuts “would be a shot in the arm for us.”

But a recovery of tech employment is no certainty, particularly not in the near term.

Much of the rebound in the stock market is due to the outsized performance of a handful of giant companies, including Microsoft, Meta, Amazon and especially Nvidia. That could leave smaller public companies under pressure to improve their performance, including by cutting staff, said J.P. Allen, a professor in the School of Management at the University of San Francisco.

While venture investment is picking up, much of that money lately has been going into startups focused on artificial intelligence. But instead of using that money to bulk up their workforces, those startups are using outsized portions of the money they’re raising to either buy their own Nvidia chips to develop their AI models or to pay cloud-computing providers to run their models on those providers’ Nvidia-powered servers, Allen said.

And as long as those AI companies are still trying to figure out a business model, they’re unlikely to do a lot of hiring, he said.

“This investment [into AI startups] doesn’t translate into jobs, for the most part,” he said.

More broadly, there’s still a lot of uncertainty in the economy right now, including when exactly the Fed might cut rates, and the presidential election and how its outcome could affect policies related to the economy, Raisz said. All of that is likely to keep a lid on hiring for the time being, she said.

“A lot of firms tend to be pretty cautious in times of uncertainty,” Raisz said. “Right now, there’s too many unknowns for firms.”