An aerial view of downtown San Jose. File photo.
An aerial view of downtown San Jose. File photo.

    Unemployment rates across California spiked last month following record lows across the state and Silicon Valley, according to data released Friday.

    Santa Clara County’s unemployment rate rose to 3.3 percent last month, according to the California Employment Development Department, which handles workforce services including Unemployment Insurance.

    While these preliminary labor market numbers lag several weeks, that’s a sharp increase from 2.6 percent in February, the same month California maintained a record low of 3.9 percent unemployment statewide.

    This rise comes as no surprise, reflecting the earliest COVID-19 responses from local officials, including the nation’s first regional “shelter in place” order led by Santa Clara County Health Officer Dr. Sara Cody on March 17 after the World Health Organization declared the contagious and deadly respiratory illness a pandemic March 11. Those mitigation efforts have left thousands of non-essential businesses shuttered, multi-million dollar relief funds drained and 200,000 jobs lost within Santa Clara County alone in the last four weeks.

    “It’s likely just the tip of the iceberg,” said Rachel Massaro, director of research at Joint Venture’s Silicon Valley Institute for Regional Studies. “More than a quarter of Silicon Valley’s jobs are in potentially at-risk industries during the pandemic, such as retail, accommodation and food services, construction, transportation, warehousing, administrative services, arts and entertainment, among others.”

    And April unemployment rates are expected to be much higher.

    Chart courtesy of Joint Venture’s Silicon Valley Institute for Regional Studies.

    Even if some of the unemployment is temporary, Massaro said workers will face diminished job options as the workforce and economy are reshaped by the coronavirus crisis.

    Despite the increase, Santa Clara County ranked fourth lowest of the state’s 58 counties, while San Mateo came in first at 2.8 percent. Combined, Silicon Valley sits at 3.1 percent unemployment. San Francisco County was ranked third at 3 percent. Comparatively, March unemployment rates for California and the United States are at 5.6 and 4.5 percent, respectively.

    Nick Kaspar, Silicon Valley Central Chamber Of Commerce president, said he thinks that gap between Silicon Valley and national rates will continue to exist, if not widen.

    “I think the tech industry in the Silicon Valley remains strong and they’re keeping many people employed,” Kaspar said. “This hopefully means more people will have disposable income to jumpstart the other industries that are really suffering during this time.”

    This is by no means the first financial hardship Silicon Valley has faced, when local unemployment rates sat around 8 percent during the 2002-03 dot-com bust and 10.5 percent while the 2008 recession’s impact peaked the following summer.

    But what should residents and workers expect next from the labor market in Santa Clara County, which recorded a 20-year low of 2 percent unemployment in May, September and December of last year?

    “I wish I knew,” Kaspar said. “There are experts working to project these numbers, but I believe the reopening plan and how we respond to reopening the economy will have the biggest impact.”

    Local government officials have already started the process of figuring that out. San Jose Mayor Sam Liccardo last week announced the formation of the Silicon Valley Economic Recovery and Resilience Council, an industry-led group of employers and labor leaders, which will aim to jump-start the region’s economy.

    “The fact is there is no blueprint for what we need to do,” said Lisa Su, president and CEO for AMD, and a co-chair for the new economic recovery council. “But I’m also a firm believer that this is a time that we can bring out the best in our communities, the best in our companies, the best in our public and private partnerships and … we have an opportunity to really accelerate the pace of change.”

    Follow along with San José Spotlight’s real-time coronavirus coverage on our LIVE BLOG here.

    Contact Katie Lauer at [email protected] or follow @_katielauer on Twitter.

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