Silicon Valley unemployment sees slight decline in July

People are starting to go back to work in Santa Clara County but unemployment is still alarmingly high.

After unemployment reached a historic peak of 11.6% in April, it declined to 9.3% in July, according to a study released Aug. 21 by Joint Venture Silicon Valley, a group that provides analysis on the Silicon Valley economy and quality of life.

“We by no means want to diminish that nearly 21,000 jobs were added to our regional economy,” said Rachel Massaro, the research director for the group’s institute for regional studies. “Yet, when you look at the rise in unemployment that happened at the beginning of the shelter in place (order), it’s hard to look at this slight decline in the unemployment rate as progress.”

In February, unemployment was at 2% and climbed up to double digits by April, following mass closures around the South Bay.

“If you look at it, relative to how we were doing in February, very close to the 2019 low of 2% unemployment here, 9.3% does not sound good,” Massaro said.

Scott Knies, the executive director of the San Jose Downtown Association, echoed the sentiment.

“Nobody’s doing backflips,” he said.

Many downtown businesses are still struggling to retain employees and customers after the COVID-19 pandemic sent San Jose State students home and shut down on-site work at offices in the area, Knies said.

“So much business was generated in the downtown by our workforce because we frankly don’t have the residential population we need to sustain our businesses,” he said.

Massaro said the pandemic has muddied up any clear forecast of job growth in the next few months. Usually employment ties directly to the economy but researchers now have to account for public health in predicting when business will boom again.

“Right now is a very unique time in which the unemployment rate is primarily driven by government policies to reduce transmission rates to keep our population healthy,” Massaro said. “So, those industries that are closed or are very hard to reopen, given the social distancing requirements, are the ones that have the greatest unemployment right now.”

However, Massaro said job growth in some industries could be a sign that some businesses are adapting to social distancing requirements. She said public health restrictions on different sectors of the workforce tie directly into job growth.

“To see 20% growth on the state level in personal care services jobs is huge because that is an industry that’s very hard to reopen with social distancing and requires a lot of accommodations in order to make it happen,” Massaro said.

But, as with many effects of the pandemic, it remains difficult to predict how unemployment changes from here. The sample size is small, she said, which can decrease the precision of the analysis.

She also explained how unemployment data already was outdated and only showed the economy’s condition five weeks ago.

This plays a role in explaining seasonal changes, she explained, such as the number of education jobs plunging.

“I’m fairly certain that we lost more education jobs this summer compared to others because fewer kids are going to camp, fewer kids are in summer school,” Massaro said. “That was a huge driver that we saw in the July data was for summer break and lack of employment.

These numbers could bounce back up because of school starting again, she said, but researchers wouldn’t be able to tell until data is released by state and federal labor departments.

Eased restrictions by counties and cities to reopen businesses could also drive down unemployment, Massaro said.

“There are a few other examples throughout the region where a lot of restaurants are moving into blocked off spaces in the street to allow for additional outdoor dining,” she said. “Those kinds of accommodations that we’re making as we get more used to this new normal are going to help increase employment in those very perceptible industries like restaurants and retail, but it has yet to be seen to what extent.”

Contact Mauricio La Plante at [email protected] or follow @mslaplantenews on Twitter.