Unemployment continues to drop in Silicon Valley, but the recovery remains lopsided for certain industries.
The unemployment rate in the South Bay dropped half a percentage point to 3.1% between mid-October and mid-November, according to a recent report from Joint Venture Silicon Valley’s Institute for Regional Studies. This is within 0.3% of the March 2020 unemployment rate before the COVID-19 pandemic upended the region.
Employers in the region added almost 13,000 workers between October and November, according to the report.
“The good news is that we’re recovering so many of the jobs we lost, and that the tech sector is driving the recovery,” Russell Hancock, president and CEO of Joint Venture Silicon Valley, told San José Spotlight.
Since April 2020, Silicon Valley—defined in the report as Santa Clara and San Mateo counties—has recovered nearly 174,000 jobs. At 3.1%, the current unemployment rate is 2.5% lower than it was at the beginning of the year, and 8.9% lower than in April 2020. Employment recovery has been up and down throughout the year: In June, the region saw an increase in unemployment.
Data from the report comes from the California Employment Development Department and the U.S. Bureau of Labor Statistics.
The strongest growth has occurred in the professional and business services sector. One of the most resilient subsets of that category is computer systems design and related services—broadly speaking, tech—which added 4,400 jobs between October and November.
In October, San Mateo and Santa Clara counties held the second and third lowest unemployment rates among California counties. Marin County holds first place.
“There is a real possibility of the unemployment rate falling to pre-pandemic levels in the next couple of months,” Ryan Young, an affiliated researcher at the Institute, said in the report.
But the unemployment news isn’t all rosy for Silicon Valley. As of mid-November, approximately 46,500 people are still unemployed—32,900 of them in Santa Clara County. Hancock noted the recovery has been slower in certain industries.
“For example, we’re still missing 53,900 of those retail and hospitality jobs that we lost during the pandemic, and with the omicron variant flaring up we may see continued losses there,” Hancock said. “These are of course the people who can least afford to be furloughed or underemployed.”
Stephen Levy, director and senior economist with the Center for Continuing Study of the California Economy in Palo Alto, said the latest unemployment figures are good—but he’s skeptical the region will hit pre-pandemic levels in the near future.
“They were very, very low by historical standards,” Levy told San José Spotlight, noting before the pandemic Silicon Valley had an unemployment rate that hovered between 2-3%.
Levy noted the tech industry was well positioned to weather the pandemic.
“We went online, we used the internet a lot more, we used Facebook, we used Zoom—we did all the things the companies here excel in,” he said. “So they prospered in sales and revenues and profits grew during the pandemic.”
Levy agreed the current economy is uneven for other industries. On the one hand, logistics companies such as Amazon and FedEx are showing growth due to an increase in deliveries during the holidays. But Silicon Valley’s once thriving convention business has not recovered, nor have the restaurant, hospitality and travel industries.
“So that means there are people who say, ‘What recovery? It hasn’t helped me,’” Levy said.
Derrick Seaver, head of the San Jose Chamber of Commerce, told San José Spotlight retaining workers remains a problem for retailers, restaurants and hotels. He’s encouraged by recent shows of support for these industries, such as the Santa Clara County Board of Supervisors using federal relief dollars to create a small business grant program, and San Jose extending its outdoor dining program.
Seaver said elected leaders should pay attention to reports like the one produced by Joint Venture and ask questions to pinpoint where the recovery is lagging.
“They might find from some of those folks in some of those fields that while the overall economy is recovering, they still have some needs around their workforces,” Seaver said.