Unemployment is in decline across Silicon Valley, but experts say the region’s recovery reflects social inequities.
The South Bay’s unemployment rate dropped to 2.8% last month, 0.1% lower than the unemployment rate in March 2020 before the COVID-19 pandemic struck, according to a new report from Joint Venture Silicon Valley’s Institute for Regional Studies. Employers added nearly 15,600 workers between January and February of this year, which represents the single largest job increase of any period since last summer.
It’s good news that people are hiring and creating more jobs, according to Russell Hancock, Joint Venture president and CEO. But he warned that’s not the full story.
“Even though we say unemployment is back to where it was, that’s because the tech sector is fine,” Hancock told thecupertinodigest.com. “What’s not doing well are the sectors like hospitality, hotels, conferences, events, concerts—all of that stuff that hasn’t resumed yet. And some of those things may not resume.”
Some hard-hit industries are hiring in vast numbers again. Approximately 7,700 jobs were added in hospitality, 6,000 in education and health services and 3,400 in construction, according to Joint Venture’s report. But it is still far short of pre-pandemic levels.
Hancock said these industries were the hardest hit during the pandemic because unlike tech companies, most workers couldn’t go remote. He said as a result, Silicon Valley’s economy essentially split in two during the pandemic and one suffered while the other prospered.
Image courtesy of Joint Venture of Silicon Valley.
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“Even though it’s true unemployment is at 2.8%, there’s still huge pockets of unemployment,” Hancock said. “Only this time it’s not spread thinly across the economy—it’s concentrated in certain segments of the economy, and those folks are in a big world of pain.”
Stephen Levy, director and senior economist with the Center for Continuing Study of the California Economy in Palo Alto, told thecupertinodigest.com a significant number of people in Silicon Valley—roughly 40,000—have dropped out of the workforce, and they’re not counted as unemployed.
“There is still a sizable number of people who have not been able to return, or who have chosen not to return to the workforce,” Levy said, adding this group includes individuals who have given up on finding jobs, pivoted to child care or who are afraid of returning to work and contracting COVID-19. “If we had those 80,000 jobs we’d be much closer to pre-pandemic levels.”
Earlier this year, Joint Venture released a report documenting the worsening wealth divide in the South Bay. According to Joint Venture, the median income in Silicon Valley was $138,000 last year, but approximately 33% of households—and nearly half of all children—require some form of government or community assistance to pay for basic needs like food.
As of mid-February, about 42,000 workers in Silicon Valley were unemployed. A world apart from February 2021, when 76,500 people were unemployed.
Hancock said employers in the region are hiring, but they’re struggling to find workers. He said part of this trend might be due to workers being priced out of increasingly unaffordable cities such as San Jose. He added that enhanced government assistance during the pandemic, such as unemployment benefits and the eviction moratorium, may have given remaining workers more bargaining power to pick and choose jobs, creating a new power dynamic.
“2022 is a different country than 2020,” he said.
Contact Eli Wolfe at [email protected] or @EliWolfe4 on Twitter.
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