Silicon Valley unemployment drops as hospitality sees slow recovery

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Unemployment continues to plummet in Silicon Valley, but it’s anyone’s guess when the leisure and hospitality sector will fully recover.

The unemployment rate in Silicon Valley dropped to 2.4% in March—less than half the rate recorded the same time last year—according to a recent report from Joint Venture Silicon Valley’s Institute for Regional Studies. Employers in Silicon Valley, which Joint Venture defines as Santa Clara and San Mateo counties, added more than 16,200 workers between February and March, marking a continued positive trend for 2022.

Leisure and hospitality jobs saw the greatest growth for the second month in a row, with 3,200 jobs added to the restaurant industry and 500 in arts, entertainment and recreation. Experts say the recovery in this sector is going strong, but cautioned the road will be long, citing massive pandemic-related damage suffered by many businesses that rely on tourism.

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Unemployment continues to drop in Silicon Valley

“Leisure and hospitality has been gaining a lot of jobs, it’s just the hole (caused by the pandemic) is so big we’re still behind,” Stephen Levy, director and senior economist with the Center for Continuing Study of the California Economy in Palo Alto, told “I think with the increase in air travel, vacation season, more restaurants opening and some workers returning back to downtowns, that leisure and hospitality will continue to recover—it will still be the last sector to recover, probably.”

Levy, who examined data from California’s Employment Development Department for all nine Bay Area counties, noted more than 50% of the region’s leisure and hospitality jobs disappeared at the outset of the pandemic, dropping from 441,200 to 208,500. As of March, Bay Area counties have recovered 66.8% of those jobs. This contrasts strongly with some tech-oriented fields like information, which experienced an increase in jobs between February 2020 and March 2022, according to Levy’s research.

Russell Hancock, CEO and president of Joint Venture, told spring weather and relaxing of some COVID-19 restrictions is creating more demand for services in leisure and hospitality. But he emphasized the recovery is uneven in different industries.

“Some sectors probably won’t recover, and we’re just going to have to deal with that,” Hancock said, citing as an example the use of Zoom to hold virtual or hybrid conferences instead of in-person events. “That means the big conference convention centers and people in the event business, they may not recover in the same way.”

Data graph courtesy of Joint Venture of Silicon Valley.

Team San Jose, which manages the city’s arts and cultural centers and tourism, reported no revenue in 2021. By comparison, the city’s tourism arm produced $138.8 million in 2018-2019, the last full year before COVID-19 hit the city.

Dennis King, executive director of the Hispanic Chamber of Commerce Silicon Valley, told many tech companies still allow employees to work from home, which is starving restaurants and other service-oriented businesses of customers.

“They’re still struggling because that customer flow has not returned, and until it does, many of those restaurants and service providers are going to continue to feel the emptiness of not having those customers,” he said.

King said another problem hurting the leisure and hospitality sector is confusion around wearing masks. Santa Clara County recently revised its health order to make masks recommended—but not required—indoors. However, private business are still allowed to set their own mask requirements. King says the lack of clarity could deter some people from going out to restaurants or meeting with friends.

Some have found silver linings in the recovery. Enrique Fernandez, business manager of UNITE HERE Local 19, told many leisure and hospitality businesses are bringing back workers. He said the industry appears to be in an upswing as more people are venturing from their homes to take vacations. He also noted some business travelers are returning to the South Bay, a positive omen for the ongoing recovery.

“I think the fact that some meetings and conventions are booking is a good sign,” Fernandez said.

Contact Eli Wolfe at [email protected] or @EliWolfe4 on Twitter.

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