The Bay Area and California added jobs in November, but amid widening tech and biotech mass layoffs, the employment gains in both regions slowed significantly, a government report released on Friday shows.
The nine-county Bay region added 7,400 jobs in November, the new report shows. That increase, however, was the third-smallest monthly gain of 2022 so far, according to the new report from the state Employment Development Department.
The South Bay added 2,000 jobs, while the East Bay gained 1,100 and the San Francisco-San Mateo metro area added 3,000. All the numbers were adjusted for seasonal variations. Overall, California added 26,800 jobs in November, the second-smallest gain this year. The state unemployment rate worsened slightly, to 4.1% in November, up from 4% in October, the EDD reported.
In a prepared release, Gov. Gavin Newsom struck an optimistic tone. “California has added jobs for fourteen straight months,” he said. “More Californians are working than ever before.”
The new jobs numbers are a sign that the recent wave of tech and biotech job cut announcements — which began in October but became pronounced in November — could be starting to undermine the Bay Area job market. These include high-profile players such as the owner of the Facebook app, Amazon, Twitter, Lyft, Roku, Oracle, Doordash and Juul.
“The highly anticipated but unwelcome job growth slowdown has officially arrived in the Bay Area and California as high-profile layoffs in the technology and biotech space find their way onto the state’s official job tally for November,” said Scott Anderson, chief economist with Bank of the West.
Although employment gains are slowing, the Bay Area and California are not likely to be heading to a full-scale economic meltdown, in the view of Michael Bernick, an employment attorney with law firm Duane Morris and a former director of the EDD.
“The job market will not collapse any time in the future in the Bay Area or California,” Bernick said. “But job growth will certainly slow in 2023.”
While the disclosures of tech and biotech layoffs already have been made public, in many instances the employees won’t be officially removed from the company payrolls until the first three months of 2023, which could soften the impact on the local economy.
“Job growth is slowing down, and the impact of recent layoffs should become more apparent over the winter,” said Jeffrey Michael, director of the Stockton- based Center for Business and Policy Research at the University of the Pacific.
The job market may be softening to an even greater extent than is readily apparent in the jobs report, which is based on data sources known as the payroll survey of employers, warned Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.
Levy spotted some alarming trends in what is known as the household survey, a data source that is used to calculate the unemployment rate, the number of people who say they are unemployed and the size of the labor force.
“The household survey data showed a steeper slowdown than the jobs data,” Levy said. “The unemployment rate and the number of unemployed residents rose in every Bay Area metro area, while the labor force declined in each metro.”
The Bay Area unemployment rate was 3.3% in November, which was worse and higher than the jobless rate of 2.9% for the region in October, according to a review by this news organization of figures released by Beacon Economics and UC Riverside.
The number of unemployed Bay Area residents increased by 16,500 in November compared with October, while the size of the labor force shrank by 11,100 during the month.
Despite high-profile layoff announcements, tech companies are still adding Bay Area jobs.
“Given the very significant layoffs we saw in November, the fact that these numbers are even positive is impressive,” said Patrick Kallerman, vice president of research with the Bay Area Council Economic Institute.
The tech companies added 1,600 Bay Area jobs in the Bay Area in November, propelled mainly by an increase of 1,000 tech jobs in Santa Clara County, according to seasonally adjusted numbers from Beacon Economics.
Hotels, restaurants and drinking establishments added 2,400 jobs in the Bay Area last month. Santa Clara County led the upswing by adding 1,300 hotel and restaurant positions, Beacon figures show.
Bay Area retailers suffered big job losses in November, which suggests that shoppers have not flocked to shopping malls for in-person purchases. Retailers chopped 2,000 jobs in the Bay Area last month, with Santa Clara County suffering the worst retail decline, losing 1,000 jobs.
“Job growth will certainly slow in 2023,” Bernick said. “We will see more hiring freezes as well as layoffs in white-collar and tech jobs.”
Some experts said they believe outright employment losses will hound California and this region in 2023.
“Sluggish job growth will soon transition to net job losses in the new year as at least a mild recession takes hold in the Bay Area and across the state,” Anderson said. “The uptick in California’s unemployment rate last month is a harbinger of higher unemployment rates.”
Other analysts say the region’s economic foundation remains solid despite the current struggles.
“To be adding to our total number of jobs even during a rash of layoffs just shows you that the underlying fundamentals are there,” said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank. “Once tech resets, we’ll resume our typical growth patterns.”