The past six months have been hard on many Silicon Valley families, with a string of layoff announcements from the tech industry’s largest companies hitting an estimated quarter million employees around the world. But the latest data from Silicon Valley Index finds that the area still has historically low unemployment, and that tech companies are still growing.
“There is no way we can construe this as a crisis,” Russell Hancock, head of the group Joint Venture Silicon Valley that created the report, told the San Francisco Chronicle. The tech layoffs added up to about 11,000 jobs in the Silicon Valley area, representing a 1% loss in the region’s share of the industry’s workforce. “The only way we can accurately depict this is as an adjustment.”
Overall, the tech industry has still grown at nearly twice the rate of over-all employment in the region, the study found. And much of that employment is concentrated at tech giants like Apple, Google parent Alphabet and Facebook parent Meta, which together employed 19% of Silicon Valley’s workers.
The data offers a more positive picture of the tech world than we’ve been hearing from many executives, workers or investors. In instituting layoffs, tech giants like Alphabet and Meta have said the economy was shifting away from the pandemic boom that came from our increasing reliance on various apps, smartphones and computers for remote work.
“Over the past two years we’ve seen periods of dramatic growth,” Alphabet CEO Sundar Pichai said in a note to staff last month, explaining the reasoning behind the cuts. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”
But economists and industry watchers have increasingly pushed back on the gloom these layoffs have created. Most tech companies still employ more people today than they did three years ago, at the beginning of the pandemic, they note. Indeed, Silicon Valley Index found that the region added 88,000 jobs between mid-2021 and mid-2022, a faster rate than the rest of the country. And despite layoffs, the area added at least 22,000 more jobs through the end of the year.
Other worries
While Joint Venture Silicon Valley’s data may signal that the shock from tech layoffs hasn’t had meaningful impact on the region, it also means that other issues around wealth inequality will continue.
The group found, for example, that it’s “impossible” for anyone earning minimum wage to meet basic needs like food, housing and transportation without the help of public subsidies. Even a dual-income family with no children would need wages of nearly $20 per hour to meet their basic needs without assistance. When adding children, and the costs of childcare and preschool, the income needed increases “significantly.”
“A single adult with two young children in Silicon Valley could have earned nearly 700% of the Federal Poverty Limit in 2022, and still not have managed to comfortably afford rental housing at the minimum level of decency,” the report found. “At seven times the definition of poverty, a Silicon Valley single-parent with one preschooler and one school-aged child would be unable to eat out at restaurants, go to the movie theater, take a family vacation, or save for retirement without seeking outside support or incurring debt.”
All told, the report found the income divide between tech and non-tech throughout Silicon Valley has accelerated, even as income inequality has lessened in California and the US overall. The group counted about 163,000 households with at least $1 million in investable assets, more than double what it was seven years ago.
Overall, less than 1% of the region’s households control 36% of the area’s collective wealth. On the other end of the spectrum, as many as one in five Silicon Valley households are at risk of food insecurity.
That could explain why people are leaving, the group said. About 91,000 people departed Silicon Valley over the past two years, the highest since the dot-com bust two decades ago. “And yet the economy is at full employment, growing even despite a round of layoffs,” Hancock wrote. “There’s a lot of sorting out for our region to do.”
