Project OaklandTech, Culture and Change in Oakland, CA

Original article by George Avalos – East Bay Times

SAN JOSE — Job growth in the tech industry used to zoom like a race car, but these days, hiring by this principal driver of the Bay Area’s economy chugs along more like a family SUV.

The technology industry’s job growth in the nine-county region has dramatically decelerated, according to this newspaper’s analysis of figures released by state labor officials and Beacon Economics. Tech’s annual job growth throttled back to 3.5%, or 26,700 new jobs, in 2016. That’s much slower than the 6% annual gain of 42,300 jobs in 2015, or the 6.4% gain in 2014.

And while the industry’s 3.5% growth last year is still a sturdy annual pace, Bay Area technology companies have already disclosed plans to slash about 2,000 jobs in the first three months of 2017.

“You have growth and you have layoffs at the same time in tech,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “You have layoffs because there are several companies trying to make the same products or services. Not all will succeed; some will fail.”

Even so, job growth in technology companies last year far outpaced total job growth of 2.6% across all industries in the Bay Area. That indicates the tech sector remains a major engine of the region’s economy.

“Tech will continue to outperform the overall job market over time, even as it goes through structural changes,” said Scott Anderson, chief economist with San Francisco-based Bank of the West.

TECH LAYOFFS

Layoffs scheduled for the first quarter are occurring at some of the Bay Area’s largest tech companies, along with numerous smaller firms and green energy companies, according to a review of layoff announcements filed with state officials, also known as Worker Adjustment and Retraining Notification, or WARN, notices.

“The technology industry is very dynamic, and there is a lot of change, and it has been growing very rapidly,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at University of the Pacific. “So you would expect some increase in these layoff notices over time as these companies get bigger.”

The ten firms with the largest first-quarter layoffs are:

• Oracle: 441 in Santa Clara
• Visa: 213 jobs in Foster City
• NetApp: 160 jobs in Sunnyvale
• Theranos: 150 jobs in Palo Alto and Newark
• Marvell Semiconductor: 139 jobs in Santa Clara
• SunPower: 116 jobs in San Jose and Richmond
• Violin Memory: 106 jobs in Santa Clara
• Google: 94 jobs in Mountain View
• Pandora Media: 91 jobs in Oakland
• AOL: 80 jobs in San Jose

“Some of this is companies whose business models aren’t working out very well, or consolidation in semiconductors, or other factors,” said Rob Enderle, an Oregon-based analyst who tracks the technology sector. “You also have big companies that are hiring as well as getting rid of of people. Some companies have to change their skills mix. Intel is an example of that. Intel didn’t do that well with a push into mobile products, so now they are going into autonomous vehicles and artificial intelligence.”

Other experts say tech companies will continue to churn their workforce as they discard less promising business lines and try new ventures.

“Tech is always looking to get into new industries,” Anderson said. “Taxi cab services, driver-less vehicles, financial services, retail — tech is getting into all of these and looking for other new frontiers.”

JOB GROWTH BY AREA

The region’s tech companies last year continued creating more jobs than they shed, but at a slower pace.

Santa Clara County continued to be the industry’s nerve center, creating more new tech jobs — 12,900 — than any other county last year. The county accounted for 47% of Bay Area tech jobs in 2016.

It was the East Bay that gained tech jobs at the fastest pace last year, growing by 4.3%. Santa Clara County tech grew by 3.6% and the San Francisco-San Mateo metro area grew by 3.1%.

Tech companies employed 779,300 people Bay Area-wide at the end of 2016, or 20% of all payroll jobs in the nine-county region.

Government labor agencies and analysts such as Beacon Economics roughly define tech employment as a combination of three industries:

• professional scientific and technical services
• information services and products
• computer and electronics manufacturing

By its nature, tech will remain a quickly transforming industry, experts said.

“I would be more worried if we weren’t seeing layoffs at the same time as hiring,” Enderle said. “Technology companies are competing not only heavily in the United States, but also overseas. Tech has to move fast.”

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