(Story reposted from San Jose Mercury News)
The Bay Area is poised to reach all-time-high levels of employment, breaking the records set at the height of the dot-com boom, as the region undergoes another technology renaissance and a reshaping of its economic landscape. In September, the region had 3.57 million payroll jobs, which was about 43,000 jobs, or 1.2 percent, below the record of 3.61 million reached in January 2001, state data show. But the rebound in the nine-county region’s major urban centers has been uneven. The San Francisco metro area already posted record highs in recent months, and the East Bay is close to its best-ever employment numbers. For Santa Clara County, even with its remarkable job growth over the last few years, that pinnacle could be a year away.
Despite that, one thing is certain: The looming milestone is a testament to the Bay Area’s ability to overcome the calamities of the tech bust, the 9/11 terrorist attacks, corporate scandals, and, most recently, the Great Recession. And this isn’t another dot-com bubble, argues Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. The foundation of the current growth is a collection of world-class market leaders in the tech sector.
“We are in a blowout, surging economy,” said Levy. “A lot of it is being driven by companies with millions of customers, billions in sales and hundreds of millions or billions in profits. And the economic growth is spreading from the main tech centers to other parts of the Bay Area.”
The rebound is doing more than bring employment to record levels. It also has produced a profound transformation in the Bay Area economy, this newspaper’s analysis of job trends over the 14 years from the dot-com peaks in the fall of 2000 through September of this year shows.
More than 165,000 manufacturing jobs have vanished, including nearly 89,000 computer and electronics manufacturing positions in the nine-county region.
“Tech hardware jobs were decimated after the dot-com bubble, and that part of the business really hasn’t come back in this cycle,” said Mark Vitner, senior economist with Wells Fargo Bank. “That’s the big reason behind the slower recovery for Santa Clara County.”
The real estate industry is also struggling, with 30,000 construction jobs and nearly 26,000 finance and real estate positions lost since 2000.
The slumping industries were replaced by a surge in sectors such as health care and social assistance, which added 152,500 jobs; leisure and hospitality, up nearly 84,000 jobs; and a category called “professional, scientific and technical services,” which was up 52,000 jobs. This category typically includes jobs such as tech engineering, computer and network design services, social media, Internet design and tech research.
In September 2000, tech jobs accounted for 21 percent of the total workforce in the Bay Area, and as of September of this year, that share had dwindled to 19 percent. Computer and electronics manufacturing used to account for 7 percent of the Bay Area workforce, and now it represents 4 percent.
Yet while the tech sector has lost jobs over the 14-year stretch, it has been a robust industry in the last few years. Over the one-year period that ended in September, the Bay Area added 32,000 tech jobs, according to an analysis of figures from the state Employment Development Department and Beacon Economics.
“The Bay Area in general and Santa Clara County in particular specialize in the goods and services that help businesses be more productive,” said Jordan Levine, director of economic research with Beacon Economics. “And it’s happening at a time when the entire country is trying to figure out how to be more productive and efficient.”
“There are a lot of openings in the tech industry, and it’s easier to find jobs,” said Ashim Suri, a Fremont resident who works in San Jose as a recruiter for tech companies. “It’s definitely a stronger tech market than it was a year ago. Salaries for technology workers are really rising.”
Yet wages aren’t rising in all industries, even in the hottest metro areas.
“It’s a frustrating process to find higher wages,” said Clara Di Bartolo, a San Francisco resident who works in retail and marketing, says she sees plenty of available jobs, but pay raises are sluggish for nontech workers. “Wages are stagnant for middle-class people.”
For two years, Santa Clara County has been the fastest-growing metro center for employment in the nation, with annual growth rates that averaged 4.2 percent, EDD statistics show.
But Santa Clara County has to overcome a steep drop in its job market following the dot-com meltdown.
After hitting its dot-com peak, the county suffered a 20 percent nose-dive in total jobs before its employment market stabilized. By comparison, the East Bay fell 11 percent before hitting bottom. The San Francisco area slumped 14 percent.
“This shows how hard Santa Clara County fell from what was an amazing peak in the dot-com years,” said Jeffrey Michael, director of the Stockton-based Business Forecasting Center at the University of the Pacific. “It’s plausible it could take another year or two for Santa Clara County to get to its record levels.”
And changes in the tech sector have benefited the San Francisco area to a much greater degree than Santa Clara County.
For instance, Santa Clara County added 14,000 jobs in a broad category that includes software, social media, computer design, network design, mobile telecommunications and Internet-related positions, a 7.6 percent increase.
Over the same period, the San Francisco-San Mateo-Marin region added 18,500 jobs in that category, a 9.2 percent increase.
“This isn’t just a flash in the pan, this is a structural shift about where the jobs are going in the Bay Area,” said Scott Anderson, chief economist with San Francisco-based Bank of the West. “San Francisco has been offering tax incentives for these tech companies. They have been very aggressive in attracting these new jobs.”
Plus, San Francisco has become a magnet for engineers fresh out of college or just starting out in their careers.
“The new young millennials are more apt to want to live in urban areas where there is a lot of activity and a chance for collaboration and getting together,” Anderson said. “That gives some advantages to San Francisco over Silicon Valley.”
Even industries such as construction are showing strength over the last year or so, despite the long-term decline in that sector.
“We have a lot of openings for welders, and have been looking to find welders for six months now,” said Jason Guiol, a San Jose resident who works with a construction firm.
Perhaps the most encouraging part of the rebound in the Bay Area is the resurgence of the East Bay, at the epicenter of the cataclysm unleashed by the meltdown of the housing and banking sectors. The East Bay over the most recent 12 months has enjoyed a big surge of thousands of jobs in professional, scientific and technical services, health care, restaurants and hotels, and construction.
“The entire Bay Area is recovering strongly,” Wells Fargo’s Vitner said, “and all of its metro areas are firing on all cylinders. It’s not just one industry that is leading things back.”