Silicon Valley, often called an engine of California’s economy, was able to wield the shield of its vaunted tech sector during April to ward off some of the economic fallout unleashed by coronavirus-linked business shutdowns.
April’s job losses were nothing short of a catastrophe for California: 2.34 million jobs lost statewide, 555,100 positions erased in the Bay Area.
Yet Santa Clara County’s employment losses were far less pronounced than was the case elsewhere in the Golden State, this news organization’s analysis of job statistics compiled by Beacon Economics and UC Riverside has determined.
“So far through the COVID-19 crisis, Santa Clara’s economy has retained its labor market edge over the rest of the Bay Area and California,” said Scott Anderson, chief economist with Bank of the West.
During April compared with the month before, job totals plunged by 13.7 percent in the Bay Area, 13.5 percent in California, 14.6 percent in the East Bay, and 14.4 percent in the San Francisco-San Mateo metro area.
Deemed to be the primary center of Silicon Valley’s tech sector, Santa Clara County suffered a significantly smaller decline of 11.2 percent.
“Santa Clara County’s vibrant technology sector remains largely intact and in some cases benefits from the widespread business shutdowns and stay-at-home orders,” Anderson said.
State and local government agencies have imposed drastic shutdowns and restrictions on businesses in a quest to corral the spread of the coronavirus. In response, employers were forced to jettison or furlough workers when economic activity plummetted.
The differences between Santa Clara County and other regions become more striking when government jobs are excluded, and the assessment is limited to only the performance during April of the private sector, which is the real engine of the economy.
During April, Santa Clara County’s private-sector job base shrank by 11.9 percent. Private industry jobs shrank by a noticeably steeper 15.2 percent in California, 15.1 percent in the Bay Area, 15.8 percent in the San Francisco-San Mateo region, and 16.4 percent in the East Bay.
Tech is playing a big role in all of this.
The high-tech industry is arguably Santa Clara County’s most crucial industry and plays a major role in the San Francisco-San Mateo region as well as the East Bay. Economists frequently combine the jobs in information services and products; professional, scientific, and technical services; and computer electronics manufacturing to estimate the number of tech jobs in a region.
“Thanks to the high concentrations in tech, the San Jose area had the lowest job loss of any of the large coastal metro areas in California,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at the University of the Pacific.
In April, tech jobs declined by just 3.4 percent in Santa Clara County, 3.1 percent in San Francisco-San Mateo, 7.1 percent in the East Bay, 4.1 percent in the Bay Area, and 6 percent in California.
Put another way, Santa Clara County’s largest industry – technology products and services — suffered a tiny rate of decline.
The South Bay’s resilient tech businesses helped to lessen the blow from the devastation in sectors such as hotels and restaurants, which were shredded by a loss of 53 percent of the jobs in that industry.
The San Francisco-San Mateo region endured a similar rate of job loss in the hotel and restaurant sector, a 55 percent decline. But for San Francisco-San Mateo County compared with Santa Clara County, hotels and restaurants are a much bigger piece of the economic pie, and tech is significantly smaller.
“Tourism is important in San Francisco, way more than San Jose,” said economist Christopher Thornberg, founding partner with Beacon Economics.
And that means hotel and restaurant job losses unleash more pain in the San Francisco metro area than in the South Bay.
“Tech sector job losses across the Bay Area remain smaller than most other industries,” Anderson said. “Working from home is not an issue at most technology service firms. Many tech workers have been able to retain their full incomes.”
