Layoffs took the Bay Area by storm in 2022, as the tech industry navigated a market downturn and grappled with the fallout from a period of rapid pandemic-era growth.
The forecast for 2023 looks pretty grim, according to city economists. Overall employment in the tech sector may continue to fall, following end-of-year trends that showed tech employment slowed significantly from October to December.
And on the horizon is a potential recession that could hit San Francisco especially hard.
“Because of our reliance on tech, and the [downturn] in venture capital and the economic headwinds facing that industry, we may well enter a broad economic downturn in 2023,” said Ted Egan, chief economist at the SF Controller’s Office. “Since our recovery from Covid has been relatively weak, this could push further into the future a full recovery to pre-pandemic conditions.”
Less than a week into the new year, layoffs show no sign of slowing.
Direct-to-consumer styling company Stitch Fix will slash 6% of its total workforce, and Cisco announced yet another round of cuts that will lay off employees in the South Bay.
Salesforce, San Francisco’s largest tech employer, announced a 10% headcount reduction and the closure of some of its offices on Jan. 4; and Seattle-based Amazon plans to slash its workforce by 18,000 employees, in a blow to two companies once deemed impervious to shifting economic headwinds.
The good news is that some aspects of SF’s job market remain relatively stable, and may help mitigate the effects of tech restructuring.
Unemployment rates returned to pre-pandemic levels, hovering around 2% in October. By comparison, unemployment in the city skyrocketed to 13% at the onset of the pandemic and sat at roughly 5% in mid-2021.
Even as layoffs pile up, jobs are still steadily flowing into the Bay Area, edging toward 2020 levels. The city gained roughly 14,600 jobs in October 2022, reversing the previous months’ job losses.
A Trying Year for Tech
Last year was a tough one for the tech industry, and perhaps nowhere else felt the effects of the economic downturn as badly as San Francisco.
Nearly 25,000 people across 160 companies lost their jobs last year, most of whom worked in technology and consumer services industries. These workforce reductions hit fledgling startups and big tech conglomerates alike, slashing headcounts by up to 50%—sometimes across multiple rounds of layoffs.
The hardest hit SF-based company of 2022? Twitter takes the cake, after Elon Musk acquired the struggling social media company, aggressively restructuring it to turn a profit. Half the company, or 3,700 employees, were laid off in early November, with scores of employees quitting en masse after refusing to comply with Chief Twit’s extreme work demands.
About 784 employees were laid off at the SF headquarters, and Musk directed the company to unload coffee makers and computers. (The sell-off at the gutted Downtown office is allegedly ongoing.)
The largest single headcount reduction in 2022 went to food delivery giant DoorDash, which dismissed 1,250 people at the end of November, or roughly 15% of its 2021 workforce. After nearly tripling its head count between 2020 and 2021, DoorDash failed to turn a profit and struggled as consumers resumed dining in at restaurants.
Although Big Tech logged hundreds of layoffs in 2022, San Francisco’s real estate industry took a hit as the city’s Downtown corridor emptied and home sales stagnated. Property technology companies bore the brunt of worsening economic headwinds, with 14 different real estate and proptech companies reporting layoffs in the last year.
Real estate tech company Doma, for example, completed three separate rounds of layoffs in 2022, slashing 1,075 jobs overall.
San Francisco 2023 Layoff Tracker
The Standard compiles a list of SF-based layoffs to track the state of the city’s economy. You can find our 2022 tracker here.
Liz Lindqwister can be reached at [email protected]