24,000 and counting: What’s behind San Francisco’s surge in layoffs?

‘Tis the season, unfortunately. 

Companies often spend the weeks leading up and Christmas handing out pink slips. In fact, December is the second most popular month to cut staff according to a Wall Street Journal analysis of Bureau of Labor Statistics data.

Since Dec. 1, blue-chip goliaths like Morgan Stanley and PepsiCo joined legions of tech firms that have laid off staff in the last few months. 

Why so Grinch-y? Though short-sighted, experts say executives are more beholden to their shareholders than their employees these days. And because most companies’ fiscal years coincide with the calendar year and end on Dec. 31, companies race to get the extra labor expense off the books before their quarter ends as they face an uncertain economy in 2023.

The Standard spent the year watching SF layoffs slowly build into the year-end crescendo currently taking place. A total of 166 companies have laid off more than 24,000 staff members since January, with approximately 41% of those job cuts happening since Nov. 1.

What’s behind the massive staff cuts taking place in SF and beyond?  The harsh reality of post-pandemic economic fallout—and no city is more exposed than San Francisco.

Here are the five targets that represent layoff trends in the region during 2022.

The “canary in the coal mine” for the layoffs to come was when tech firms began to cut their recruiting and hiring teams. Beginning in spring, companies saw they could easily dismantle the machines they had built to bring in legions of new staff members during the pandemic. Twitter was an early mover, cutting 90 recruiters way back in June, long before Elon Musk walked into the lobby carrying a sink.

As the region got its arms around managing Covid-19, healthcare providers began to shed workers they had hired to support patients during the pandemic. Carbon Health cut 250 of its team as it announced the end of some of its Covid support services in June.

Tech firms that ballooned by delivering products and services to customers’ doors naturally subsided with the pandemic as people left their homes again. StitchFix,  OutSchool, Eaze, DoorDash, and this week, Thumbtack, serve as poster children here.

As interest rates rose, home buying fell—even in the Bay Area. Young firms that focused on “PropTech” that provided mortgages, shopping and other real estate services began to lay off staff. Doma, a digital insurance, escrow and closing costs provider, issued three rounds of cuts in 2022. 

As endlessly covered by the media, layoffs by the biggest tech players wreaked the most havoc on the city this year. Employee ranks swelled during the pandemic as companies took advantage of borrowing at low-interest rates: Meta famously hired 30,000 people during the past three years and then cut 11,000 of its workforce in November. While only 362 of those positions were in San Francisco, the slash from Salesforce during the same week is what shook the city most. SF’s largest employer cut just 1,000 of its 56,000 employees but the move by a company known for its ohana approach to valuing talent was extremely disconcerting.

The upside? The unemployment rate in San Francisco sits at a record low 2.1%. And back in August, labor experts point to the continued addition of new jobs to replace those laid off in San Francisco.

Will that trend continue as the nation’s downturn intensifies? It’s too soon to tell.

The BLS data shows the most popular month for layoffs is actually January.