Hardest hit are the construction, retail and financial services industries.
But job growth can be found in certain pockets of the economy - clean technology is a big one.
"There's been about 2,500 to 3,000 new jobs created in San Jose in the last year, mainly in solar and clean transportation areas," James Robbins of the Environmental Business Cluster said.
President-elect Barack Obama has pledged to help create 5 million new clean tech jobs by investing $150 billion over the next 10 years.
ElectraDrive is a San Jose start-up leading the charge. It is developing a rapid and inexpensive was to convert gas vehicles to electric.
"We knew whoever was going to get into the White House was really going to give the whole industry a kick-start," ElectraDrive CEO Fraser Murison Smith said. He thinks now is the time for a clean tech job explosion.
The healthcare industry is another pocket in the economy full of good paying jobs that cannot be outsourced. In the past year, the San Jose market has added 1,100 healthcare jobs and the sector has had job gains every year since 2003.
"So we may see growth in that area for some time as our population ages," labor market consultant Janice Shriver said.
At the Labor Development Department, a record number of people are being told to sharpen their skills and look where the jobs are growing, not where they are disappearing.