Despite layoffs, experts say Silicon Valley economy is more 'bust and boom' than 'doom and gloom'

Amanda del Castillo Image
Wednesday, February 15, 2023
Layoffs represent only 2% of tech workforce, Silicon Valley CEO says
Describing the tech sector's current job cuts, Joint Venture Silicon Valley's CEO said the valley is experiencing more of an adjustment than a crisis.

SAN JOSE, Calif. (KGO) -- An upcoming report will examine the strength of Silicon Valley's economy and the health of the community. The annual Silicon Valley Index by Joint Venture Silicon Valley is set to highlight challenges and changes over the past year.

Recent tech layoffs remain top of mind for most, but officials are saying it isn't about perceived "doom and gloom," rather the cyclical Silicon Valley "bust and boom."

That's the message from Joint Venture Silicon Valley's President and CEO, Russell Hancock, as he addressed the organization's annual report.

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Describing the tech sector's current job cuts, Hancock said the valley is experiencing more of an adjustment than a crisis.

"It's a tremendous upheaval and displacement," Hancock said about the layoffs. "And so, those people who are going through that kind of pain are in a world of hurt. I understand that. However, there is good news."

Hancock said Silicon Valley has more job openings being advertised than cuts. Adding, studies show most tech workers are also landing on their feet within three months.

It's all part of an expected pattern he said, one that saw expansion during the COVID outbreak.

"The interesting thing about this latest run is that it went longer than normal," he shared. "The bust usually comes every eight or 10 years, but we've had a 15 year run. And when we hit that calamitous event, that pandemic, that turned out not to be a bust. That turned out to be a bonanza."

VIDEO: Tech expert explains how Google layoffs will impact Silicon Valley and beyond

Bay Area tech expert Ahmed Banafa explains how Google layoffs will impact Silicon Valley and beyond.

Of course, now companies are scaling back.

"They hired so many people during pandemic, now they're questioning if this is the same momentum of the purchasing and online activity is going to continue," San Jose State engineering professor and tech expert Ahmed Banafa told ABC7 News. "Time just told us- we have seen that is not the case."

Banafa echoed Index researchers who found the region has come to rely on three companies, accounting for nearly 20% of tech jobs.

"The tech employment in Silicon Valley is actually based on three companies which is Apple and Google and Meta or Facebook," he said. "There are more companies."

Researchers estimate 30 tech companies employ more than 40 percent of tech workers in Silicon Valley and San Francisco.

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Hancock said though many tech workers are experiencing their first downturn now, the overall job cuts only represent about two percent of the tech workforce.

"Now here we are, 15th going into our 16th year of expansion, and that means the workers that are in their 20s and 30s have come to think of this as normal," Hancock shared. "When in fact, it's not normal. What's normal is that we have adjustments. What's normal is that we have periodic downturns, before we move to the next big thing."

Hancock added, "During the bust, you shouldn't become overly despondent. And during the booms, you shouldn't become overly euphoric."

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