The Bay Area job market, a long-time engine for California’s economy, has sputtered badly in the wake of the coronavirus outbreak, reflecting a profound shift in the fortunes of Silicon Valley.

The slowdown is so pronounced that the region has become a drag on California’s job market. In 2024, job growth in the state ranked only 37th among all others.

Adjusted for seasonal volatility, California job totals in 2024 increased by just 1%, according to data from the Employment Development Department. The Bay Area job market, in the same period, grew 0.2%.

“The Bay Area’s labor market performance over the past year has been among the bottom of the pack in both the state and nation,” said Scott Anderson, BMO Capital Markets chief U.S. economist.

Several factors are behind the sluggish results for the region.

“A high cost of living and doing business, sluggish population growth, and a tech sector revamping for a new AI-driven world are big pieces of that puzzle,” Anderson said.

Before the arrival of COVID-19 in 2020, the job market in the Bay Area hummed at peak performance.

Over a 10-year period that ended in 2019 — the final year before the start of business shutdowns to combat the spread of the deadly virus — the Bay Area job market outpaced California’s by a significant margin.

During that stretch, regional job totals increased by 30.5%, while California’s job market grew by 23.5%, according to figures compiled by the state Employment Development Department.

From 2020 through 2024, however, job totals in the Bay Area slid lower by 0.8%, compared with an increase of just 3.2% for California, according to this news organization’s analysis of EDD reports.

“These numbers on job growth are stunning,” said Michael Bernick, an employment attorney with law firm Duane Morris and a former director of the state EDD.

In contrast, job totals in the United States grew 4.7% over the five years from 2020 through 2024. All the while, problems with statewide and Bay Area job markets lingered as 2024 drew to a close.

Hiring in the state is partly being weighed down due to conditions in the region. Layoffs in the normally robust tech sector, which is seeking to streamline its operations, are a big factor in the sluggish pace of hiring.

In 2024, the South Bay, East Bay and the San Francisco-San Mateo region all produced job gains that fell short of the statewide average. A nosedive in hiring for the San Francisco metro region was a primary factor.

Here’s how the job markets fared during 2024 in the Bay Area’s three major urban centers:

—The San Francisco-San Mateo area lost 8,200 jobs in 2024, a decline of 0.7%.

—The South Bay added 3,100 jobs for a 0.3% gain.

—The East Bay gained 8,400 jobs, an increase of 0.7%

Tech industry cutbacks might not vanish any time soon as the sector relentlessly strives to please investors and analysts, in the view of Bob Staedler, a principal executive with the land-use consultancy Silicon Valley Synergy.

“The operational efficiency demanded by Wall Street is a factor that should not be overlooked,” Staedler said. “Companies that strive for efficiency by layoffs or moving jobs elsewhere are rewarded by the markets. I don’t see that slowing down anytime soon.”

Meanwhile, job growth in the state’s rural regions greatly outpaced hiring activity in more urban locales.

In 2024, five metro centers posted job gains of at least 2%: San Joaquin County, Yuba County, Sutter County, Madera County, and Butte County. San Joaquin County had the largest job gains, with a 5.3% increase in 2024.

In sharp contrast, the San Francisco-San Mateo region was the weakest metro area in California, with a 0.5% decline in total payroll jobs last year.

Several other major metro regions also managed slight job increases in 2024. Job totals increased by 0.9% in Los Angeles County, 0.7% in Orange County, and 0.5% in San Diego County.

Some observers, though, believe a more fundamental problem has emerged for the Bay Area when compared to 30 metro areas surveyed by the state EDD.

“In each of the past two calendar years, 2023 and 2024, the Bay Area counties have ranked near the bottom of all major California counties in rate of job growth,” Bernick said.

Regional leaders must take strong measures to address the region’s economy, in the view of Jeff Bellisario, executive director of the Bay Area Council Economic Institute.

“After two straight years of negligible net employment growth in the Bay Area, it is time to take a hard look at the foundational drivers of our economy and the policies that are limiting our growth,” Bellisario said.

This time, the problems can’t all be laid at the feet of the usual suspects, he argued.

“It has become commonplace to blame the pandemic, contraction in tech, and high interest rates as the reasons for the region’s flip from a decade of leading job growth to now five years of underperformance,” Bellisario said.

The Bay Area Council has long urged state and local political leaders to find some way to address sky-high housing prices and traffic woes that haunt the nine-county region and California.

“Without serious and urgent action to remove the barriers to investing and creating jobs, attracting new companies, and promoting this region to the world, it is hard to see a near-term path to more robust employment gains in the region and the state,” Bellisario said.

For Russell Hancock, president of San Jose-based think-tank Joint Venture Silicon Valley, one thing is certain: The Bay Area and its tech hubs have journeyed into uncharted territory.

“Silicon Valley has entered a new phase in our ongoing evolution,” Hancock said. “Previous waves of layoffs could be understood as companies recalibrating after all the overhiring during the pandemic.”

Things appear different this time, he said.

“We have entered a period of low growth and no growth,” Hancock said. “I suspect we’re going to be hunkered down for a while.”

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