Expect cooling in job market
Analyst: Santa Clara County is still ‘ hot,’ but lack of housing and labor supply taking a toll
SAN JOSE — The Santa Clara County economy and job market will slow during 2017, yet still remain in good shape, an economist told a gathering at San Jose State on Thursday.
Job growth in Santa Clara County will slow to roughly 2 percent this year, Christopher Thornberg, principal economist and founding partner with Beacon Economics, told an economic summit hosted by the university. The county is the home base of the world’s tech industry and is one of the key engines for the Bay Area economy.
“Santa Clara County is still hot, but things are starting to slow because growth is being constrained by a lack of housing and a lack of labor,” Thornberg said during his presentation.
A 2 percent increase in total payroll jobs would represent a marked slowdown from the employment growth of recent years. The job market in Santa
“The cities around San Jose want nothing to dowith creating more housing. There are toomany communities where the NIMBYs have locked things down.”
— Christopher Thornberg, Beacon Economics
Clara County grew 2.9 percent in 2016 and 3.7 percent in both 2015 and 2014, according to seasonally adjusted figures released by state labor officials.
The county has lost jobs during three of the first four months of 2017, state government reports show, a slump that has kindled fears of a more protracted slowdown.
“Tech jobs are starting to rebound, but we’re seeing some weakness in nontech industries” in Santa Clara County, Thornberg said in an interview with this news organization following his presentation.
Over the 12 months that ended in April, the technology industry added 6,700 jobs in Santa Clara County, according to figures from the state Employment Development Department and Beacon Economics.
“Just as tech is showing signs of gaining momentum, non-tech industries are losing jobs,” Thornberg said.
However, several industries that depend, at least in part, on core sectors such as tech and manufacturing, lost jobs over the same one-year period in Santa Clara County. Administrative support services shed 2,100 positions, educational services lost 1,200, retail fell by 1,100 jobs, financial services and insurance lost 800 jobs, and construction companies shed 300 positions.
One big exception to the pattern for Santa Clara County: The non-tech sector with the biggest job gains over the 12-month period was the restaurant, hotels and entertainment industry, which added 5,700 jobs.
Manufacturing added jobs over the one-year period, gaining 800 positions in Santa Clara County. But 400 of the 800 jobs were gained in computer electronics manufactur- ing, and 400 in non-tech manufacturing. All told, tech accounted for slightly more than half of the 13,300 jobs that were added in the county during the 12 months that ended in April.
Experts pointed to multiple impediments for the Santa Clara County job market and economy. Housing costs continue to march higher, which makes it tougher for workers from outside the region to justify a move to this area for work. Plus, the job market has been so strong that it’s getting tougher for employers to find people to hire. In both instances, if a person doesn’t get hired, they never show up as an employment gain — even if the company has openings to fill and would hire people if they could.
“We are seeing headwinds” in the South Bay, San Jose Mayor Sam Liccardo told the economic summit. “We have seem some job losses in the recent job numbers this year. And we have a real challenge on housing costs.”
Thornberg applauded San Jose’s efforts to build housing to address the needs of workers.
“San Jose is doing great, but the problem is that San Jose can’t be the only one doing all the work,” Thornberg said. “The cities around San Jose want nothing to do with creating more housing. There are too many communities where the NIMBYs have locked things down” and blocked development.