Tech layoffs, compounded by interest rate increases and inflation, lead to higher unemployment levels and falling wages in California, Oregon, and Washington
Wall Street Journal : Tweets: @producercities Tweets: Jim Russell / @producercities : West Coast States Face Higher Unemployment, Falling Wages: “Average wages have plummeted in areas where high-paying tech jobs are concentrated. San Francisco County had the largest drop in weekly wages, 22.6%, of any large county in the country last year” https://www.wsj.com/... [image]
Context & Ripple Effects
The West Coast's tech labor market has been deflating in stages: the startup layoff wave of 2020 cut over 25K jobs in the San Francisco region alone, then remote work and continued cuts left San Francisco offices only 43.1% occupied by late 2022 — the emptiest of any major metro tracked. The new WSJ numbers show what that does to paychecks, not just headcounts: San Francisco County posted the largest weekly-wage drop, 22.6%, of any large U.S. county last year.
The macro overlay matters here — interest-rate increases and inflation compounded the sector-specific cuts into broader unemployment across California, Oregon, and Washington. And the damage looks structural rather than purely cyclical: Bureau of Labor Statistics data shows California's share of U.S. tech jobs has declined every year since 2020, echoing earlier episodes like the 2016 Bay Area layoff doubling.
First-order effects
- Tech workers in California, Oregon, and Washington face simultaneous pressure on both sides of the ledger — higher unemployment and falling average wages where high-paying tech jobs are concentrated, with San Francisco County's 22.6% weekly-wage drop as the sharpest single datapoint.
Second-order effects
- Displaced tech workers are redirecting their search toward banking, retail, health care, and manufacturing even as total tech occupation employment hit a record 6.39M in November 2022 — meaning non-tech employers in other regions absorb talent the West Coast hubs are shedding.
- Local economies built around dense office attendance take a second hit: San Francisco already had the weakest return-to-office of any major metro at 43.1%, so falling resident wages compound the spending pullback downtown.
Third-order effects
- If California's declining share of U.S. tech jobs keeps its post-2020 trajectory, the industry's geographic center of gravity diffuses away from the Bay Area toward distributed and lower-cost markets — turning West Coast wage declines from a recession artifact into a rebalancing.
The trend: The West Coast's decade-long monopoly on premium tech labor is eroding, with each layoff cycle since 2016 relocating a portion of the industry's jobs and wages to other regions and sectors.