Tech layoffs may drive up Bay Area's unemployment rate

Recent tech layoffs may lead to an uptick in the San Francisco Bay Area's low unemployment rate, according to the city's chief economist.

Why it matters: Any rise in unemployment could lead to less spending in the local economy, which is already struggling to fully recover from the effects of the pandemic.

What's happening: The unemployment rate in the San Francisco metropolitan area rose by 0.1 percentage points in February to 2.9%, per a new analysis of Labor Department data.

• Year over year, the Bay Area's unemployment rate is one percentage point lower than in February 2022, when it was 3.9%.
• Nationally, the unemployment rate was 3.5% as of March.

Yes, but: Numerous layoffs last month at companies like Twitch and Amazon, and Meta's announcement this week of 4,000 layoffs, could pull our rate higher.

What they're saying: "Local unemployment is still very low, despite having picked up in January because of the tech layoffs," San Francisco's chief economist Ted Egan told Axios via email. "We may see some increase in unemployment in the months to come, as those layoffs ripple through the city's economy."

The big picture: San Francisco is still in active pandemic recovery mode, with the city facing a massive budget deficit and high office vacancy rates.

• Our downtown core has had the slowest pandemic-related recovery of the 62 largest cities across the U.S. and Canada, according to an analysis from the School of Cities at the University of Toronto.

• That's in part due to tech-related layoffs as well as the transition to remote work that has contributed to the city's 30% office vacancy rate.

Between the lines: In recent months, Mayor London Breed outlined a downtown revitalization plan and has since co-sponsored legislation designed to make it easier to convert empty offices into housing.

• "Offices are absolutely critical to the future of our city, but the reality is we need a more diverse and resilient downtown," Breed wrote on Medium earlier this month.