For the first time since 1994, Santa Clara County–the heart of California’s Silicon Valley–is expected to end the year with a rate of job growth that falls substantially behind the statewide rate.
And the region will produce about 80 percent fewer new jobs this year than it did in 1997, according to employment figures released by the state.
Silicon Valley’s long-term prospects remain good, but the economy is taking a “pause.”
“It’s gone from leading the state to lagging the state,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “The California economy is continuing to grow while Silicon Valley has flattened out.”
That breather, he said, is attributable to the recession in Asia, which has caused a decline in exports and sales of high technology companies. It also is the result of a cyclical downturn in the chip industry that has led to a drop in earnings for many of the region’s companies.
Because of these changes, the electronics and computer industries have ranked first and third respectively in job-cut announcements this year, as compared with last year when they were not in the top five.
If final figures show that trend continuing through December as expected, job growth in Santa Clara County will be about half of what is occurring statewide. That is a striking reversal from 1997 when employment in the region was growing at almost twice the state’s rate.
Specifically, Santa Clara County has added about 9,300 jobs in non-farm industries in the last year as compared with more than 52,000 for the previous year.
The slowdown in the Silicon Valley economy was illustrated at the recent Westech Career Expo job fair.
The job candidates who packed a Santa Clara Convention Center conference room were in the unfamiliar position of being among too many applicants for too few jobs.
Tom Lasch, 41, was laid off in September from his job in the purchasing department at Diablo Research, a Sunnyvale-based contract manufacturer, and had yet to land a new one after three months of looking.
“There are a lot of jobs here, but they’re all in the Internet,” he said.
Indeed, the number of computer and office equipment manufacturing jobs in Santa Clara County declined over the 12-month period ending in November to 49,500 from 52,600.
The job fair still did present opportunities.
Garth Honhart, 31, an Intranet developer, was laid off at the end of November from San Jose-based Cerprobe, which makes equipment to test integrated circuits. He was confident his skills in networking systems would make it easy to find another job.
“I’m not going to take anything unless it’s really good,” he said. “I can afford to be picky.”
Indeed, several recruiters at the fair said they had jobs for people with skills like Honhart’s — a knowledge of the Java language and Web design — and could not find enough people to fill them.
Economists said that the Silicon Valley economy is in flux, and that the latest unemployment figures are another sign of the shifting landscape.
Unemployment in Santa Clara County dropped to 3.3 percent from 3.6 percent in October. While that is the lowest it has been since June, it still is higher than the November 1997 rate — an extraordinarily low 2.6 percent.
Still, the latest figure is below the national unemployment rate of 4.4 percent, and economists said that the local number clearly shows that the area’s economy is doing well.
Yet economists cautioned against celebrating a monthly drop of three-tenths of 1 percent in the unemployment rate. They said that the end of the year generally brings a decrease in the unemployment rate, as retail employment picks up.
And the fluctuations from month to month are less important than the shifts that are occurring over longer periods, said Doug Henton, an economist at the Palo Alto-based consulting firm Collaborative Economics.
Most important, job growth in Silicon Valley has slowed substantially, economists said.
Santa Clara County began outpacing the state in job growth in 1995 when the county recorded growth of more than 5 percent compared with the state’s figure of less than 1 percent. That trend continued through 1996 and 1997. But for the 12 months that ended November 1998, Santa Clara County saw the number of non-farm employment positions increase by less than 1 percent.
Meanwhile, the California job growth rate for the 12 months ending in November was 2.7 percent, more than double Santa Clara County’s.
