AI is booming. Tech jobs in San Francisco are not

https://sfstandard.com/2026/01/28/ai-booming-tech-jobs-san-francisco/

The city lost thousands of jobs last year as layoffs at major companies 
outpaced hiring.

Another boom time has arrived in San Francisco. Office buildings are 
filling back up. Apartment hunters are locked in bidding wars. And 
lunchtime lines snake around the block for overpriced slop bowls. But 
despite San Francisco being the undisputed center of the AI boom, the city 
is hemorrhaging thousands of tech jobs. 

The labor market of San Francisco and San Mateo counties saw the loss of 
4,400 jobs, or 0.4%, in 2025, according to data released last week by the 
California Employment Development Department. A decline in tech jobs was a 
big driver, with the information sector recording the steepest annual 
drop, losing 4,500 jobs, about 4%.  

The downturn has spilled into adjacent industries. Professional and 
business services posted a net decline of 3,600 jobs over the year, with 
sharp reductions in professional, scientific, and technical services and 
in corporate management roles. Those losses were partially offset by 
modest gains in administrative and support services.

Leisure and hospitality led job growth, adding 4,500 positions over the 
year. Nearly 80% of those gains came from accommodation and food services, 
reflecting a rebound of in-person activity even as high-paying office jobs 
wane. 

In San Francisco proper, the slowdown was more severe than in any other 
major city. The number of job listings in San Francisco declined 37% from 
February 2020 to October 2025, according to data from Indeed(opens in new 
tab). 

“The number of jobs being created in AI is not enough to fully offset the 
job losses at traditional Big Tech companies,” said Enrico Moretti, a 
professor of economics at UC Berkeley. “The upward trend in AI is still 
dwarfed by the downward trend from the rest of the industry.” In 2025, 
around 40,000 workers were laid off at tech companies headquartered in the 
Bay Area, according to independent tracker Layoffs.fyi(opens in new tab). 
Meanwhile, OpenAI and Anthropic employ fewer than 10,000 employees 
combined. 

The layoffs have continued into this year. Menlo Park-based Meta cut more 
than 1,000 jobs(opens in new tab) from its Reality Labs division this 
month, while San Francisco-based Pinterest said this week that it’s laying 
off 15% of its workforce(opens in new tab) and cutting back on office 
space. 

San Francisco’s labor market is a national outlier because of its heavy 
exposure to tech. Nationally, economists describe the current labor market 
as “low hire, low fire,” but in the tech sector, it is better 
characterized as “low hire, some fire,” according to Laura Ullrich, 
director of economic research at Indeed.

The pullback follows more than a decade of rapid expansion of the city’s 
tech sector. Starting in the mid-2010s, low interest rates and abundant 
venture capital fueled investment into local private tech companies, 
driven by the hope of lucrative initial public offerings. Flush with cash, 
companies expanded aggressively, adding jobs and competing fiercely for 
talent in a search for fast growth, blitzscale-style.

That hiring spree accelerated during the pandemic. Jobs were plentiful, 
perks were lavish, and workers who hit a wall at one company could 
probably land a job with the competition. 

But this era of Big Tech “over-exuberance” has ended, according to 
Moretti, as interest rates have spiked and headcounts proved too large. 

Of course, the tech downturn has coincided with the rise of artificial 
intelligence, adding a new layer of disruption to an already unsettled 
labor market. New college graduates, in particular, are finding themselves 
shut out of the workforce as companies favor automation and more seasoned 
workers. Since 2019, the hiring of new graduates at the 15 largest tech 
companies has fallen 55% nationwide, according to data from venture 
capital firm SignalFire. 

For those who are employed, companies are increasingly mandating “AI 
fluency,” using the technology to shrink workforces and push employees to 
do more with less.

“Companies are hiring fewer software engineers because they can use AI and 
be more productive,” said Ullrich. “So maybe instead of having 20 people 
on your team, you now have 10.”

More broadly, the wave of AI-driven growth looks fundamentally different 
from past tech booms in the city. This time, much of the investment 
capital is flowing not to jobs and office space but into the costly 
infrastructure that underpins artificial intelligence: data centers, 
specialized chips, and computing power. The shift has muted tech hiring 
and reduced the spillover benefits that once rippled through the economy, 
explaining why the region lost jobs last year even as investment surged.  

“When tech is hiring, you have money flowing out of both the companies and 
their employees,” said Ted Egan, chief economist for the city and county 
of San Francisco. “Tech is the driving force of growth in the city.”

What declining tech hiring means for the Bay Area’s future remains 
uncertain. Egan pointed to signs that AI adoption is beginning to stall 
even as investment continues to pour in — a mismatch that could create 
further short-term disruption in the labor market. 

Those concerns are increasingly echoed by tech executives, some of whom 
warn that advances in AI could trigger widespread upheaval for white-
collar workers. In that view, San Francisco’s pullback in tech hiring may 
be an early signal of what other regions could face as AI continues to 
improve. 

“I think it’s possible that we see 20%-30% unemployment levels over the 
next two to five years,” Verizon CEO Dan Schulman said last week at the 
World Economic Forum(opens in new tab) in Davos, Switzerland. “To what 
will you reskill? Customer service — most of that will go away. 
Programming, we know most of that will go away. Legal probably gets cut in 
half.” 

At the same conference, JPMorgan Chase CEO Jamie Dimon argued for phasing 
in automation(opens in new tab) to avoid displacement, saying he’d welcome 
government bans on mass replacement of humans with AI, if they were 
needed.

Similar anxieties surfaced this week in an essay(opens in new tab) by 
Dario Amodei, CEO of San Francisco-based Anthropic, who cautioned that 
rapid advances in AI could create an “underclass” of unemployed or very 
low-wage workers. 

Still, not everyone is pessimistic. Moretti said the AI era is still in 
its early phase, with most AI-related jobs concentrated in basic science, 
including research and technical development. He expects broader job 
growth to follow as the technology is applied more widely across 
industries and as companies move from experimentation to selling AI-
powered products at scale — changes that could favor the Bay Area.

“There will probably be job losses in the medium and long run,” Moretti 
said. “But of all the cities in the U.S., the San Francisco Bay Area will 
be in the best position.” 


-- 
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Thank you for cleaning up the disasters of the 2008-2017, 2020-2024 Obama 
/ Biden / Harris fiascos, President Trump.

Under Barack Obama's leadership, the United States of America became the 
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