AI Boom Leaves West Coast Tech Workers Struggling to Find Jobs
Despite possessing AI skills and over a decade of management experience in technology, Juan Ruiz has encountered difficulties in transitioning to a new job in California, a state recognised for its vibrant tech scene. Ruiz has been seeking a new position with higher compensation since October 2024, dispatching hundreds of applications, he informed. Thus far, there has been a notable absence of activity. “Nobody’s calling back,” Ruiz said. America’s tech companies are experiencing unprecedented gains from the most significant investment surge recorded, as reported by the Bank of International Settlements — a substantial number of these firms are based on the West Coast. Unemployment in the region remains notably elevated, with California, Oregon, and Washington collectively reporting a jobless rate of 5.2% in June, as per the Bureau of Labour Statistics. This figure positions them as tied for the second-highest rate in the nation, trailing only Washington, DC, which recorded a rate of 6%. Tech hiring has experienced a significant deceleration over the past few years, particularly in the West Coast region. The sluggish job market has effectively excluded new entrants, leaving individuals such as Ruiz in a state of stagnation. While companies are investing in AI, they are simultaneously implementing layoffs rather than increasing their workforce, which has a widespread impact on employment. And it’s not just technology firms, according to economic analysts. “AI technology is getting better and companies are using it, so they don’t need to hire as many software developers or data analysts, for example,” said Laura Ullrich.
“Large companies are also spending a lot of money on AI enterprise solutions, which usually means labor spending goes down, unless their budget grows.” Employment in California’s information industry reached a six-year low in April, according to BLS figures. By June, the situation had improved only marginally. Meanwhile, the unemployment rate in that state has shown a consistent upward trend since the start of the year. Unemployment claims are rising in California “among workers who were formerly in highly AI-exposed occupations, especially those who are advanced-degree holders in the Bay Area and in technology-adjacent sectors,” said Ben Hyman. A recent analysis from the Federal Reserve Bank of San Francisco showed that unemployed people with advanced degrees are among the groups struggling the most to find a job. Hyman stated that AI is exerting “very concentrated effects” on California’s tech-adjacent industries, rather than impacting the state’s economy in its entirety. Amazon and Microsoft, two of the largest employers in Washington, have both declared multiple rounds of significant layoffs in recent years. Last month, Microsoft disclosed a decline in its total headcount for the first time in ten years, whereas Amazon has reduced its workforce by over 30,000 positions since October.
Last year, Amazon CEO Andy Jassy communicated to employes that the incorporation of AI into the business is expected to “reduce our total corporate workforce.” Intel, the largest private employer in Oregon, announced layoffs last month, affecting its data center operations and reducing its workforce to 81,000 — a decline from over 130,000 in 2022. Employment in the state’s chip industry has reached a level not seen in three decades. The US economy experienced an unexpected decline of 23,000 jobs last month, according to the BLS report released on Friday, as businesses continued to grapple with the repercussions of the protracted conflict in Iran. Rising transport and freight costs, driven by the ongoing conflict, persist in exerting pressure on enterprises within the San Francisco Fed’s district, which encompasses a significant portion of the western United States, as indicated by the Fed’s most recent periodic survey of businesses, referred to as the Beige Book. Some businesses reported that vendors have imposed fuel surcharges, according to the survey.
The prevailing economic environment has prompted businesses to engage in “selectively hiring in response to attrition or specific business needs,” as noted in the Beige Book. Matt Carter was laid off last year from his project manager position at tech firm Welocalize and has faced challenges in securing a tech job in Portland, Oregon, ever since. He informed that he divested his property shortly after his layoff and that his unemployment benefits have since been exhausted. Carter is currently contemplating the prospect of taking on a role as a security guard in order to manage his financial obligations. “Getting a tech job on the West Coast in a big city like Portland, Los Angeles, or San Francisco is kind of like winning the lottery at this point,” he said. “There’s just so much competition and not a lot of hiring.”
