What does it mean when one of strongest sectors of the US economy starts to falter? From Wolf Richter at wolfstreet.com:
Tech skills are suddenly “abundant” in San Francisco & Silicon Valley
Hiring dropped 4.1% in May year-over-year in the Bay Area, which includes Silicon Valley, San Francisco, Oakland, San Jose, and other cities, according to LinkedIn’s new Workforce Report. This contrasted with the US overall, where hiring rose 2.4%, “the strongest month for hiring since June 2015,” as the report put it.
On a seasonally-adjusted basis – this irons out large seasonal variations, such as the drop-off in December due to the holidays or the surge over the summer due to seasonal work and student internships – hiring plunged 11.1% in May from April.
This measure of hiring activity is based on the 138 million workers in the US who have profiles on LinkedIn. That would be 86% of what is deemed to be the “civilian labor force” of 160 million people and about 42% of the total US population.
So not everyone is part of this sample. It’s a sample of people interested in other jobs and in making themselves visible to recruiters and companies. The data may be skewed in that direction and away from people who are not looking or who have skills that are not very marketable on LinkedIn.
But it’s a huge sample, and May’s 4.1% year-over-year drop in hiring in the Bay Area – so this is not a drop in employment, but a drop in hiring activity – is significant.
There’s more. The report includes a section on the “skills gap” – the mismatch between the skills employers need (demand for skills) and the skills workers have (supply of skills). The report explains:
There is an abundance of skills when supply exceeds demand. There is a scarcity of skills when demand exceeds supply. A city with a scarcity of skills needs more workers with certain skills, while a city with an abundance of skills has too many workers with certain skills.
And the Bay Area has the largest mismatch of skills of any other area in the report (ahead of Washington DC, Austin, and Los Angeles).
To continue reading: It Starts: Hiring Falls in San Francisco Bay Area, Says LinkedIn