The Country's Tech Market Is Growing, But So Are Industry Layoffs
Top markets across North America saw the number of tech jobs grow in 2021, but economic headwinds could signal a slowdown in hiring in the coming months.
CBRE’s latest Scoring Tech Talent report shows the U.S. gained 136,000 new tech jobs last year, an annual increase of 2.5%. There are now 5.5 million tech jobs nationwide, per the report. The top five markets — the San Francisco Bay Area, Seattle, Toronto, Washington, D.C., and New York City — remain unchanged from 2020; however, San Diego, Portland and Los Angeles/Orange County added the most new jobs year-over-year.
Despite the industry’s growth, the report also showed that layoffs are ramping up as companies grapple with rising inflation and a looming recession. The first half of this year saw 4% more layoffs compared to the same period last year, although some areas of tech are more impacted than others.
Fintech, for example, saw a 500% increase in layoffs, which Colin Yasukochi, executive director of CBRE’s Tech Insights Center in San Francisco, said is related to a trend of cryptocurrency firms letting go of employees amid rising interest rates.
For the most part, however, the majority of layoffs are concentrated in administrative and sales jobs, Yasukochi said. Companies remain hesitant to lay off members of tech teams, which he said can take years to build.
Another trend that continues to gain steam is the prevalence of remote work. Close to a quarter of all tech job listings listed at the close of Q1 were for remote positions, which Yasukochi said represents a significant shift in the industry.
“That is a huge increase compared to where we were pre-pandemic when only 4% of those same jobs were available on a remote basis,” he said during a July 12 media briefing.
The tech industry has been the top driver for office leasing in the U.S. over the past five years — in 2021, the high-tech industry comprised 21% of major leasing activity. However, hybrid and remote work has put a dent in occupancy and slowed rent growth in some major markets.
New York, the San Francisco Bay Area and Philadelphia have seen rents drop by more than 3% compared to the first quarter of 2020, according to CBRE. New York City still has the most expensive office asking rate at $77.45 per SF per year.
A growing number of tech companies are scaling back growth plans and exercising caution as the U.S. hurtles toward a recession. Still, Yasukochi feels confident that North America will continue to see growth in tech occupations due to the highly coveted skills possessed by its talent.
“Many tech companies are still growing, especially the larger ones,” he said. “They're just growing at a slower pace than they anticipated six months ago.”