Fewer people in the Bay Area are working in factories and other production facilities and instead, many more are working in the "softer" side of high-technology: Internet, software, mobile communications, social media, and research and development.
(TNS) -- Move over factory workers. Make room for coders.
The Bay Area job market has climbed to record heights in recent months, much as it did during the dot-com era. But the shift in demand for tech and computing skills has created a very different economic landscape for workers.
"When you talk about technology, there has been a major movement from the hard stuff -- computers, semiconductors, peripherals -- to the soft stuff," said Christopher Thornberg, principal economist and founding partner with Beacon Economics. "It used to be a lot about developing new hardware. Now, the hardware has faded in importance compared with the software. It's all about the applications these days."
Fewer Bay Area people are working in factories and other production facilities, in stores, on building projects, in banks and mortgage offices.
Instead, many more are working in the "softer" side of high-technology -- jobs that include the Internet, software, mobile communications, social media and research and development. Health care, hotels and restaurants catering to higher-paid tech workers have also greatly added to their ranks of employees during the 15 years since the peak of the dot-com bubble, according to this newspaper's analysis of official statistics from the state's Employment Development Department.
It's the latest chapter of a long-running trend as the economy evolves.
Despite the upheaval in high-tech, the evaporation of manufacturing jobs, and the radical reshaping of the tech sector since the dot-com era, technology remains the biggest job producer in the Bay Area with more than a 22 percent share, just a shade below the 23 percent level 15 years ago.
High-tech -- defined as a combination of technology manufacturing, information services and products, and professional, scientific and technical services -- added a scant 400 positions in the Bay Area from December 2000 through December 2015, according to EDD estimates that were released in January. That's 0.1 percent higher than at the height of the dot-com boom.
Technology accounts for 32 percent of the jobs in Santa Clara County, down from 34 percent in 2000; and 24 percent of the jobs in the San Francisco-San Mateo region, up from 22 percent in 2000. In the East Bay, tech has 12.3 percent of the job market, trailing only health care and social assistance, which has a 14.6 percent share.
"It's a bit of a concern that the Bay Area relies so heavily on technology jobs for our economy," said Jon Haveman, chief economist with San Rafael-based Marin Economic Consulting. "A downturn in tech would have a major impact on the Bay Area economy, but we can withstand it. The Bay Area has a healthier economy than at the peak of the dot-com bubble."
The most profound downturn has been in manufacturing as companies erased nearly 156,000 factory jobs over the 15-year period, equivalent to the population of Concord and Saratoga combined. During this time period, arguably the most famed manufacturer that vanished, with a loss of 4,700 jobs, was the New United Motor Manufacturing auto factory in Fremont that closed its doors in 2010.
Some NUMMI workers were lucky to find similar work and some were rehired when Tesla took over the sprawling facility to build its electric cars. Sergio Santos, a longtime NUMMI worker and president of the union at that plant, estimated that 25 percent of the 3,700 union workers at NUMMI found jobs at Tesla. Many had to retrain for non-manufacturing jobs, however.
"There are a lot of jobs these days, but so many of them are lower-paying jobs than what we had at NUMMI," said Ronald Lopez, who had worked at the plant for 20 years and now is employed at work2future Foundation in San Jose, a center that provides job training for young people. "A lot of the jobs these days are with entry-level construction, beginning IT jobs, hospitality and retail."
The Bay Area has 35 percent fewer manufacturing jobs than in the dot-com era. Many of them shifted out of state or overseas.
"The manufacturing downturn is largely due to the high cost of doing business in the Bay Area and the high cost of living, because land is so expensive," Haveman said. "But it also means we are seeing a hollowing out of the Bay Area job market, with a lot of middle-class jobs going away."
Those job losses in factories have spilled over to tech manufacturing for products such as computers, electronics, semiconductors and peripherals.
"A structural shift has occurred in the tech economy," said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at University of the Pacific.
The tech part of manufacturing has lost 93,000 jobs, a 38.8 percent decline during the 15 years.
In contrast, the digital and information side of technology is booming and has added 93,500 jobs, a 19 percent increase. It's easy to see examples: Mountain View-based Google, Cupertino-based Apple and Menlo Park-based Facebook, along with San Francisco-based salesforce.com are hiring workers and adding offices at a quick pace.
"Tech services, software, Internet, mobile, social media technology is really taking off," said Scott Anderson, chief economist with San Francisco-based Bank of the West.
Like the rest of the Bay Area, Santa Clara County has shed a huge number of tech manufacturing jobs, losing nearly 63,000 in 15 years, or a 36 percent decline. But when it comes to "soft," or non-manufacturing tech jobs, Santa Clara County has gained 47,000 positions, up 25 percent.
The East Bay has lost 15,000 tech manufacturing jobs for a 46 percent decline over the 15 years, but has also gained 5,700 soft tech jobs, or a 5 percent gain.
The profound changes in tech are particularly visible in the San Francisco-San Mateo region, which has benefitted greatly by the emergence of the new generation of digital startups such as salesforce.com, Uber, Twitter and Facebook. The San Francisco-San Mateo area has added more than 40,000 tech jobs, despite losing nearly 11,000 tech manufacturing positions. Again, the big boost came from a gain of 51,000 "soft tech" jobs.
The rise of the Internet also has altered the employment needs of the retail and financial services sector.
"You have an online ability to buy clothes or other items, you can book your hotel on the Web, you don't need to go to the bank as often," said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.
In many ways, the evolution of tech is a reflection of the shifting nature of the dynamic U.S. economy. Emerging industries constantly supplant legacy sectors. It's not just that tech is replacing other industries; tech is replacing itself.
"We have this economy of new tech versus old tech, which is certainly playing out in the Bay Area," said Mark Vitner, senior economist with San Francisco-based Wells Fargo Bank.
©2016 the Contra Costa Times (Walnut Creek, Calif. Distributed by Tribune Content Agency, LLC.