The Bay Area job market surged again in May as the region’s booming economy kept employers adding to their payrolls for the 13th consecutive month
The Bay Area gained 6,800 jobs in May, according to seasonally adjusted figures released Friday by the state Employment Development Department. The number of payroll jobs in the nine Bay Area counties stands at 3.986 million, with the South Bay, East Bay and San Francisco-San Mateo regions each adding more than 1,000 last month.
All three of those regions also are at record-low unemployment rates, according to a Beacon Economics survey that stretches back nearly three decades and includes the red-hot employment market of the dot-com boom.
But there’s a dark side to the sizzling record numbers: worsening traffic, escalating housing prices, rising rents and overcrowded schools.
Experts warned Friday that the region’s success creating thousands of new jobs a month could choke off or hobble growth in the future.
“The big issue is the high cost of living and the high cost of housing in the Bay Area,” said Mark Vitner, an economist with San Francisco-based Wells Fargo Bank.
As housing prices and rents soar, people can no longer afford to live close to their jobs, analysts said. “The high costs are forcing more people to move to the Central Valley,” Vitner added.
Over the one-year period that ended in May, the Bay Area added 88,200 payroll jobs, this news organization’s analysis of the EDD figures shows. During the same 12 months, Santa Clara County added 34,500 jobs, the San Francisco-San Mateo region gained 23,200 positions while the East Bay added 23,100 jobs.
“The job numbers are solid,” said Scott Anderson, chief economist with San Francisco-based Bank of the West. “These reports cement the leadership of Silicon Valley in terms of employment creation in California.”
The unemployment numbers tell a similar story: Santa Clara County’s unemployment rate improved to a record low of 2.5 percent in May, compared with 2.6 percent in April, according to seasonally adjusted records that date back to January 1990 and were compiled by Beacon Economics. Jobless rates remained unchanged in May at 2.9 percent in the East Bay and 2.2 percent in the San Francisco-San Mateo regions, Beacon reported. Those also were the lowest on record in those two metro areas.
The question is, when will the bubble burst?
Analysts agree that it will be tough for the region maintain its current remarkable pace of job creation, especially coupled with a historically low number of people out of work.
“It’s going to get harder over the next 12 months to maintain job growth at these rates,” Anderson said. “It’s not due to a lack of demand but a scarcity of workers. Employers may be scraping the bottom of the barrel in terms of being able to find more people to hire.”
Other experts agreed that the biggest threat to job growth could be the ability of employers to hire at the same brisk pace of today.
“We need to grow the labor force,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy, “and the best way to do that is to create more housing for people to work here.”
The alternative is dire, experts said. More people could be shoved into brutal commutes over increasing distances.
“We have to grow the workforce and be able to get them to work in a reasonable amount of time,” Levy said. “That’s the barrier. The barrier is not the strong economy, nor is it the desire of companies to hire.”
It’s the South Bay companies that showed the highest desire for Bay Area hiring in May, accounting for 39 percent of all the jobs in the region added over the last 12 months. In turn, the Bay Area produced 29 percent of all the jobs that California created — with just 20 percent of the state’s population.
During May, Santa Clara County added 1,800 jobs, the East Bay gained 1,400, and the San Francisco-San Mateo metro area added 2,700. All seven of the metro areas that make up the nine-county Bay Area added jobs in May, the report shows. Santa Cruz County added 600 jobs in May.
California overall gained 5,500 jobs during May, the EDD reported. The statewide unemployment rate remained unchanged at a record-low level of 4.2 percent. One notable area that lost employment was Orange County, which shed 3,500 positions.
Among the strong industries during May, according to a Beacon Economics analysis of the EDD report: Technology companies added 1,000 jobs in Santa Clara County and 600 in the East Bay, hotels and restaurants added 900 positions in the San Francisco-San Mateo region and health care gained 800 jobs in the San Francisco-San Mateo metro.
In the East Bay, retailers added 600 jobs, while transportation and warehouse companies — in a sign of strength at the Port of Oakland — added 900 positions.