Troubled times in Silicon Valley

A double dose of bad news hit one of California’s key economic engines Tuesday.

As word filtered out about two federal investigations into the demise of Silicon Valley Bank, Meta announced it will lay off 10,000 workers. 

This follows a string of tech layoffs that began last year, which included Microsoft, Amazon, Google and Meta again when it laid off 11,000 workers in November, citing overhiring during the start of the pandemic.

Though many states and regions were impacted by the dot-com bubble burst of the late 1990s and the cascading effect of the 2008 Great Recession, Silicon Valley’s reputation as an industry that fuels California’s growth and innovation means its losses during these economic lows are especially acute.

But a couple of business leaders told me Tuesday that we shouldn’t be too quick to count out Silicon Valley.

• Peter Leroe-Muñoz, senior vice president of tech and innovation at Silicon Valley Leadership Group: “I really do believe that Silicon Valley will weather the storm that we’re going through at this moment. It’s just a question of how long we’re all going to need an umbrella.”

And a big storm has indeed been battering one of the valley’s most prominent financial institutions since its dramatic collapse last week. Currently under the control of the Federal Deposit Insurance Corp. after state regulators stepped in to seize it, Silicon Valley Bank will now be investigated by the Justice Department and the Securities and Exchange Commission, according to The Wall Street Journal.

The Justice Department’s investigation will specifically involve its fraud prosecutors in San Francisco and Washington. These probes are par for the course when financial companies experience big losses, and may not lead to any charges. Meanwhile, shareholders have filed a class-action lawsuit against the bank.

The failure of the bank — the go-to source of financing for many startups — ripples throughout Silicon Valley and beyond. It’s another stress point for tens of thousands of workers in the region with various jobs outside of tech, employed (or previously employed) by companies from small startups to tech behemoths alike. 

These layoffs and significant financial losses further fuel the inequities that plague the area. Houses in San Francisco, San Jose and other cities in Silicon Valley, for example, often top most expensive lists. Yet the same cities have some of the largest populations of people experiencing homelessness.

Regardless, with reassurances from the federal government that it will guarantee deposits into Silicon Valley Bank, business leaders told CalMatters they have faith in the resilience of the valley’s economy.

• Derrick Seaver, president and CEO of the San Jose Chamber of Commerce: “Look at the inherent strengths of our region. The workforce, which is among the most highly educated in the world; the amount of venture capital that is concentrated in our region, more so than any other part of the globe. I don’t know if the challenges of this present moment will outweigh our longer-term fundamental strengths.”

Other Stories You Should Know

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1 Equal Pay Day in CA – sort of

From CalMatters economy reporter Grace Gedye:

Women working full time, year round in the Golden State make 88 cents for each dollar that men earn. 

To mark a not-so-happy Equal Pay Day, First Partner Jennifer Siebel Newsom announced Tuesday that mayors of four California cities — Fresno, Los Angeles, Long Beach and San Diego — have joined Oakland and San Francisco in signing the Equal Pay Pledge, an initiative her office leads. 

Signatories commit to conducting annual gender pay analyses, reviewing hiring and promotion procedures to reduce barriers and bias, and promoting “equal pay best practices,” such as increased pay transparency. Those cities join 111 other employers – including the cities of Oakland, San Francisco, as well as companies including Apple, Chipotle, Gap Inc. — that have signed on. 

• Newsom: “Together these cities and companies employ hundreds of thousands and serve millions of customers and constituents. So that’s a big deal.”

Nationally, the gender pay gap is greater: Women earn 84 cents for every $1 men get. And the numbers are even worse for women of color.  

Data released on Tuesday by Indeed, a job listing site, shows that the share of job postings with salary information has increased dramatically over the past three years, thanks in part to new state-level pay disclosure laws — including one in California — and a tight job market. 

California’s law requires companies with 15 or more workers to post pay ranges in job openings. We’ve got your questions about that law answered.

Indeed ranked cities by how much the share of job postings with pay ranges increased over the past year. California cities dominate the list, and topping it are Silicon Valley and the Bay Area. 

Some sectors have more transparent pay than others. Nationally, jobs in childcare, security, dental, personal care and home health, and real estate were most likely to have employer-provided pay ranges, Indeed’s data showed. Jobs in high paying fields, including scientific research and development, management, and banking, had the lowest rate of pay ranges in job postings.

2 Flood relief, but not for all

The season’s 11th atmospheric river continues to hit the state, and some residents, particularly those living in the area known as America’s salad bowl, are crippled by flood damage, report CalMatters’ Lauren Hepler, Nicole Foy and Wendy Fry.

As concerns over their jobs and housing grows, undocumented workers, employees working in the cannabis industry and others living on the margins are seeking disaster relief from the state since they do not qualify for federally-funded programs such as Federal Emergency Management Agency aid or unemployment benefits.

• Michelle Hackett, a cannabis farmer in Salinas: “Ideally if we were any other business, we would have immediately had help. Whether it be the county, whether it be the state — someone needs to be held accountable.” 

As the state grapples with a projected $24 billion budget deficit, local advocates report that these workers are left to endure these hardships by themselves. This is despite a January mass shooting at a Half Moon Bay farm, which shed light on the squalid living conditions of farmworkers.

This issue isn’t going to go away anytime soon. Flood watches and advisories covered much of California this week. Thousands have been evacuated. The California Governor’s Office of Emergency Services reported that 490 people stayed in 30 emergency shelters Monday night.

Last week, the migrant town of Pajaro flooded as its nearby levee broke, displacing hundreds of residents. As this new storm hits, some are feeling abandoned, reports the Los Angeles Times. Gov. Newsom, who plans to visit Pajaro and other flooded areas today, added Alpine, Orange and Trinity counties Tuesday night to the 40 already under his emergency declaration.

3 Salmon season canceled

Due to plummeting numbers of Chinook salmon, a council of fishery managers in the West Coast plans to cancel California salmon season for the year, reports CalMatters’ Alastair Bland. The season runs from May through October.

It’s a move that threatens the livelihoods of anglers and fishers in the state, such as Jared Davis. He’ll need to catch other species such as halibut and striped bass to keep his fishing business afloat. But as anyone who has ever craved a spicy salmon roll knows, “Our customers want salmon,” he said. 

The salmon industry raked in about $460 million from fish sales, restaurants, tackle shops and other related businesses in 2022. But because of the drought, rising water temperatures and habitat loss, less fish are spawning. 

Chinook salmon numbers on the Klamath River, for example, hit their fourth lowest return in 40 years. There were only two other times, in 2008 and 2009, when crashing populations forced complete shutdowns. 

In addition to its economic and retail impact, salmon is a diet staple and key cultural element for members of California’s Karuk, Hoopa and Yurok indigenous tribes.

• Bill Tripp, Karuk Tribe director of natural resources and environmental policy: “The health of our people depends on having salmon… If they disappear, we could lose our ability to survive here.”

Despite financial losses or being put out of work, however, some support the cancellation. Naturalist and ocean kayak fishing guide Eric Stockwell believes halting the fishing season will give the salmon population a fighting chance to recover its numbers.

In other seafood news (yes, really!): There’s a legal battle boiling between two entities located near two separate oceans. The Monterey Bay Aquarium is being sued by lobster industry groups in Maine, reports the AP. 

Last year, the aquarium’s conservation program classified lobster caught in the U.S. and Canada as a food to avoid because the gear used to harvest lobster entangle endangered whale species. The Lobstermen’s Association says this portrayal is inaccurate and defamatory, but the aquarium stands by its assessment.

Other things worth your time

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Biden honors Monterey Park shooting victims, takes executive actions on guns // ABC News

Dysfunction in state benefits agency kicks Californians when they’re down // San Francisco Standard

California budget deficit could delay new child care funding // AP News

Advocates propose an alternative to refocus budget on Black students // EdSource

California’s climate dreams won’t come true without major change // SFGATE

California tribes grapple with a crisis of missing women and girls // Los Angeles Times

SFUSD pours money into fixing troubled EMPower payroll system // San Francisco Chronicle

Hollywood writers face ‘existential’ crisis, union says // Los Angeles Times

$45 million funneled toward California’s community schools // The Mercury News

Yes, the SFPD has a staffing crisis — but that’s just the beginning // Mission Local

‘Rust’ special prosecutor steps down, a blow to Alec Baldwin case // Los Angeles Times

S.F. just approved exemption to its boycott of conservative states // San Francisco Chronicle