Area’s economy ‘treading water’

Specifically in San Mateo County, the labor force grew by only a few thousand from August 2024 to August 2025, and despite fewer layoffs so far this year, unemployment levels held steady at 4.1% — lower than state unemployment levels and similar to the national rate. 

“Companies are basically just staying flat,” said Rosanne Foust, president and CEO of the San Mateo County Economic Development Association. “They’re not over-hiring like they did post-COVID or even during COVID in some cases.” 

Russell Hancock, president and CEO of Joint Venture Silicon Valley, said despite the loss in net new jobs, it’s actually impressive that the labor market remains relatively steady, given the last couple years of consistent layoffs, persistent inflation and high interest rates. 

“The workforce seems to be fixed in place, about the same level as when we went into the pandemic. Some people say that we have stalled, and that interpretation could be valid,” Hancock said. “But since August 2022, there has been a rash of layoffs and yet the size of our workforce has been unaffected, so the economy is absorbing all these layoffs.”

The technology industry is still undergoing a “paradigm shift,” he added, where growth is not necessarily preferred over profitability, as it has been for years. 

“Now companies are saying, ‘We want to stay lean,’ and that strategy is paying off,” Hancock said. “That is not usually how Silicon Valley rolls. Usually, it’s about explosive growth ... so it feels strange to people that have lived here for a long time, but I’m not willing to say there is a problem.”

The life sciences industry, also dominant in the area, is facing even more headwinds. Tariffs, federal cuts from the National Institutes of Health, macroeconomic pressures and the potential impact of H-1B visa cost increases impact investment. Life science companies, such as Genentech and Gilead, have comprised much of the county’s overall layoffs this year and last. 

In Belmont, three of its five major biotechnology projects have been withdrawn or indefinitely paused as of April. According to a CBRE market report, last quarter saw a 32% vacancy rate in life science buildings across the Bay Area — nearly four-fold the rate from 2022. The amount of lab space under construction in the region as of last quarter has also been significantly less than prior years. In just the last couple months, South City, home to many biotech companies, recently extended the entitlements of two life science projects from two to 10 years to give developers more time to finance and build out their projects, largely as a result of unfavorable market conditions. 

“Biotech is just going to have to plug their nose and hold their breath for about three years,” Hancock said. 

Even with the recent rate cut from the Federal Reserve, he said biotechnology firms are still going to take a wait-and-see approach. 

“It makes money cheaper, and that spurs investment but nobody wants to invest in this climate,” he said. ““We’re no longer a growing economy. We are an economy that is treading water.”

Foust said cities and the county are trying to have more conversations with biotechnology employers to see what could be done to help spur industry investment. That could include advocating at the state level to expand research and development tax credits, she said. 

“If we can’t get what we need from the federal government, what can we do?” Foust said. “The numbers aren’t great, but it means there is an opportunity to drill down and talk to companies and see what we can tap into.”