1

Nicole Havins

havins.nicole@bls.gov

Nicole Havins is an economist at the Office of 

Employment and Unemployment Statistics, U.S. 

Bureau of Labor Statistics.

Technology industries helped post-Great 

Recession jobs grow faster in northern than in 

southern California

Analysis of Current Employment Statistics and area data 

shows that employment recovery since the 2007-2009 

recession is concentrated in certain sectors. In California, 

technology sectors have had notably strong recoveries. 

High concentrations of employment in the technology 

sectors have driven the total nonfarm employment recovery 

in northern California. Southern California, which has 

proportionally less technology employment, has 

experienced a slower recovery.

As California’s labor market recovery continues in 2014, a 

lot of attention is being paid to the Bay Area technology 

industry, including the industries with a strong presence in 

Silicon Valley. Employment in this part of the economy has 

grown at a rate that has propped up the recovery of all 

nonfarm employment throughout the state. This surge in 

employment is particularly interesting because it highlights 

the difference in how northern and southern California have 

fared recovering jobs after the Great Recession.1

The current rate of growth in technology contrasts greatly 

with this industry’s performance in the wake of the 2001 

recession. During that period, the tech industry suffered a 

substantial decline. As a result, large, northern California cities like San Francisco and San Jose lagged behind 

their southern counterparts—including Los Angeles, San Diego, and Riverside. Southern California cities generally 

benefited from having smaller technology centers, and were buoyed by their dominant leisure and hospitality 

industry.2

As the state recovers from the 2007–2009 recession, the tables have turned. Employment in technology-driven 

industries is growing at a faster pace than other industries. Accordingly, employment growth in several large, 

northern California cities is outpacing growth in southern parts of the state.

December 2014
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This article offers a look at California employment growth in four different North American Industry Classification 

System (NAICS) sectors—professional and business services, information, leisure and hospitality, and education 

and health services. With respect to professional and business services, a more detailed examination of the three 

industry groups that make up this sector is conducted. The analysis focuses on eight California areas (four 

northern and four southern) that had total nonfarm employment of 750,000 or more in both 2008 and 2014.3 The 

northern areas examined are San Francisco–San Mateo–Redwood City Metropolitan Division, Oakland–Fremont–

Hayward Metropolitan Division, San Jose–Sunnyvale–Santa Clara MSA, and Sacramento–Arden–Arcade–

Roseville Metropolitan Statistical Area (MSA). The southern areas are Los Angeles–Long Beach–Glendale 

Metropolitan Division, Santa Ana–Anaheim–Irvine Metropolitan Division, San Diego–Carlsbad–San Marcos MSA, 

and Riverside–San Bernardino–Ontario MSA.4 The results offer an interesting perspective on different postrecession recovery patterns for the northern and southern California areas.

Background and Methods

Data from the Current Employment Statistics (CES) survey, conducted by the Bureau of Labor Statistics, are used 

to calculate employment recovery ratios—the ratio of employment in an industry at a given time compared with the 

industry’s peak employment.5 This analysis compares employment levels in January 2008 with those in January 

2014. January 2008 was the month where nonfarm employment across the nation reached its peak. This data 

point serves as an adequate proxy for peak employment in the selected areas. The January 2014 end date allows 

for year-over-year comparisons of not seasonally adjusted data.6

Using the January 2014 and January 2008 data points, a recovery ratio is calculated to determine the percent of 

peak nonfarm employment recovered in the eight large California areas studied at selected supersector and 

detailed industry level. A value less than one indicates that January 2014 employment was below the January 

2008 level. Conversely, a value greater than one signals that January 2014 employment was above the January 

2008 peak. More precisely, a ratio of 1.06 would indicate 6 percent growth above the January 2008 level, whereas 

a ratio of .98 would show that the January 2014 rate was only 98 percent of January 2008 employment.

Results

The first step in the analysis requires calculating recovery ratios of the four selected sectors in each of the eight 

large areas studied. Of the eight areas, only three had recovery ratios greater than 1.00. Values range from 0.96 in 

Sacramento—Arden—Arcade—Roseville to 1.07 in San Francisco—San Mateo—Redwood City. As figure 1 

shows, two of the three Bay Area localities stand out with the highest recovery ratios. 
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The professional and business services sector composed the largest share of total nonfarm employment in San 

Francisco–San Mateo–Redwood City Metropolitan Division, San Jose–Sunnyvale–Santa Clara MSA, Santa Ana–

Anaheim–Irvine Metropolitan Division, and San Diego–Carlsbad–San Marcos MSA. Of those areas, the two 

northern areas, San Francisco–San Mateo–Redwood City Metropolitan Division and San Jose–Sunnyvale–Santa 

Clara MSA had the larger percentages compared to the southern two areas.

The information sector has the smallest share of total nonfarm employment in every area. San Francisco–San 

Mateo–Redwood City Metropolitan Division, San Jose–Sunnyvale–Santa Clara MSA, and Los Angeles–Long 

Beach–Glendale Metropolitan Division have information sectors with larger shares of total nonfarm employment 

compared to the other areas.

The leisure and hospitality sector accounts for about 10 percent of total employment across the eight areas 

examined. The sector’s highest share is held in the northern area of San Francisco-San Mateo-Redwood City 

area, with 13 percent. The lowest share is found in the southern area of Riverside—San Bernardino—Ontario, 

where only 6.9 percent of workers are employed in this sector. Despite these two outliers, the southern areas 

generally have a greater concentration of workers in leisure and hospitality. Three of the four southern areas have 

more than 10 percent of workers in this sector. Three of the four northern areas have 10 percent or fewer workers 

in this sector. (See table 1.)
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Source: U.S. Bureau of Labor Statistics, Current Employment Statistics survey.

Education and health services represents a large share of employment in all eight areas without significant 

differences in composition or relative share of total nonfarm. The industry is large and recovering strongly, with few 

differences across the eight areas.

Having established the relative size of key industries in each area, the next step in the analysis is to calculate 

recovery ratios at the sector level to see which sectors are driving the total nonfarm recovery.

Across most areas, education and health services was the sector with the highest recovery ratio. Because this 

sector’s growth, driven by health care and social assistance, was fairly consistent throughout the north and south 

regions, analysis here does little to explain why one part of the state is outperforming the others. In the four 

southern areas, leisure and hospitality was the sector that showed the second largest recovery ratios. In the north, 

information generally showed outsized recovery ratios. The two areas where the Silicon Valley is located, San 

Francisco—San Mateo—Redwood City Metropolitan Division and San Jose—Sunnyvale—Santa Clara MSA, were 

the only areas where recovery in the information sector outpaced recovery in education and health services. In 

addition, the Sacramento–Arden–Arcade–Roseville MSA showed the second largest recovery ratio in professional 

and business services (See Table 2.)

Area

Education and health 

services

Leisure and 

hospitality

Professional and business 

services

Information

San Francisco–San Mateo–

Redwood City 13.3 13.0 23.2 4.8

San Jose–Sunnyvale–Santa 

Clara 15.3 8.8 19.7 6.3

San Diego–Carlsbad–San 

Marcos 13.7 12.4 17.1 1.8

Los Angeles–Long Beach–

Glendale 17.6 10.4 14.5 4.8

Oakland–Fremont–Hayward 16.8 9.4 16.5 2.1

Riverside–San Bernardino–

Ontario 14.8 6.9 10.8 .9

Santa Ana–Anaheim–Irvine 12.5 12.7 18.4 1.7

Sacramento–Arden–Arcade–

Roseville 15.0 10.0 13.3 1.7

Table 1. Selected industries’ percentage share of total nonfarm employment, 2014

Area

Education and health 

services

Leisure and 

hospitality

Professional and business 

services

Information

San Francisco–San Mateo–

Redwood City 1.22 1.15 1.19 1.31

San Jose–Sunnyvale–Santa 

Clara 1.29 1.16 1.08 1.44

San Diego–Carlsbad–San 

Marcos 1.25 1.04 1.01 .76

Table 2. Selected industries' total nonfarm employment recovery ratios, 2008–2014

See footnotes at end of table.
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Source: U.S. Bureau of Labor Statistics, Current Employment Statistics survey.

The information sector has substantially stronger recovery ratios in San Francisco-San Mateo-Redwood City, and 

San Jose-Sunnyvale-Santa Clara. Even though the information industry is relatively small, it is important because 

the information industry is dominated by very different types of firms in the northern and southern areas. In the 

southern areas, information employment is driven by the motion picture industry and related support activities. 

While in the Bay Area, the motion pictures industry plays a relatively small role compared to the software and 

Internet service related industries. The strong information recovery ratios in San Francisco-San Mateo-Redwood 

City and San Jose-Sunnyvale-Santa Clara support the positive impact of technology on total nonfarm employment 

growth in those areas.

Similar to the job recovery for the information sector, recovery ratios for professional and business services are 

highest in the two northern areas where Silicon Valley is located, and lowest in the southern areas. Professional 

and business services is the industry in which the effect of the technology sector is most apparent. A deeper look 

at this particular industry yields interesting results.

Professional and business services comprises three industry groups: professional, scientific, and technical 

services; management of companies and enterprises; and administrative and support and waste remediation 

services. Of these three, professional, scientific, and technical services captures the largest portion of the Silicon 

Valley tech industry growth. This industry group includes, among other services, a wide range of technology-based 

services related to Internet software, computer design, and consulting services. (See figure 2.)

Area

Education and health 

services

Leisure and 

hospitality

Professional and business 

services

Information

Los Angeles–Long Beach–

Glendale 1.20 1.11 1.03 1.00

Oakland–Fremont–Hayward 1.21 1.13 1.05 .75

Riverside–San Bernardino–

Ontario 1.27 1.06 .96 .73

Santa Ana–Anaheim–Irvine 1.20 1.07 .99 .83

Sacramento–Arden–Arcade–

Roseville 1.14 .99 1.04 .75

Table 2. Selected industries' total nonfarm employment recovery ratios, 2008–2014
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The recovery ratios for each of the industry groups within professional and business services demonstrates the 

strength of the recovery in the Bay Area. Professional, scientific, and technical services, along with administrative 

and support and waste remediation services make up about 50 percent and 40 percent, respectively; the recovery 

ratios in these areas go further toward explaining the recovery in the professional and business services sector. 

(See table 3.) The high recovery ratios for management of companies and enterprises is misleading, however, as 

this industry group makes up less than 10 percent of professional and business services across the eight areas. 

Area

Professional, scientific, and 

technical services

Management of companies 

and enterprises

Administrative and support and waste 

remediation services

San Francisco–San 

Mateo–Redwood City 1.26 0.97 1.14

San Jose–Sunnyvale–

Santa Clara 1.19 1.07 1.01

San Diego–Carlsbad–

San Marcos 1.05 1.30 1.13

Los Angeles–Long 

Beach–Glendale 1.03 1.04 1.02

Oakland–Fremont–

Hayward .93 1.22 .95

Riverside–San 

Bernardino–Ontario .86 .86 .98

Santa Ana–Anaheim–

Irvine .99 1.07 .95

Table 3. Professional and business services industry group recovery ratios, 2008–2014

See footnotes at end of table.
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Source: U.S. Bureau of Labor Statistics, Current Employment Statistics survey.

Conclusion

The employment recovery in California has been strongest in those areas most heavily invested in the technology 

industry. The greatest recovery gains, both in total nonfarm employment and tech-intensive industries, occurred in 

the Silicon Valley areas, San Francisco-San Mateo-Redwood City Metropolitan Division and San Jose-SunnyvaleSanta Clara MSA. These two areas had total nonfarm recovery ratios over 1.06 compared with an average of 0.98 

across the other six large areas.

Looking deeper into the composition of professional and business services, the effect of growth in professional, 

scientific, and technical services was the clear driver of the strong performance in the Silicon Valley areas. Lower 

total nonfarm recovery ratios are most prevalent in those areas with the weakest technology industries and the 

least active professional, scientific, and technical services industry groups.

An analysis of the data reveals that there exists a strong relationship between employment recovery in the 

technology related industries and recovery at the total nonfarm level. This highlights the importance of the 

technology industry in employment recovery from the most recent recession. Because technology related 

industries are proportionally larger and higher growth in the San Francisco-San Mateo-Redwood City Metropolitan 

Division and San Jose-Sunnyvale-Santa Clara MSA areas, employment recovery has occurred at a much faster 

clip in the Silicon Valley areas than it has in the southern areas. This growth has bolstered northern California’s 

recovery, creating a much higher rate of growth in the northern areas than found in the southern areas

SUGGESTED CITATION

Nicole Havins, "Technology industries helped post-Great Recession jobs grow faster in northern than in southern 

California ," Monthly Labor Review, U.S. Bureau of Labor Statistics, December 2014, https://doi.org/10.21916/mlr.

2014.39

NOTES

1 Refers to the recession beginning December 2007 and ending June 2009 according to the National Bureau of Economic Research 

(NBER) “US business cycle expansions and contractions,” http://www.nber.org/cycles.html.

2 Mary Daly and Fred Furlong, “Profile of a recession—the U.S. and California." FRBSF Economic Letter, February 22, 2002, http://

www.frbsf.org/economic-research/publications/economic-letter/2002/february/profile-of-a-recession-the-us-and-california/.

3 The monthly Regional and State Employment and Unemployment release notes the largest and smallest changes in total nonfarm 

employment for areas with average employment greater than 750,000.

Area

Professional, scientific, and 

technical services

Management of companies 

and enterprises

Administrative and support and waste 

remediation services

Sacramento–Arden–

Arcade–Roseville .90 1.22 1.13

Table 3. Professional and business services industry group recovery ratios, 2008–2014
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4 State and metropolitan area estimates are currently published based on the 2009 area definitions outlined by the Office of 

Management and Budget in OMB bulletin 10-02. The new 2013 definitions outlined in OMB bulletin 13-01 will become the standard 

CES metropolitan area definitions with the release of January 2015 preliminary data in March 2015. For the scope of this analysis 

note that the current CES area definitions still include Marin County as part of the San Francisco-San Mateo-Redwood City 

Metropolitan Division.

5 The CES survey collects monthly employment, hours, and earnings data from approximately 144,000 business represented by 

about 554,000 establishments.

6 CES Metropolitan Statistical Area (MSA) and metropolitan division data are not seasonally adjusted for industries below the total 

nonfarm employment level. Also note that, since January 2014, data have not been benchmarked and year-over-year comparisons 

may include some effect of differing seasonality between the benchmarked history and sample based data.

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Survival and growth of Silicon Valley high-tech businesses born in 2000, Monthly Labor Review, September 2011.

Crash and reboot: Silicon Valley high-tech employment and wages, 2000–08, Monthly Labor Review, January 2010.

High-technology employment: a NAICS-based update, Monthly Labor Review, July 2005.

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