Carina Nuez, who works as a janitor in San Francisco’s financial district, is seriously contemplating her relocation to another location. She’s only making about $600 a week, as San Francisco’s bankruptcy cuts her cleaning services significantly due to her telecommuting. \u201cShe spends most of her income on rent, which has plummeted by nearly 50 percent compared to a few years ago,\u201d said Nuez. said.<\/p>\n
California’s economy, which once enjoyed a booming economy with big tech companies, is facing a crisis amid the stagnation of big tech companies. As the unemployment rate increased significantly due to large-scale job cuts by big tech companies and wages decreased, the aftermath of the economic downturn is spreading to small businesses such as cleaning companies, laundromats, and restaurants that are rooted in the local economy. Concerns are growing.<\/p>\n
The Wall Street Journal (WSJ) reported recently that the ripple effect is spreading to small businesses in the region as the California economy suffers from measles in the aftermath of the big tech slump. The economic downturn at big tech companies has led to manpower cuts to the point of being called a job cut fever.<\/p>\n
Mark Zuckerberg’s meta-announced plans to lay off 11,000 people, or 13% of the total workforce, in November last year, and then increased the number of job cuts by 10,000 in March this year. Microsoft is also planning to cut 10,000 jobs, less than 5% of its total workforce.<\/p>\n
Big Tech’s job cuts acted as a driving force to raise the unemployment rate in California. According to the Department of Labour, California’s unemployment rate in April was 4.5 percent, the second highest in the nation. This is almost 1 percentage point higher than the national unemployment rate of 3.4%. California’s unemployment rate, which is showing a different pattern from the national unemployment rate, which has been at an all-time low since 1969, was largely due to job cuts by big tech companies.<\/p>\n
Falling wages also hurt the state’s economy. In San Francisco County, where big tech companies are concentrated, weekly wages plummeted 22.6% last year. Wage declines are unmistakable in cities with big tech companies, with Seattle falling 5.4% to 339th out of 356 large cities nationwide. The aftermath of big tech job cuts is also a factor slowing job creation in California.<\/p>\n
In April, jobs at tech companies and construction companies in California declined significantly compared to the previous year, while the number of jobs in finance, trade, transportation, and logistics remained flat compared to last year. The stagnation of big tech companies coincides with the Federal Reserve’s rate hike, leading to contraction in consumer demand, making it more difficult for small business owners in the California area.<\/p>\n
The California government was also not free from the stagnation of big tech companies. In May, the state government projected a budget deficit of $32 billion this year. From the deficit forecast in January, it has increased by $10 billion. Over the past two years, amid a boom in big tech, California has posted a budget surplus of $102 billion.<\/p>\n
The sharp turnaround from a surplus budget to a deficit budget in just two years is because the income of the top 1% of the highest earners, who account for almost half of the income tax collected by the state government, has plummeted.<\/p>\n","protected":false},"excerpt":{"rendered":"