San Francisco’s AI Gold Rush: Why 70% of Tech Jobs Are STILL Vanishing!

San Francisco, long considered the heartbeat of the tech industry, is experiencing a renewed surge in activity, particularly within the booming field of artificial intelligence (AI). The City is home to two of the sector's most valuable startups, OpenAI and Anthropic, alongside a multitude of smaller venture-backed companies. Venture capital investment is flowing in record amounts, and leasing efforts by AI firms are beginning to alleviate the city's significant office space vacancy. Despite this promising landscape, a puzzling question remains: where are the jobs?

According to the latest figures from the California Employment Development Department, tech employment in the San Francisco-San Mateo region has declined by approximately 14% from its peak of 222,400 jobs in August 2022. As of November, there were only 190,800 tech jobs in the two-county area, a slight decrease from 194,500 jobs in November 2024. This stagnation in job growth is surprising, especially given the recent slowdown in mass layoffs—defined as job-cutting events involving 50 or more workers at companies with at least 75 employees. In the last six months of 2025, mass layoffs in San Francisco accounted for just 1,131 job cuts, with 793 occurring in the tech sector. This represents less than half the number of layoffs during the same timeframe in 2024.

"I think everyone is very perplexed by this,"

stated Abby Raisz, vice president of research at the Bay Area Council Economic Institute. She articulated the ongoing dilemma, noting that while layoffs have decreased, there is still no sign of a robust jobs recovery in tech.

The discrepancy between the decline in layoffs and the stagnation in tech employment may stem from several factors. Historically, an increase in venture capital investment has led to corresponding hiring increases as startups utilize funds to expand their operations. However, in the current climate, much of the capital is being directed towards building data centers and acquiring costly infrastructure—particularly the energy-intensive Nvidia chips used for training AI models. OpenAI, for instance, plans to invest approximately $1.4 trillion in data-center infrastructure in the coming years, a move that prioritizes capital expenditures over hiring.

J.P. Allen, a professor at the University of San Francisco’s School of Management, echoed this sentiment, explaining that "most of it has been going toward the capex, the cap expenditures on AI." This shift in focus means that while companies like OpenAI and Anthropic are raising billions, it does not necessarily translate into job creation as it once did.

Interestingly, AI job listings in San Francisco have increased significantly. In 2025, generative-AI companies averaged 410 job postings each month, a marked rise from 240 per month in 2024. AI positions now represent 18% of all tech job listings, up from just 4% in 2023. However, this increase in AI hiring still falls short of compensating for the overall decline in tech employment. For context, between 2019 and 2022, the average monthly tech job listings never dipped below 3,875, whereas no year since then has seen an average higher than last year’s 2,295.

Analysts believe a combination of factors is contributing to this paradox. Concerns over economic uncertainty, high interest rates, and geopolitical tensions may be causing large tech companies to remain cautious before ramping up hiring again. Furthermore, with AI technologies increasingly adopted, companies may be hesitant to create new positions that could potentially be replaced by AI systems. Egan noted,

"I think it's clear that one of the reasons [tech companies] aren’t hiring is because of AI."

While the current landscape may appear bleak regarding tech employment, there is cautious optimism among analysts about future hiring trends. Historically, tech sectors that experience substantial growth in venture funding tend to see subsequent increases in hiring, particularly once the focus shifts from developing foundational technology to creating applications. As more startups emerge in San Francisco and experiment with AI applications, it's expected that this shift will require more human capital, leading to job creation.

In conclusion, while the City boasts a vibrant AI startup ecosystem and significant venture investment, the lack of a substantial increase in tech employment raises important questions about the future of work in the industry. Analysts remain hopeful that as AI technology matures and application development expands, job growth will follow suit, allowing San Francisco to reclaim its status as a leader in tech innovation.