The coming IPOs of Anthropic and OpenAI are set to rain down riches in San Francisco. Just across the Golden Gate bridge, a recent gathering captured the flip side of the AI boom.
A group of more than four dozen laid-off workers gathered at 11 a.m. on a Monday to hike Mount Tamalpais, a majestic peak overlooking the San Francisco Bay. They descended the mostly deserted trail in groups of about a dozen, led by Basem Istanbouli, a former Google employee sporting a bucket hat and a pair of toe shoes.
Among them was a former Meta Platforms Inc. worker considering leaving tech altogether to pursue her passion for illustration. A software engineer, out of work for more than a year, lugged a large camera he’d bought a week before he was laid off.
Istanbouli has been organizing the weekly outings since December, when he started un(PTO), a community for people navigating unemployment. The group’s first hike included him, a friend and a “random dude off Reddit.” The online community has since grown to more than 1,700 people, and sometimes more than 80 show up to the outings.
Trillion-dollar startups, once-unthinkable compensation packages and bidding wars for workers who can build and deploy artificial intelligence have created the impression of a Bay Area labor market on fire. But even as debate swirls about AI’s potential dangers and the need for regulation, the technology has already had a profound disruption on jobs. Many of the workers who helped power San Francisco’s last boom are struggling to find their place in this one.
Tech-industry employers filed layoff notices for more than 14,500 Bay Area workers in the 12 months that ended in June, almost double the count for the previous fiscal year, a Bloomberg analysis of data from California’s Employment Development Department shows. Across all industries, San Francisco and nearby San Mateo County have added more than 10,000 jobs in the last 12 months, but have lost more than 60,000 since February 2020, according to a report by Ted Egan, chief economist of the city and county of San Francisco.
Just as many once-booming software companies are trying to reinvent themselves for the age of AI, tech workers are now having to adapt. Demand for software engineers in the Bay Area has fallen 42% since 2022, according to Lightcast, a labor-market analytics firm. Jobs tied to AI-related IT and computer science, meanwhile, have jumped 37%.
Nico Crisafulli, a 55-year-old single dad who’s part of the un(PTO) group, worked as a full-time front-end web developer for an e-commerce company before being laid off in July. He was thrust into a labor market he didn’t recognize.
“Hard coding is sort of not really a thing anymore,” he said. “Getting a front-end engineer job seems a little bit of yesterday’s problem. I don’t know if that’s even possible.”
Crisafulli decided to become a software engineer at a very different moment in Silicon Valley. In 2013, he paid $15,000 for a coding boot camp and made a career out of skills like JavaScript and front-end development. Now he’s parsing job titles like “AI strategist” and “AI engineer,” trying to figure out where his experience fits in a labor market that increasingly prizes a different kind of technical worker.
While the AI boom is responsible for a lot of San Francisco’s revival, tech isn’t driving hiring in the area. In the last 12 months, the information sector, which includes most of tech, lost about 2,000 jobs. In fact, the industries driving the labor recovery are private education and health, as well as leisure and hospitality, according to Egan.
There’s a “sort of a seesaw between the labor market stimulating effects of the AI investment and then the depressive effects of the layoffs of the legacy tech companies,” said Egan. “It is clear that you’ve got a lot of people getting laid off and a smaller number of people at this point getting hired for AI-specific skills.”
Just this month, Uber Technologies Inc., one of the standout startups of San Francisco’s 2010s boom, announced it was cutting about 3,300 roles, or 10% of its staff globally, in a restructuring aimed at reducing management layers.
Istanbouli, the un(PTO) founder, started the group to help ease the isolation that comes with having a tough time finding a job. It has evolved beyond hikes to also include career-related gatherings such as interview preparation. Still, he’s concerned to see so many people joining.
“You wonder, how held back are people gonna be in their careers?” he said. “And you also wonder how much of these people are going to actually face financial instability to a point where a lot of really smart people are actually going to end up leaving San Francisco.”
Adding to the financial pressure, AI wealth is making the city more expensive: San Francisco rents are rising at the fastest pace in the country.
New Types of Engineers
While one class of worker is watching the skills that once made them indispensable become easier to automate, the premium is shifting toward those who can keep pace with AI, where the skills in demand can seem to change almost by the day.
The market is particularly unforgiving for engineers at the beginning of their careers. In California, employment among workers ages 22 to 25 in the occupations most exposed to AI has fallen 16.8% since the launch of ChatGPT, compared with a 4.6% decline among other workers, according to workforce intelligence platform Revelio Labs.
Tawni Cranz, an operating partner focused on talent at venture capital firm SignalFire, said the traditional “on-ramp” for new graduates has been “completely stifled.” Larger technology companies, she said, face the challenge of figuring out how to redesign the entry-level experience while still “building a pipeline for future founders and future leaders.”
Now, one of the most popular jobs in tech may be forward deployed engineers, a once-obscure role popularized by Palantir Technologies Inc. in the early 2010s. It blends engineering with the customer-facing work of figuring out how businesses can actually put AI to use.
Postings for the position in the Bay Area are up nearly 600% since 2022 and command a median advertised salary of $202,300, according to Lightcast. OpenAI currently has almost 20 job postings for forward deployed engineers, with salary offerings running from around $145,000 to $325,000 plus equity. At Anthropic, forward deployed engineers command a salary ranging from $280,000 to $320,000. Salesforce Inc., one of San Francisco’s largest private employers, has committed to hiring 1,000 workers for the role.
At Taktile, which sells AI software to banks and insurers, forward deployed engineers increasingly do work that previously might have required software engineering, product and business teams, said Hao Li, who leads the company’s FDE team in North America.
“You can combine these three things into one role and that becomes this unicorn called FDE,” Li said.
Crisafulli, the laid off tech worker, is eager to embrace AI in his next role. At his former job, he had used it to build a workflow that compressed roughly two days of work into about an hour. He doesn’t blame AI directly for his layoff, but believes the technology made it easier for the company to do the same work with fewer people.
Since losing his job, he’s built five applications with AI and is trying to learn as much as he can about the technology. Yet some days he feels more hopeful than others.
“Some days I wake up and I’m like, maybe I’ll just open a flower shop,” he said. “That sounds much nicer, to be honest.”
This article was provided by Bloomberg News.