AI is booming on the West Coast. So why is unemployment so high there? | CNN Business

Tech companies are spending on artificial intelligence while laying off workers. mihailomilovanovic/E+/Getty Images Economy Job market AI See all topics Facebook Tweet Email Link Threads Link Copied! Follow Despite AI skills and more than a decade of management experience in technology, Juan Ruiz has struggled to switch jobs in a state known for its tech scene: California. Ruiz has been looking for a new job with more pay since October 2024, sending out hundreds of applications, he told CNN. So far, it’s been crickets. “Nobody’s calling back,” Ruiz said. America’s tech companies are benefiting from the largest investment surge in history, according to the Bank of International Settlements — many of them headquartered on the West Coast. Yet unemployment in the region is among the highest in the country: In June, California, Oregon and Washington were tied for the second-highest jobless rate, at 5.2%, according to the Bureau of Labor Statistics, behind Washington, DC’s 6%. Juan Ruiz, a former worker in the tech industry, on August 7, 2026. Michele Abercrombie/CNN Tech hiring has slowed sharply over the past few years, especially on the West Coast. The sluggish job market has shut out new entrants and left people like Ruiz feeling stuck. While companies are spending on AI, in many cases they’re also conducting layoffs instead of expanding headcount, affecting employment broadly. And it’s not just tech companies, according to economists. “AI technology is getting better and companies are using it, so they don’t need to hire as many software developers or data analysts, for example,” said Laura Ullrich, director of economic research at Indeed. “Large companies are also spending a lot of money on AI enterprise solutions, which usually means labor spending goes down, unless their budget grows.” AI’s disruption Employment in California’s information industry hit a six-year low in April, BLS figures show. By June, it was only slightly better. Meanwhile, that state’s unemployment rate has climbed steadily since the beginning of the year. Unemployment claims are rising in California “among workers who were formerly in highly AI-exposed occupations, especially those who are advanced-degree holders in the Bay Area and in technology-adjacent sectors,” said Ben Hyman, an economist at the University of California, Los Angeles. A recent analysis from the Federal Reserve Bank of San Francisco showed that unemployed people with advanced degrees are among the groups struggling the most to find a job . San Francisco's skyline is seen through the Golden Gate Bridge on October 20, 2025, in Sausalito, California. Justin Sullivan/Getty Images A person walks by the Spheres at Amazon’s headquarters campus in Seattle on January 28, 2026. David Ryder/Reuters A sign is seen at the Microsoft headquarters on July 3, 2024, in Redmond, Washington. David Ryder/Getty Images Hyman said AI is having “very concentrated effects” on California’s tech-adjacent industries, rather than the state’s economy as a whole. Amazon and Microsoft, two of the largest employers in Washington, have both announced several rounds of mass layoffs in recent years. Microsoft last month reported that its total headcount fell for the first time in a decade, while Amazon has cut more than 30,000 jobs since October. Last year, Amazon CEO Andy Jassy wrote in a note to employees that AI’s integration into the business will likely “reduce our total corporate workforce.” Intel, the largest private employer in Oregon, also announced layoffs last month, impacting its data center operations and shrinking its workforce to 81,000 — down from more than 130,000 in 2022. Employment in the state’s chip industry is now at a 30-year low . Persistent uncertainty The US economy unexpectedly lost 23,000 jobs last month , the BLS reported Friday, as businesses navigated the ongoing fallout from the months-long Iran war. Rising transportation and freight costs spurred by the war continue to weigh on businesses in the San Francisco Fed’s district, which spans a large swath of the country’s western region, according to the Fed’s latest periodic survey of businesses , known as the Beige Book. Some businesses even reported vendor-imposed fuel surcharges, the survey said. The current economic landscape has led to businesses “selectively hiring in response to attrition or specific business needs,” according to the Beige Book. Matt Carter was laid off last year from his project manager job at tech firm Welocalize and has struggled to find a tech job in Portland, Oregon, ever since. He told CNN he sold his house shortly after being laid off and that his unemployment benefits have also run out. Carter is now considering becoming a security guard to make ends meet. “Getting a tech job on the West Coast in a big city like Portland, Los Angeles, or San Francisco is kind of like winning the lottery at this point,” he said. “There’s just so much competition and not a lot of hiring.” Economy Job market AI See all topics Facebook Tweet Email Link Threads Link Copied! Follow