The AI boom is adding much more money to San Francisco\u2019s economy, said Egan, but its impacts are different. During the dot-com boom, and the pre-pandemic tech boom, companies spent freely on office space. In the past three years, many of those leases have expired, resulting in a net loss of about 7.5 million square feet of occupied office space across the city.\u00a0<\/p>\n
While the tech boom of the 2010s created new jobs, the AI boom appears to be jettisoning them. The city lost over 30,000 tech jobs in the past three years \u2014\u00a0nearly all of the job losses reported citywide.<\/p>\n
In 2018, tech companies based in San Francisco paid almost half of their payroll expenses here, according to their business tax filings, said Egan. But between 2021 and 2024, that share has declined, from 44 percent of payroll to 11 percent.\u00a0<\/p>\n
\u201cOne of the things I\u2019ve kind of struggled with is, why is the apartment market so hot when the labor market is so cold?\u201d he pondered. \u201cIt does appear that whether people are hiring in San Francisco or not, tech workers are moving back to San Francisco after several years of saying, \u2018I\u2019m going to Miami or Austin or wherever.\u2019\u201d<\/p>\n
Still, Egan said, the startups and the money involved are reasons for long-term optimism about the city\u2019s economy. \u201cI do think a certain corner has been turned,\u201d he said. \u201cThe AI thing could be a bubble that blows up tomorrow, but I think that as long as that money is there, the worst of it is behind us.\u201d<\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/04\/042026_ZM_TedEganGregWagner-2-930x620.jpg\")
Audience members converse before the conversation between Mission Local Reporter Io Yeh Gilman, SF Chief Economist Ted Egan, and SF Controller Greg Wagner on April 15th, 2026 at Manny\u2019s. Photo by Zoe Malen<\/p>\n
Still, panelists made it clear that there is an abundance of bad ahead to be dealt with. Seated next to Egan was his boss, San Francisco Controller Greg Wagner, who was sworn in for a 10-year term as the Controller in February 2024. Wagner\u2019s office was responsible for calculating the $643 million<\/a> two-year deficit that San Francisco now faces.<\/p>\n \u201cHow painful will fixing this structural deficit be?\u201d Gilman asked Wagner.\u00a0<\/p>\n \u201cThe elusive answer is it\u2019s going to be up to the mayor and the board,\u201d said Wagner. Labor is the single biggest cost the city incurs, Wagner said. \u201cAbout half of the city\u2019s budget is for people.\u201d And there\u2019s more jobs buried elsewhere in the budget. \u201cThe second biggest piece is on grants and contracts,\u201d Wagner added. These contracts often pay the salaries for people who work for organizations that contract with the city.<\/p>\n Earlier this month, Mayor Daniel Lurie announced plans to reduce city spending by $400 million this year to reduce the deficit. He plans for $100 million of cuts to come from getting rid of positions and layoffs. His office recently gave 127 city employees<\/a> layoff notices as part of that plan, though labor unions have pledged to fight every one<\/a> of the proposed layoffs. <\/p>\n Usually, Wagner said, the solution to a budget shortfall is to try to squeeze a little more efficiency out of the government, rather than cutting the services provided by city employees and contractors. However, \u201cthe size of this deficit is beyond squeezing efficiency,\u201d he explained. \u201cIt\u2019s big enough that it really does mean some conversations about service levels, the number of positions that are in the city government.\u201d<\/p>\n \u201cHow much control does the controller have?\u201d asked Gilman.\u00a0<\/p>\n Not as much as you might think, said Wagner. A controller\u2019s job is to prevent misuse or misappropriation of city funds, said Wagner. \u201cThere\u2019s a lot that feels completely outside of my control.\u201d Wagner\u2019s office can calculate the deficit, but it has no power over the city budget, which is controlled to a large degree by the Mayor\u2019s Office and to a lesser degree by the Board of Supervisors.<\/p>\n The city\u2019s economy is \u201calways in a state of transition,\u201d said Egan. The dot-com boom brought an influx of money and new residents into the city, but did little to disrupt 30 years of stagnant job growth that had been underway since the 80s. Post-2010, San Francisco became one of the two fastest growing cities in the United States \u2014 \u201centirely unexpected,\u201d Egan said. During the COVID-19 pandemic, the city lost more population than any other city and experienced the biggest rent drop. Now the city\u2019s population is on the rise again.<\/p>\n That\u2019s a good thing, said Wagner. \u201cOur financial recovery is based on people coming to San Francisco and working in San Francisco,\u201d Wagner said. If the two upcoming ballot measures to fund local and regional public transit systems don\u2019t pass, he said, that could impact the city\u2019s recovery. \u201cIt\u2019s a little bit hard to square significant reductions to the public transit system with an economic recovery that works for the city\u2019s budget.\u201d<\/p>\n Some have expressed hopes that AI could be used to increase efficiency in city government, and reduce the impacts of the budget shortfall on city services. There\u2019s no \u201coff the shelf solution\u201d to do that without considerable trial and error, said Egan. AI\u2019s tendency to hallucinate makes it problematic for use in contexts like building code or critical services.<\/p>\n \u201cThere is a lot of conversation about how to use AI in the city,\u201d said Wagner. \u201cCity Administrator Carmen Chu is really pushing us to do some structured thinking about how to use AI.\u201d City governments tend to be late adopters of technologies, he said.\u00a0<\/p>\n If you\u2019re an AI skeptic, said Egan, that doesn\u2019t mean that you disapprove of AI. The models are just so new. In five years, we\u2019ll be able to see what they can actually do.\u00a0<\/p>\n