Two things:
1- as someone who is more or less in the job/contract market in SV, I can confirm that the past two months have seen a dramatic rise in hiring. The past two weeks have especially intense compared to the past months.
2- startups may be somewhat squeezed, but an improved job market is really better for everyone. The right people will still prefer to work at startups over large corporations. Desperation over money is never a good driver for the job market.