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SAN JOSE — Blaming a dramatic fall in help-wanted ad revenue and other signs of Silicon Valley’s economic slowdown, the San Jose Mercury News said it will have to lay off some of its 1,700 workers. 

Early retirement offers may help, but “we will be unable to achieve the level of expense reduction we are seeking to achieve without layoffs,” Chairman and Publisher Jay T. Harris said in a memo to the staff Monday. 

All departments of the paper will be scrutinized as the paper decides whom to let go over the next two to three weeks, Harris said. 

“We will approach the difficult work ahead carefully, with sensitivity for those affected, and with an unshakable resolve to remain true to our most important priorities and values,” Harris said. As many companies in the area have been freezing hiring or laying people off, the newspaper saw recruitment advertising fall $2.5 million last month from February 2000, Harris said in the memo. 

“We are operating in the toughest revenue environment we have seen in several years; at the same time, newsprint prices have been climbing steadily,” said Polk Laffoon, vice president of corporate relations for Knight Ridder, which is the Mercury News’ parent company and the nation’s second-largest newspaper publisher. 

U.S. newsprint prices averaged $610 per ton in February, almost 20 percent higher than the same time last year, according to Pulp and Paper Week, an industry newsletter. 

The adverse market conditions also are forcing the Contra Costa Times, another Knight Ridder paper in the San Francisco Bay area, to trim expenses by eliminating jobs through attrition, said Publisher George Riggs. 

After falling shy of its budgeted revenues for the third consecutive month, the Walnut Creek-based paper recently laid off three workers from its payroll of 1,100 full-time employees, Riggs said, but he hopes to avoid the large-scale cutbacks under consideration at the Mercury News. 

Luther Jackson, executive officer of the San Jose Newspaper Guild, the largest of the five unions that represent Mercury News employees, disputed Harris’ contention that the newspaper has to pare inefficiencies that developed as it boomed in the last few years. 

“The Mercury News has never been overstaffed by any stretch of the imagination,” Jackson said. “It’s always been fairly lean. Don’t think you can walk around the Mercury News and find people with nothing to do.”