Silicon Valley Unemployment Rate Reaches Record 11% & Rising

Discussion in 'Economics' started by ByLoSellHi, Apr 19, 2009.


    Silicon Valley unemployment rate jumps to record 11%

    By Pete Carey

    Mercury News
    Posted: 04/17/2009 10:32:21 AM PDT
    Updated: 04/18/2009 04:20:27 AM PDT

    Silicon Valley's unemployment rate jumped to a record 11 percent last month, and more than 100,000 people are now unemployed and looking for work in the area, the state reported Friday. The question now is how many more will join them before the recession ends.

    No one claims to have the answer, but some analysts say there are inklings that the job losses may slow over the next few months, even though the region's jobless rate rose from a revised 10.2 percent in February.

    The March rate is the highest since the state began keeping comparable records for the valley in 1990, the Employment Development Department said.

    California's rate reached 11.2 percent in March, the fourth-highest in the country and the highest since 1976, which is as far back as EDD records go.

    Silicon Valley's computer and electronics manufacturing sector was down sharply for the month, losing 1,300 jobs, but the pain was widespread, ranging from construction workers and truck drivers to financial services employees, engineers and lawyers.

    "It's the most brutal labor market I've seen in 30 years," said Michael Bernick, a San Francisco lawyer who was the EDD's director from 1999 to 2004 and who has volunteered for decades with job training groups.

    But there are also some encouraging signs. Stock prices of high-tech firms are up, as semiconductor companies such as Intel report an uptick in orders and a possible bottoming of the business free fall.

    Housing at the lower end of the market is beginning to sell, with multiple offers becoming more common. Banks are reporting profits.

    And the rate of job losses in California slowed, with a decline of 62,100 in March compared with 114,000 in February.

    That gives Leza Williams some reason for hope. The 47-year-old administrative assistant lost her job at a high-tech firm a week ago. "I'm very optimistic," she said Friday.

    To be sure, these are signs of life in a still-troubled economy. Many of the homes that are selling are foreclosures, and the companies with rising orders warn that it may not last. Bank profits are partly due to changes in accounting rules.

    But these indicators are "reasons to believe the enormous job-shedding has stopped or will stop soon," Bernick said.

    It can't happen soon enough for John Plocher, a 47-year-old software engineer who was laid off from struggling Sun Microsystems in November after about 20 years with the company. "It's just staggering how many people are out there looking," he said Friday.

    Job-loss shock

    "All the big companies seem to be shedding," Plocher said. At regular lunch meetings of his networking group, "I just look at their name tags: 'I used to work at "...' and it's all the big names in the valley."

    Plocher, who has a son in high school and daughter in college, said socializing and networking are important, especially to get over the first shock of losing a job. "The first month was really, really hard."

    That grueling job loss is very real, but there are two stories to tell about the valley, said Stephen Levy of the Center for Continuing Study of the California Economy in Palo Alto: "One story is that the recession has hit Silicon Valley with full force, with a high unemployment rate and escalating job losses."

    "The second story is that that's history," he continued. "As we look to the future, things look better for Silicon Valley than they did six months ago. We now have an administration that has put science, technology and innovation at the top of its agenda. You can see Silicon Valley companies competing aggressively for all of this new work in alternative energy, design and engineering. We have an agenda that favors what we do.

    "But that is not going to stop more job losses in the months to come, into 2010," Levy said. "The glimmers we're seeing say that the job losses will slow, but they will continue through the summer."

    The glimmers remain difficult for some analysts to see.

    "I think of myself as an optimist, but I find it hard to be optimistic about the situation," said Jon Haveman of Beacon Economics in San Rafael.

    Haveman said tech-job losses appear to be slowing, as does the overall rate of decline in some areas, but "San Jose is not one of those areas."

    And amid the layoffs, a lot of hiring is going on, though less than usual, said former EDD director Bernick.

    "The numbers we look at are net numbers," he said. "Within that, there is an enormous amount of job creation and job destruction going on. I wouldn't be surprised if there's considerable job creation and hiring going on in Santa Clara County. There's just more loss."

    Dot-com bust worse

    Still, the job losses in this recession pale in comparison with the dot-com collapse, when 123,900 jobs were lost during one 12-month period. The valley has shed 36,200 jobs in the past year.

    The EDD data combines Santa Clara County and the sparsely populated, agricultural San Benito County. Separately, Santa Clara County's unemployment rate is 10.8 percent and San Benito County's is 16.2 percent.

    The nation's jobless rate in March was 8.5 percent, much lower than California's. One reason for that is that the state was one of the hottest markets during the housing boom and had further to fall.
  2. If unemployment rate reached %11an companies are laying off who is applying for H1B visas in thousands from Silicon Valley

    Something does not make sense
  3. But that's what is happening.

    In fact, a lot of former H1B types would rather work in their native countries (mainly India, Singapore, Taiwan, China) now than at times past.

    Venture capital money has dried up in the Valley. There is a trickle of deals now, and a small one at that.
  4. Venture Capital has not "Dryed" up in the Valley. They are being far more careful with their Funding.

    There are plenty of VC and ANGELs in the Valley sitting on Boat loads of Cash.

    How do I know....Because I deal with them every day.

    As far as your take on HB1 Visas.....I have no idea if that is true or not.
  5. When I say 'dried up,' I mean that it's probably less than 25% of what it was just two years ago.

    You would know if you deal in this arena regularly.

    This American Life had an hour devoted to tech and venture capital in Silicon, and they were talking to the movers and shakers and all said money is not flowing to fund deals at any comparable levels as of just two or three years ago.
  6. A lot of white collar technical jobs have been shipped to india etc.. and more will come.

    We pretty much decimated our industrial workbase and the next leg is pretty much wiping out our technical white collar jobs.

    Why do you think all this bailout is about getting Americans more loans so they can keep borrowing and taking on debt.
  7. "Small business startup funding in Silicon Valley has slowed down significantly, closing off liquidity and the cash flow spigot. Entrepreneurs are down one significant lifeline."


    "But as Silicon Valley is mired deeper in economic recession, it has become painfully clear that venture capital is no longer going to be anyone’s parachute for a good long while. Just to put things in perspective, there has only been ONE IPO produced by this region for the entire 2008 (ArcSight, a systems security firm), as compared to the 28 IPO launches a year that was experienced over the last two decades. The Silicon Valley lottery is over for now."

    And that was 2008. One IPO for the entire year.
  8. Euler


    Definitely not symptomatic of a booming economy, but on the bright side maybe this will encourage a higher proportion of startups with a business plan that can succeed even if they don't IPO, as was the case in the days of old. After all, the most profitable tech companies today were internally profitable almost from day 1. Of course, this certainly is a lot easier in some areas, such as software, than in others, such as biomedical.