Monday, October 11, 2004

The faces behind the numbers

Paul Kedrosky of Infectious Greed and Matt Stoller of BOP News are taking about unemployment in the IT sector.

Kedrosky reports on WSJ highlights of findings from a recent Sphere Institute report:
More than half of the people working at technology companies in California in early 2000 had left the technology field or the state by the end of 2003, and more than 40% experienced declining incomes over that period, according to a study on the impact of the tech bust.
Then again, those who stayed behind in the tech sector didn't do so badly:
Those that [stayed a tech firms] enjoyed rising incomes -- up 11% after accounting for inflation. But workers who left tech for other industries saw their wages stagnate or decline. Those who shifted from semiconductor makers to health care, for example, made 31% less in the fourth quarter of 2003, compared with the first quarter of 2000, after accounting for inflation.
Matt Stoller notes in response:
The technoconomy is becoming a hard place to live. From what I've heard, if you're talented and ambitious, you can make a lot of money. If you're either lacking in talent or salesmanship, you're in trouble.
As someone who was paying very close attention to the technology field during the period discussed (in my double roles of technical recruiter and spouse of a job-seeking programmer), I'm not sure why what strikes me as self-evident struck the WSJ as newsworthy.

When the dot-com bubble crashed and IT workers started losing jobs in California, especially around Silicon Valley, the cost of living did NOT drop commensurately. In other words, you had large numbers of people, accustomed to heady lifestyles, living on some of the most expensive real estate on earth (maybe not in the same league as Tokyo, but pretty damn high)...who just had their income cut from 6 figures plus perks to a $1000-odd monthly unemployment check. If you had equity in a home and you were willing to relocate, and start from scratch somewhere else, great! But if you were renting...there was no way to stay in the area on UI.

I'm not sure why the WSJ finds this worthy of comment. People either switched industries, so they could find a way to afford to live in their homes or general areas and not radically relocate (think employed spouses, children in school, ties to the community, etc. for those of you who are still footloose); or else, faced with a glut of workers and a paucity of jobs, relocated to they could stay in IT. I helped some of them move... In other parts of the country people may have hung on longer looking for local IT jobs but in California, long-term unemployment wasn't an option.

This was all out in plain sight the whole time; not sure why the WSJ thinks it is headline material today.

I'd also like to address the notion that "ambition" is a key to making money in technology.

The great thing about tech, and especially pre IT-bubble tech, is it is a great meritocracy. Either you can code or you can't; it's that simple. If you can, you tend to do well. Before dot-com entrepreneurs dangled the shiny carrot that a 6-month certificate in Java would get you $90K out of collage and the keys to the company jet, tech people weren't locked in the basement banging out code because it was sexy or prestigious, but because they loved what they did. (A hacker hacking is a happy thing.) Hacker culture awards ability. So, if you're good, you have some job security, even in hard times, maybe even moreso than in other industries.

But ambitious? Ambition doesn't get you anywhere if you are talking hands-on tech people (i.e., vs entrepreneurs, or non-tech people in tech companies), at least not in the vertical-ascension sense. There are a limited number of technical jobs, a pretty flat heirarchy, beyond which you get "promoted" into management and admin jobs...that are no longer technical, and drive real techs crazy. (One of the most vicious and pitiless examples of the Peter Principle you'll ever witness.)

Now, ambition helps if it is an ambition to learn new technologies as they come out, ambition in a professional development sense. For example, if you are a MicroSoft programmer and you've been dead-ended into's time to get ambitious and learn some competitive technologies, before your career track dead-ends completely.

The people I've worked with in IT rank pretty high on Maslow's scale, generally. The majority were strongly commited to self-improvement, but usually inversely interested in self-promotion.

But people, with talent, in IT, who aren't interested in learning? I met very few, and those few I did meet didn't last long--they tended to fall out and gravitate into more static fields of employment.

IT/Technology industries evolve quickly. If you work in those industries and you aren't interested in developing your skills on an ongoing basis, yes you will run into trouble--as in any other fast-paced industry.

It's like saying, I learned how to do repairs on model T's back when it was cutting edge, and now I still want to be a mechanic. The demand in your industry is for a broader or different skillset, so you're out of luck.

Salesmanship as a key to success for bang-on-the-metal IT workers? Irrelevant, in my experience--unless, perhaps, you are interviewing strictly with non-tech HR people in large corporations, but as soon as you have to deal with other tech people, they'll not only see through it, they are more likely to despise you for it. :)

(Hacker culture: a great antitode to the "free market," A-type personality, MBA-ridden, social darwinist world.)

If you're still in tech (i.e., if you survived this long), it's not as cutthroat as Matt makes it sound. Of course, it's also not the cakewalk it was in the late 90's when there was a labor shortage, either--especially given the increasing number of highly-skilled technical jobs being sent overseas. And, unless you are really well networked, it's a better time to be a perm than a contractor.

As my husband, who is a programmer who works both permanent and contract jobs, points out: you contract under Democratic administrations, and if a Republican looks to get elected, grab the first permanent job you can find.

I would like to also address the trollism, expressed by in a comment on Matt's post, that "in a free market economy, there is plenty of work for able, well educated people."

I was recruiting primarily in the telecom sector in Dallas in 2001, when the Sept 11 attacks crushed the optical telecom industry and put a big nail in the coffin of a general telecom industry that had already seen multiple waves of layoffs that year.

I worked every day with brilliant, accomplished, educated people...who were unemployed--and desperate and terrified. Men and women in their 40's and 50's, in tech jobs and management, with MBA's or multple PhD's, deciding between what to lose first: the kids' college fund, the house, or the car (and usually losing all of it--at that point, the affluent and tech-heavy Plano, a north Dallas suburb, had the highest reposession rate in the nation, and one of the highest bankruptcy rates). These people had gone to school, excelled in their fields, paid their dues...and they and their families were destroyed by the layoffs.

In 2001, when everyone got scared and stayed home, and the economy was tanking, telecom was one of the hardest hit industries, and nobody was stepping up to hire this talent-I'm talking some of the creme de la creme of Nortel, Lucent, Bell Labs, AT&T, Texas Instruments, out on the streets.

To hell with social darwinism. These people did everything "right" that they were told to do. And then their industry dried up; other industries didn't want to hire someone who wasn't already a specialist in women's shoes or canned soup or deodorant; consulting wasn't an option because there was no one left in business to consult to. They were applying for jobs out of state and overseas; a few found work but most didn't. And when they finally showed up at Walmart and CompUSA or McDonald's or Foot Locker, no one would take their resume because they were "over qualified"...or "too old." I was trying to find jobs for candidates, guys my dad's age, who were showing up at 6:00 a.m. at Manpower and LaborReady to go dig ditches with ex-cons, because it was the ONLY work they could find. And, as they lost their pensions and their retirement savings and their cars and their kids college funds, many marriages broke up, an increasing number turned to substance abuse, and more than a handful did themselves in. One of my best friends in Dallas lost her home, declared bankrupty, her marriage broke up; her retired parents took her in, in another state, and she finally got a job selling cars, where I'm sure she put her Master's degree to excellent use. Good people by any humane and decent measure, who found out there was no net for them when they needed it and just kept falling.

There was no work at all, for many of these well-educated people, not even cleaning floors or picking up garbage, through no fault of their own.

I have ZERO patience with people who try to place personal blame on others who did nothing wrong but grow up in a country beset by inhumane, parasitic, mammon-worshipping, social darwinist republicans.

The people I worked with in Dallas aren't the problem: republicans that equate wealth with moral triumph and adversity with personal failure are.