Tech workforce's ranks shrinking
By Deborah Lohse and Mark Schwanhausser
Mercury News
Battered by the technology bust, half of the Californians working in tech in 2000 have left the field, a new landmark study of 1 million workers shows.
Nearly one-fourth of the tech workers have taken non-technology jobs that often pay less, according to the study by the Sphere Institute, a Bay Area public policy research firm. Another 28 percent have fallen off California's job rolls altogether -- having fled the state, joined the ranks of the unemployed or become self-employed.
California's tech industry -- and Silicon Valley in particular -- has endured a wrenching and permanent transformation, said Stephen Levy, director of the Center for the Continuing Study of the California Economy.
``It's not Armageddon,'' said Levy, who will sit on a panel unveiling the study today at NASA Ames Research Center in Mountain View. But, he added, ``An industry built up, and a lot of people got laid off. Tech may come back, but those firms that went bankrupt aren't coming back, and the big firms that laid off people to improve productivity aren't going to roll back productivity.''
Some former tech workers who have left the field aren't interested in coming back.
Berni Ai-Kuo of San Jose, 38, was laid off last year after eight years as a high-level executive for Hewlett-Packard, and she has been self-employed ever since in business development, real estate, marketing and antiques.
When she got a recent offer to return to a tech job, she said no.
She's making half her former pay -- and no longer earns more than her husband, an engineer at a start-up. But the loss is outweighed by a better balance between her home and work life. She can't imagine what could draw her back into the tech industry.
``No jobs are set in stone these days unless you employ yourself,'' she said. But she added, ``Right now I can say no. But you never say never.''
A stronger safety net
The study, funded by the federal Workforce Investment Act, was intended to help state policy-makers who are wrestling with how to retrain workers with outdated skills, nurture young companies that now hire one-third of the valley's workers and provide a stronger safety net when good times go bust.
It was fun while the industry was growing, particularly in the Bay Area. Here, median wages for tech workers rocketed 53 percent from 1995 to 2000, nearly double the 29 percent increase for tech workers seen elsewhere in the state.
But when the industry meltdown began, the fate of tech survivors and tech refugees contrasted sharply. Higher-skilled, higher-paid workers who hung on to technology jobs through the meltdown generally saw their wages rise moderately from 2000 to 2003. But other tech workers, often less-skilled ones who moved to non-tech jobs, had to take hefty pay cuts.
``The Bay Area had a great ride, with huge wage gains,'' said Michael Dardia, an economist for Sphere. ``For people who stayed employed in tech, they did OK.''
Staying power
Richard Sneiderman, 47, is typical of the Valley's luckier tech survivors. After moving here in 1989 he has managed to stay employed as a software designer almost non-stop through layoffs, company consolidations and consulting stints.
His salary has fluctuated up and down by about 30 percent at various times, and he has worked as a consultant for stints, with no benefits or stock options.
But now he has both, as a software designer for a wireless security start-up staffed with former colleagues. He credits his staying power to his extensive network of contacts, who hire him because they know he can get quickly up to speed on programming languages whether they are based on Microsoft or Java.
And he knows the odds were against him. In his brief job-hunting stints, ``I would look at the job boards and there would be thousands of people who had similar job skills,'' he said.
Among the study's other findings:
• Higher-skilled, higher-paid tech workers were more likely to hang on through the bust and remain in their jobs or the tech industry in general. Those survivors saw their wages rise 8 to 14 percent even during the bust from 2000 to 2003.
• Many other tech employees who settled for non-tech jobs had to take a pay cut, often suffering a drop of 10 to 30 percent. Semiconductor workers who took jobs in the business-services sector suffered the worst hit, losing 38 percent of their income.
• One of every four tech workers endured a stretch of unemployment that lasted at least a quarter sometime between 2000 to 2003. The toll was even higher for workers who ended up in non-tech jobs: two of five suffered through such a hardship.
• One-third of the Bay Area's tech workers today are employed by companies that didn't exist before 1995. These young companies pay slightly more than older companies -- but they are also three times more likely to fail.
The study also underscores a number of challenges facing Silicon Valley. For starters, where will laid-off adults go for retraining in this high-priced area?
``They can't afford a year to sign up and do this,'' said Mike Curran, director of the NOVA Workforce Board. ``You have Silicon Valley rents and mortgages to pay.''
Another question, experts say, is how will the valley cultivate its talent pool and other resources for the next big thing in technology.
``Everybody ought to be asking the question: What does Silicon Valley need to do to be as attractive for the next wave of new companies, start-ups, new innovation, new entrepreneurs, new ideas?'' Levy said. ``We've been successful in the past.''
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