As you already know, the January BLS number was 143,000 new jobs with 5.2% unemployment.
Showing Silicon Valley is still a trendsetter, the national unemployment rate is now dropping by virtue of people dropping
out of the workforce, as has been the case here for two-plus years. Let's look beyond these factoids and see what else is
out there.
Challenger and Gray announced January, 2005 layoffs at 92,351 which was -21% below
January, 2004 and the first sub-100K month since August, 2004. Since January is a seasonal month for layoffs, Challenger is
reported as suggesting this decrease bodes well for future employment growth.
"Optimism" is compounded Google by making news highs. Clearly, the internet advertising
business is strong.
An internet search for "executive recruiter" yields 945,000 hits plus 40 paid placement
ads and "engineering recruiter" finds 700,000 hits and 20 paid placement ads. (Is there a message in this ratio?)
Monster posted solid earnings growth this week, largely on the back of a 64% gain
in online job postings.(*)
Is this it? Is Silicon Valley now on the cusp of a brave new world with job growth?
Is everyone who loaded up on mortgage and new car debt now going to be proven a genius for taking the "long view"? Even trusted
skeptics are starting to succumb, as evidenced by positive comments about Silicon Valley's condition on the normally-reliable
Financial Sense web site.
Let's shine a light on these items one and by one:
Monster's earnings call placed significant emphasis on how hiring extra sales staff
drove sales. Long-time salespeople are always gratified to hear extra sales staff acknowledged as the basis for growth. However,
Monster also lowered next quarter's growth, suggest they borrowed sales forward and/or "bought" business which won't repeat.
Monster's numbers tell us less about hiring prospects than one might think.
As for recruiters, many have adopted "phishing"
tactics on Monster (and Hot Jobs, Career Builder, etc.). Instead of stealing your PayPal, credit card or bank account info,
these recruiters want your resume'. They have a hot new job opening you could be hired into, if only you would send in your
resume'-- right away! Recruiters being active doesn't "prove" more jobs are out there.
As an aside, "What's the downside to having more recruiters with my resume on file?"
Or, "Why don't I want the largest exposure possible?" This used to be valid strategy. Today, there are today at least two
drawbacks: 1) Employers receiving your resume' from multiple sources may decide it's too widely exposed to be their "must
have" hire, and/or 2) If you do get to the offer stage, multiple recruiters may try to claim the commission. Rather than adjudicate
whom to pay, the employer may find it "easier" to hire somebody else.
It is likely some of Monster's sales increase was recruiters paying for the chance
to "phish" Monster's listings. The prevalence of internet advertising, insurance sales and financial planning offers hitting
inboxes is further evidence.
As seen in this week's stock performance, Google's ability to sell internet advertising
is undeniable. The point here is only the two or three thousand Google employees (1,907 as of Dec31'03, est, 3,000+ today)
are making serious money from this phenomenon. Unlike previous booms at Cisco or Sun or Intel, there is no supply chain feeding
off Google's growth. (Except maybe the local BMW dealers.)
Moving on to Challenger, they also stated they expect
future layoffs to accelerate. After all, January's number included only 1,600 telecom layoffs while SBC/AT&T will add
13,000 on top of a another large number likely to emanate from the Qwest/MCI discussions. This detail was not prominently
mentioned in most articles.
What the above show is things did not get worse in January, or at least not by as
much as feared. Actual hard evidence of a Silicon Valley job recovery is still lacking.
The hard evidence we do have includes recent Silicon Valley layoff announcements:
-Oracle/Peoplesoft: 5,000 layoffs, with the threat of more to follow.
-HP budgeted $200M for 1H05 layoffs (FY03: $791M /17K people =$46.5K/head, implying
4,300 layoffs??)
-National (550)
-LSI Logic (510, 210 local)
-Sun ("hundreds" in HR and IT)
-Cypress (250)
-Transmeta (unspecified, possibly all ~250 employees)
-Applied Materials (120 -240)
-Copper Mountain (all ~120 employees)
-Santa Clara County and several local municipalities issuing 100's of pink slips
due to budget cuts.
Hard evidence exists for something approaching 10,000 Silicon Valley job cuts. These
are already baked into the cake for the first six months of 2005. In universe of 816,000 jobs, this is not a catastrophe.
It is, however, a headwind.
Hard evidence also includes the latest Santa Clara County jobs report showing
the fewest December jobs in the county since December, 1994:
If we get the 2% -3% job growth predicted by UCLA's Anderson School, we might get up
to 1995 levels. Wowee! (Keep in mind 2 -3% job growth is more than we had last year, or the year before, or the year
before.)
Is this it? Is Silicon Valley job growth about to finally come roaring back?
If this is "it" and Silicon Valley employment is now actually "strong," many
are liable to be disappointed.
* * * * * *
ps, Feb 8, 2005: This just in, the county now reports gaining 9,000 people
in the 18 -64 age range. In other words, the county was gaining 1% in working age population even as it lost ~3% out
of its 2004 workforce.
