patrick.net

Astrid,

Amen. I was working in the dot coms (the wrong ones, unfortunately. WHY did I turn down Google?) back then, and the mouth breathers that were allowed to call themselves web developers back then truly boggled the mind.

They are back to flipping burgers again. Sweet.

Steveoh,

Yeah, watch out BA! Pretty soon the obvious appeal (10 months of BLAH weather) and our "infinitely cheaper cost of living" and there won't be a bicycle ball bearing mfr. LEFT in the BA!

All your chrome ball bearing.... things are belong to MUGGY!

Seriously, this was reported as a "major score" by the local media. I know, I know. We can have the jobs but the "Critical Mass" clowns go with the deal! I know. :(

Law related Web 2.0 outfits are tiny and don't absorb a lot of workers.

SFBB,

Unfortunately, the remaining deadwood is concentrated in defense, homeland security, and places like Fannie Mae. My dad still have to work with these types of people as a contractor. Those people are worse than worthless.

Furthermore, the 4.6% rate is still more than 2 full percentage points above 1999 and 2000 levels.

2.6% unemployment rates were an aberration and a very bad thing. 2.6% is _below_ full employment levels, and means there was a negative "real" unemployment rate. Keep in mind that unemployment rates include at least 2.5% of churn and most people think another 1-2% of "uncounted workers". Uncounted workers drop out of the tally because they are inactive too long. This means that women taking a couple years out to raise kids, people on year long sabbaticals, people doing independent consulting to fill the gap while they wait for one of those hard-to-get jobs fall out of the measure.

4.6% is pretty close to full employment. Anything more and we'll get another annoying boom and burger flippers will start pretending to code Ajax.

Randy -

"My wife works for one of the larger public software companies and she has been importing hires (finance & accounting) from elsewhere in the country since she can’t find talent locally. This has been the case for 2 years now."

Im in Finance for SW company. Here is the rub, due to SOX Internal Control (segregation of duties) you have to hire more people than you need. That is why its said, SOX is expensive. Your wife can explain this to you far more. From the lowely staffer up to CFO you are required to have someone looking over your sholder checking your doing everything correctly, and someone else is looking over theirs.

There isnt a shortage today, there is however a misallocation and loss of common sense in the profession. How many accountants does it take to screw in a light bulb... far more than needed because of goverment regulation.

"San Jose’s unemployment rate of 4.6%"

thats because over 300,000 people left the BA.
We are down to 840,000 in workforce today. The same number as
was in 1991.

Is it a good time to change industry? How do people take the leap psychologically?

Ha Ha Says:
Borland to Relocate Corporate Headquarters to Austin

I hate seeing this happen. Borland has been in BA for decades.
We already lost 3com and a good chunk of top Fortune 50 R&D centers.

High home prices are to blame.

"Some young IT guys believe in work-life balanace."

We have prezals and Pepsi in the frig at work. Some left over Pizza
from last night too.
When you get down to it, the real IT and Devoplers love
working 50-60 hours a week with very little outside
activity. This is what motivates them. You wont see them at a
Sharks Game.

From the posts so far, my conclusions are:

The dot-bomb bust cleared out a huge amount of the dead wood, those who were poorly qualified for tech jobs but were jumping on the gold rush. Many skilled tech people lost their jobs as well in the process.

Today, we're left with a much smaller pool of qualified employees who stuck around in the Bay Area. Now with many companies back to a stable growth pattern, they are having trouble finding good, qualified tech people - hence the observations of many here that hiring skilled workers is difficult. Add on top of that the significant disincentive to moving to the Bay Area from out of state due to housing costs, and these observations makes perfect sense.

Companies here can even pay qualified tech hires over 1 HaHa (on the high from what I gather), and that would still not be enough. Yes, you can buy *something* here on that salary - a condo, a stucco box in Sunnyvale, or whatever (unless you become a FB...), but how does that sound to someone moving from their comfortable 4br home on 3/4 acre somewhere else in the country?

In the end, the true lure that gets tech people back into the Bay Area is the carrot of stock options. Many of the tech folks posting here have discussed it on a personal level, and it's clearly the major driver. It's the dream of getting swept up in a new wave of ipos/acquisitions.

"Companies have been moving out of the Bay Area for quite a while."

Since 1985 manufacturing was moved to other states and then offshore.
By early to mid 90s all mfg interest was soft off to third party interestes
like Sanmina, SCI and Solectron who had operations world wide. Corporations jetisoned all their mfg. R&D back in the 80s was offlimits
to CFO cust cutting. But that too has changed.

I work for a very large health-care employer in the east bay. We are hiring, I wouldn't say the hiring is very brisk though. We have a lot of trouble finding people because very few want to live here at the wages we offer. There is no way we can adequately compensate someone for the cost of living difference compared to other areas. I don't understand why any anyone would relocate here, the jobs here don't pay that much more than other places and the vast majority of people who move here are completely priced out of the housing market.

Are you Shabba, as in Shabba Ranks?

"In the end, the true lure that gets tech people back into the Bay Area is the carrot of stock options."

Now that stock options are expensed and the options mess of over 300 companies. That game is over. Bear in mind for every IPO in 1999 5 others didnt make it. Their busted up companies were purchased for pennies on the dollar. I worked in the B2B sector back in the day.

Skibum-Yep, that's who I am thinking of.

I disagree the ISO option game is over. Many companies are still liberally distributing options. They're just doing so now under closer supervision of their audit committees and comp committees.

I don't know of any VC funded companies that aren't issuing options. Since so few plan to go public (a large number are built for M&A) they don't need to worry too much about public compliance beyond the minimum to pass due diligence. The rest is the acquirer's problem.

Few of those 300 options scandals have resulted in much of anything, including permanent stock price damage. The problem really is that Wilson Sonsini was giving *everyone* the same bad advice, thus so many companies have consistently violated pricing issues.

I work as a software developer in san francisco. My company is actively hiring across various departments.

challenge: recruiting young doctors as older doctors retire, cost of living unattractive

Small Rant: The ER situation in the Bay Area is ridiculous. A friend of mine got really sick at 4am on a Wednesday and was told by an ER over the phone that all of them were on "divert"

This 2000 article highlights how bad the problem is in SF: http://tinyurl.com/3x9zzs but it can probably be generalized to the rest of the peninsula.

I love how keep building medical centers without ERs. I can't blame them - ERs are terribly unprofitable. If I were building a hospital, I'd try to leave it out as well.

Maybe I'm just spoiled by living in a few East Coast places that had a ridiculous numbers of hospitals. At one point, I lived in a place that had 2 trauma level 1 hospitals within 15 minutes driving distance.

(Did you know that if you get into a major accident at Gilroy, they have chopper you to a hospital? It doesn't feel that remote, but it really is...)

"Small Rant: The ER situation in the Bay Area is ridiculous."

This situation goes beyond the ER. I guarantee that if you call almost any type of doctor's office in the Bay Area, you will be put on hold, sometimes for 10 minutes or so before you can even speak to the receptionist. Also, if you need a new primary care doctor or OB-GYN, good luck.

I love how keep building medical centers without ERs. I can’t blame them - ERs are terribly unprofitable. If I were building a hospital, I’d try to leave it out as well.

They should charge me.

s/me/more

This situation goes beyond the ER. I guarantee that if you call almost any type of doctor’s office in the Bay Area, you will be put on hold, sometimes for 10 minutes or so before you can even speak to the receptionist. Also, if you need a new primary care doctor or OB-GYN, good luck.

Dentists too. All true.

But I bring up the ER example because typically I can wait 2 weeks to see the Dentist. On the other hand, I wouldn't want to wait 2 weeks to go to the ER. :)

I work for an HMO in the East Bay. Demand for docs is high, mostly because of high turnover. Working conditions are abusive, and coupled with high home prices, the results are not pretty. I see a revolving door of docs come and go constantly. I feel sorry for the ones who buy a home and have to sell it within a few months to a year.

I was re-reading Robert Shiller's book Irrational Exuberance and he made a surprising (to me) claim. He said that the last time there was a downturn in housing on both east and west coasts in the late 1980s housing peaked before the economy. In Boston housing turned down in 1988 well before the recession in 1990 while in Los Angeles the real estate market started worsening in 1989 before the start of the recession in 1990.

If the housing market turned down before the economy, it is un-likely that the slowing economy caused a depressed housing market. What Randy H said "...jobs and the housing market form a reflexive system..." may be true the causation may be in the other direction. Or another factor, say "animal spirits" for lack of a better term may cause buyers to be less optimistic about purchasing a home driving down prices. Homeowners, who subsequently feel less wealthy because of declining values of their biggest asset, may reduce spending causing a recession.

Will someone who remembers the 1980s explain which came first, the downturn in housing or the worsening in the economy?

Gavin

Two tech salaries combined (200k+) should enable a young family to get a reasonable townhouse with a comfortable mortgage, assuming with 10% - 20% down-payment.

Well, if an apartment in London can be sold for nearly $200M... Bay Area is not that over-rated yet.

"I see a revolving door of docs come and go constantly."

I see this with a lot of our young doctors. One of our doctors left and became a realtor. LOL

Food in London leaves a lot to be desired for.

I know of a Web 2.0 company just got their series A but some of the engineers are already leaving because their business model is so flawed, the VC just wanted to round out their portfolio.

Regarding the dot com cleansing of incompetent people, it goes both ways, I see many managers went to director/VP level easily during that time, some of them never got purged because of politics, the result is some very poorly managed departments.

The Mercury News used to run a lot of stories about laid off tech workers after the bust, funny if you read the story closely those people never really had a tech related job before. My favorite one is a lady who lamented that she was laid off and could not afford to buy an ibook for her daughter, I guess her HELOC was maxed out.

One kid I interviewed during the boom had a stamp on his hand (from going to clubs), I was hoping he at least tried to wash it off if he was serious about the job, and he said he had 3 interviews that day :)

Small Rant: The ER situation in the Bay Area is ridiculous. A friend of mine got really sick at 4am on a Wednesday and was told by an ER over the phone that all of them were on “divert”

eburbed,

A few points on this matter. The ER "divert" situation is common in most cities. Where I trained (Boston), there are literally 5 great, large hospitals with large ERs, and we regularly went "on divert" every few days. The issue is more complicated. There are a vast number of uninsured out there, and the ER is there "primary care doctor." This takes up time and resources. The closing of ERs is a problem too, and hospitals have no incentive whatsover to expand ERs, as they are money-losing propositions. Peter P's idea to charge more is untenable, since reimbursement is completely tied to Medicare standards (set by the government), and these guideline charges are being reduced every year.

The situation is a slow-motion disaster (much like the housing mess).

I believe mortgage rates are a greater factor than jobs in terms of bringing down home prices in the Bay Area. To see prices fall due to job loss, I think we would have to experience dot com bust part two in the near future. I just do not sense that level of sudden, palpable job loss in our near future in this area. Does anyone here believe we'll see that kind of job loss rate soon?

On the other hand, if the Fed raised the prime even a 1/4 pct., the ripple effect on RE is immediate. While a mortgage payment suddenly increases 10 to x%, most people do not experience a similar, sudden increase in their income, even if they have a 'good' job.

Add to that scenario the ARMs which will reset beginning this year and next.

I have no idea how likely it is that the Fed will raise the prime, but I think it is a more likely scenario than dot com bust part two. ARM resets are a given but there too, it cannot be known a priori how many borrowers in that category indeed stretched themselves to a point at which a fractional change in their rate puts that 'For Sale' sign up. Furthermore, a rate adjustment in and of itself does not necessarily mean a lowering of home prices. What lowers the price of homes is a supply which is much greater than the demand, coupled with other factors such as the direction in which the prime rate is heading and job confidence.

I work for a small, private software consulting firm. We have more work than we can handle. Somebody here said the key to riding out the bust/booms of Bay Area employment is to have a genuine, marketable skill set. I think our company falls into that category. I don't have anxiety about our outlook for '07 or '08. Beyond that, my crystal ball gets fogged over.

Excellent topic choice btw.

eburbed said :
I wouldn’t want to wait 2 weeks to go to the ER.

Wimp!

I work in IT for a healthcare provider and I agree 100% with Shabba. It's almost impossible to attract people from out of state, because there is just no way we can compensate someone for the cost of living differential, meaning housing. Unlike Google or web 2.0 start-ups in Silly Valley, a company like mine has no stock options to use to lure workers. All we can afford to do is pay decent wages and benefits (as Shabba said, not great --just comparable to IT salaries in any other state).

While you can still rent in CA fairly cheaply, most people from other states are accustomed to owning and are *not happy* to settle for becoming renters again --the old cultural pro-ownership bias again. Btw, I use the term "cheaply" in the relative sense. Rents here are only "cheap" compared to purchasing costs, but not "cheap" at all compared to renting in other states (and what you get for the money).

Prognosis for healthcare industry: cloudy. Hiring is a bit looser than it was a couple years ago, when it was very tight. However, healthcare costs are rising much faster than inflation --even 'true' non-hedonically adjusted inflation. At some point something has to give, which probably means more cost-cutting (i.e, layoffs) for the industry.

By the way, I've worked in IT for ten years now for a number of different outfits, and I can tell you that not *every* IT worker is a mouth-breathing idiot or youngster making 2 HaHas/year. I know there were a lot of real-life stories of 20-something dot.com millionaires in the late 90s, and there were a fair amount of mouth-breather types who got into lower-rung jobs they weren't qualified for. That said, I think some of the comments I've seen here grossly exaggerate the magnitude of both trends. The 'house-cleaning' that's gone on in the IT industry in recent years is good thing, I agree --cleans out the dead wood and leaves a core of good, qualified people. But to say that the entire IT industry here is/was populated by Ferrari-driving, supermodel-dating Gen-Y'rs or mouth-breathing former burger-flippers is just ludicrous. Either that, or all the companies I've worked for have been far more conservative than average.

There are a vast number of uninsured out there, and the ER is there “primary care doctor.” This takes up time and resources.

Can't hospitals charge a $100 cover-fee for non-critical cases?

Peter P

$100 is a rounding error.

$100 is a rounding error.

Just to deter ER abuses?

Two tech salaries combined (200k+) should enable a young family to get a reasonable townhouse with a comfortable mortgage, assuming with 10% - 20% down-payment.

That's sort of impossible - if everyone makes $200k, by definition the bar would have to be higher.

Where I trained (Boston), there are literally 5 great, large hospitals with large ERs, and we regularly went “on divert” every few days. The issue is more complicated.

Thanks for the clarification. I thought this was BA specific - guess not.

There was recently someone on NPR who talked about how our health care system is the next major catastrophe - and that if we fixed it, we'd be a lot more ready for the next terrorism attack as well as a bonus.

Too bad we spent it on hospitals in Iraq.

As for Peter P's idea, in NYC, I believe they call it "Wallet Triage" - where ambos from private hospitals SUPPOSEDLY check to see if you have health insurance. If you do, they take you to their hospital. If you don't they take you to a public hospital. Regardless of distance. SUPPOSEDLY.

There are a vast number of uninsured out there, and the ER is their “primary care doctor.” This takes up time and resources. The closing of ERs is a problem too, and hospitals have no incentive whatsover to expand ERs, as they are money-losing propositions. Peter P’s idea to charge more is untenable, since reimbursement is completely tied to Medicare standards (set by the government), and these guideline charges are being reduced every year.

The situation is a slow-motion disaster (much like the housing mess).

I agree - and this topic really deserves its thread to do it justice. Let's also not forget the elephant in the waiting room: millions of uninsured illegal aliens. Does anyone out there, liberal, conservative or moderate, honestly believe the ER situation out there would be as bad as it is today (esp. in major border/gateway states like CA) if the illegal population had not exploded over the last 20 years?

danville woman and lunarpark,

My take on the doctor hiring issue is this: MDs are perhaps the one profession where job opportunity and salaries are hardly dictated by geography. What I mean is that tech workers, IBankers, lawyers (at large law firms wanting big bucks) have to work at hubs of technology, commerce, and again commerce or government, respectively. Doctors are needed everywhere (obviously), and the compensation doesn't get better in big cities. If anything, it's worse because of supply and demand - more docs want to live in cities, there's a relative oversupply, and rural practices have to offer more to hire docs. Nowhere, except maybe NYC, is this contrast magnified more than in the Bay Area. As a result, it is difficult to hire MDs in the specialties at the low-end of the pay scale - primary care docs, pediatricians and the like. There seem to be plenty of plastic surgeons, orthopedists, dermatologists etc here, on the other hand.