patrick.net

The strategy is, *drum roll,* get educated. Certain skillsets flourished amid the recession. Unemployment is low for the college educated.

For some of us who been living in SV long enough we know better not say..
"Unemployment is low for the college educated."

But regardless of all that... have a read!

http://www.siliconbeat.com/2010/02/17/vanishing-public-companies-lead-to-the-incredible-shrinking-silicon-valley/

300K in my town with low interest rate 4.75 or so, would be a $1600 mortgage, plus the taxes on that would run about 400 to 500 a month and about 200 for Insurance. $2200 a month is a tall order, if you're in a industry that time leaves behind, and you have to reinvent your self.

Unemployment is low for college educated people because it does not count all of the college graduates working in jobs that only require a HS diploma. In the 60 Minutes piece that ran about unemployment in SV a few months ago, it featured a fiber optics engineer worikng at Target for $9 an hour. There was another story about a lawyer working at Radio Shack for $8 an hour. Stories like these are very common.

The numbers also do not include recent college graduates who have yet to enter the workforce.

HousingWatcher says

it featured a fiber optics engineer worikng at Target for $9 an hour. There was another story about a lawyer working at Radio Shack for $8 an hour. Stories like these are very common.

The guy at front desk of my auto shop is a former Seagate engineer. He was at Seagate for 20 years prior to that. People would be surprised what goes on in SV. Seen this so many times over....

it featured a fiber optics engineer worikng at Target for $9 an hour. There was another story about a lawyer working at Radio Shack for $8 an hour. Stories like these are very common.

The guy at front desk of my auto shop is a former Seagate engineer. He was at Seagate for 20 years prior to that. People would be surprised what goes on in SV. Seen this so many times over….

One of the sad thing about engineers is that the company doesn't need you any more after the technology is developed.

I was suprised that the lawyer has a tough time. Don't they do well when lots people go foreclosure or bankrupt?

Yea, I suppose I should not have mentioned college educated. Bernake croaked that line out. It's all about staying marketable.

xenogear3 says

I was suprised that the lawyer has a tough time. Don’t they do well when lots people go foreclosure or bankrupt?

When the number of local corporate clients shrink so does the need for lawyers and auditors(CPA). In both professions you need near perfect grades, passing the bar or cpa exam which is no cake walk, and lots of experience. So far we lost over 200 corporations since 2000 which had a ripple effect on other legal and financial services.

chip_designer,

What you write is just pre-housing-bubble common sense, something that has been lacking in many working-class real estate decisions since the mid 1990's.

Ace, your analysis has a couple fatal flaws which should be fairly obvious.

When acquisitions occur (like Oracle with Sun, Siebel, etc) thousands of people in redundant positions get laid off (and did). These people are removed from the work force and must find new positions. I seriously doubt Oracle kept all of Sun's attorneys and CPA's when they did the merger. As a matter of fact, those positions are ripe for a RIF.

Also, analyzing the aggregate GDP of these companies doesn't really tell you much with regards to the ability of the (now less of) employees to make enough to purchase a home.

CrazyMan says

I seriously doubt Oracle kept all of Sun’s attorneys and CPA’s when they did the merger. As a matter of fact, those positions are ripe for a RIF.

Exactly!

SF ace says

A firm like PwC probably doubled their fees between 2001 and 2011 so that ends any thoughts business is not there.

SOX compliance for issures, intergrated internal control examination along with financial audits. PWC like other big 4 firms inflated their fees, on tasks they already were performing years ago, testing of internal control. If anything the result has been higher costs to their clients. And the clients have reacted rebalancing costs and shifting to lower cost regions. I know of people in Yahoo and Symantec who were layed off in SFBA and their jobs sent to India. These were well paying jobs.

SF ace says

Funny that Thomas post this dozens of time but never follow that up with something more concrete like bay area GDP.

GDP, for our region has become meaningless. This is not the 1980s where Dollar for Dollar revenue went back into silicon valley to fuel operations, salaries and spending. Todays revenues (GDP) generated gobally have been dispersed to global operations (cost centers) but only a fractional cent on the dollar come back to the Bay Area. Your never going to see those billions of dollars being spent here for expansion and incomes. If we did, we would not see 10% unemployment today.

SF ace says

For example, Ebay and Paypal are separate Corporations even though Ebay is the public company, An enterprise like Oracle probably have dozens of Corporations. Hewlett Packard has even more.

Ineffiencies and beauracracy, no CEO/CFO/COO will stand for it. If we learned anything Larry Ellison and Mark Hurd have taken a sledge hammer to this.

SF ace says

I agree it takes more to enter the top notch firm, 10 years ago, the top 10% of the inventory had a reasonable chance, now it’s more like top 5%

BS, the problem today is the HR department and their FUed mentality as self appointed gatekeepers. That is why many companies pretty much detest HR and would rather avoid the "Gestopo" running around their ops.

Bill Gates, Larry Elison, Steve Jobs, and the pricks (I mean founders ) from Google and FaceBook... All university drop outs! Learn anything! Based on the HR hiring criteria of today, in SV they couldnt even get a entry position to scrub dishs in the cafeteria.

thomas.wong1986 says

.. rebalancing costs and shifting to lower cost regions. I know of people in Yahoo and Symantec who were layed off in SFBA and their jobs sent to India. These were well paying jobs.....
Todays revenues (GDP) generated gobally have been dispersed to global operations (cost centers) but only a fractional cent on the dollar come back to the Bay Area. Your never going to see those billions of dollars being spent here for expansion and incomes. If we did, we would not see 10% unemployment today...
Ineffiencies and beauracracy, no CEO/CFO/COO will stand for it. If we learned anything Larry Ellison and Mark Hurd have taken a sledge hammer to this.

Not a complaint, just an observation: My partner has worked in finance departments for the past three decades, and I have worked in hardware (operations and R&D). Between the two of us we've had five different positions shifted to Asia, and we both expect the situations we are in now will be soon, too.

How is it possible to live (own or rent) in SV or the rest of the Bay Area with a $9/hr job? 6 roomates?

Mr.Fantastic says

6 room mates, section 8 vouchers, and cold water ramen every night.

Aha... now it all makes sense. And don't forget how the great weather makes up for it all.

Regarding the $9/hour theory, it may actually be possible. At a glance, I see at least a dozen properties listed for $125K or less in San Leandro. 20% down payment--possibly from a down payment assistance program--puts the payment at about $7800 per year. Taxes would run around $1800 or so. Given that an individual or family actually earning just $18,000/year might in fact receive an earned income tax credit, I think it would be fair to play with the full $18,000 or so of salary, so our family gets $700/month to spend on other things. They probably qualify for Medi-cal, so there is no need to pay for health insurance. They probably get a discount on their utilities. They probably get food stamps, too, so there will be an extra $300+ per month for food. There is no need to commute far for a $9/hour job, so travel expenses will be low. Assuming a skillful dedicated homemaker, you get very affordable meals, mending, and optimization of resources. Of course there would be little in the way of shiny things and expensive gear. The family would have to be willing to work with second-hand clothing and second-hand housewares and second-hand entertainments, but these sorts of things are very available (and very cheap) at yard sales. You can get internet, books, movies, and music for free with a library card.

I think it is possible.

of course it is possible. Is it worth it? Might as well have a higher standard of living somewhere with more affordable housing

Eliza says

There is no need to commute far for a $9/hour job, so travel expenses will be low.

There would be once all the $9/hr workers move to San Leandro... so this scheme only seems to solve the wage/mortgage problem for a dozen people in the Bay Area. Unless their combined housing demand generates multiple offers and housing prices there suddenly spike, that is.

Eliza says

I think it is possible.

maybe for a lucky(?) few, with lots of caveats, but really unlikely.

I very much agree with this thread. It is just smart not to waste money and take insane risks. Smart investors take no risk, dumb people take all the risk.

But capitalism is simple. If most people aren't willing to pay, prices will come down. Just too bad we can't break that darned healthcare for profit system.

Zlxr says

My idea of affordable housing for “bad times” is one that you can pay for with one $9 an hour (minimum wage) job. That would be for 2 income families as well - or you get roommates and live in a cramped style.
So either buy a cheap house or condo in a decent place - or pay cash or enough down so that your loan is in the neighborhood of $125,000 or less. To survive in tough times you shouldn’t pay more than $700 per month. You watch, when food and utilities and gas goes sky high - you can’t afford to pay high rent.
Most of you don’t even factor in getting sick and losing $20,000 or more - which is really easy to do these days. I know because it happened to me.
If you live on one “$9 an hour income” (minimum wage) and save all the rest of the money you make - you’ll eventually have enough money to pay cash or a huge down payment for another place. You might have to sell your house or condo and use the cash you save - but you would be surprised at what you can afford if you live under your means.
plus - none of you has factored in what property taxes would be if CA decides to go with a higher tax rate of say 1.5% or 2% or whatever. Fees and taxes could cause many to lose their homes in bad times.
Better to have your money working for you than to spend all your money trying to look like you have money. There are many highly educated people that end up in low paying jobs. So don’t think you are immune. On the bright side - you will be immune if you are prepared.

So your plan is to live like a pauper and then be forced to bailout people who overindulged and are underwater/in trouble through 1) higher taxes 2) inflation 3) possible means testing for social security?

churrasco

terriDeaner says

don’t forget how the great weather makes up for it all

...or our world-class taco trucks, plethora of hot plastic surgery babes, legalized potheads, diverse cultures and classes Getting Along . . . really, the reasons are endless why California RAWKS!