Cybercities 2008 Report from the AeA - is this News?

The American Electronics Association (AeA) has released its big report on the state of the technology industry nationally, including its assessment of Washington State, which seems more designed to gain publicity than to enlighten its readers with meaningful insights about the regional labor market.

The recently released "Cybercities 2008" report tells us what happened in the technology labor force in the area in 2006, and that back in 2006 technology employment expanded by 6.5%. Whoopee! What happened in 2007 and in early to mid 2008? For that information, see our posts, below.

Reminds me of the AeA report that came out in the very early 2000s stating that the average tech worker in the Seattle area made well over $100k (I got a lot of interesting calls from AHRS technology clients after their people in their employ actively questioned why their pay was so far below the "average"). When AHRS and other compensation professionals challenged the AeA on their report, it was learned that Microsoft's pay and stock option gain data had a heavy influence on the data sample (and therefore the information reported was not terribly representative of the state of the "average" or typical tech worker at all). It did, however, gain a lot of publicity for the AeA.

On the positive side, there were a few interesting tidbits of information that came out from the 2008 report. As of 2006, the area had almost (not quite) caught up the all-time peak in tech employment reached early 2001. AHRS confidently predicts that we have now surpassed that mark, based on Microsoft's hiring in 2007, and the heavy demand for experienced high tech workers in general in 2007 and early 2008. (Even the most recent report from the WA State Employment Security Department showed technology employment increasing in the area in May 2008, despite most other employment groups being down, some significantly).

So, while the AeA report was interesting, it's hardly insightful or news to anyone who follows pay and labor market trends. See this link or several other sources for a summary of the AeA release.

Extra! Extra! 6/18/08 Labor Market Update

Wow, what a difference a day (actually 10) makes! Yesterday, the WA State Department of Employment Security released unemployment and labor market data for May 2008. In the state overall, the unemployment rate shot from 4.7% to 5.3% (but still below the national 5.5% rate), while the Seattle metro area rate jumped from 3.4% to 4.1%. Both monthly increases were among the largest in the past 25+ years.

Overall, since non-farm employment peaked in February '08, the state has lost about 5,000 jobs.

Seattle metro isn't quite as bad as it sounds, but it still doesn't sound good. Software and and aerospace actually gained jobs (700 and 600, respectively), and each are doing a good job of buffeting this area from what could be a far worse situation, economically speaking. Construction employment in the area fell sharply (-900 jobs) during a time when construction hiring is typically rising. Several other areas didn't look too hot either, so thank you tech and aerospace!

Well-known regional economist Bill Conerly predicts that due to the strength in technology, that overall the state will experience "only a minor dip" in employment this year. Again, thank you tech, and aerospace wherever you can pitch in.

AHRS' Regional Labor Market Update - Summer 2008 (as of 6/08/08)

Regional labor markets off slightly, but still more healthy than nationally – recently released data shows slight job losses in Washington State and Oregon in April, in both cases less than the previous month. April unemployment rates of 4.8%, 5.5% and 3.1% respectively in Washington, Oregon and Idaho, up only slightly (0.1% in most cases) from late 2007. Regionally, as job growth has ground to a halt, job losses have remained small so far, and less in April than in March, which was the first month of declines in most states The star of the region though remains Idaho, despite its unemployment rate shooting up to a still extremely low 3.1% in April (from only 2.7% in November).

Metro areas remain stronger, with the Seattle at only 3.5% unemployment rate, seasonally adjusted, and actually below rates in late 2007. Year over year job growth of 2.0% in Seattle isn’t bad either, considering the national economy. The Portland area was also below the state’s overall unemployment rate at last check. In general, urban areas are stronger than less populated areas.

Housing markets have slowed down in the Pacific Northwest but remain substantially stronger than the US as a whole for the past two years. It still remains to be seen if the housing slowdown will have a substantial impact on the regional economy. Most economists assume there will be some slowing in the regional economy, but there is no clear evidence that the area is in a recession, despite an obvious slowing of economic activity. Most regional economists are less sanguine than a few months ago, but few are claiming that we’re in a recession right now. Oil prices also remain an unpredictable wild card for the economy.

Despite the relative regional strength, slow job and economic growth for the remainder 2008 is still likely. Even though the northwest economy is healthier than the national one (WA Stage GDP was the third strongest in the nation in 2007 and early 2008), it doesn’t mean we’re “out of the woods” yet. Despite this, even in today’s weaker economy, many employers continue to report difficulty in hiring some skilled workers, especially experienced technology and engineering professionals, and in the nursing/health care, accounting and finance areas.

NY Times - "Lost In E-Mail, Tech Firms Face Self-Made Beast"

Wow, have I (we?) been here before (and continue to be). Like some of us, maybe a tech version of a 12-step program is the solution for us. I will be following this story for more ideas how we can all get a breather from information overload (that's why I'm doing this post near midnight!).

"It is a song that has been sung before. People are drowning in information overload. The very technology tools that were touted as an aid to productivity improvement are now being seen as counterproductive when overused. Several large-tech firms, including Intel, IBM, Microsoft, and Google are banding together to fight information overload. They realize some of the problem is of their making and they should make a stab at solving it. They plan to study the problem, publicize it, and come up with ways to help people cope with the digital deluge. Some of the companies are already experimenting with solutions. Intel encourages workers to check e-mail less frequently, to send group messages judiciously, and to avoid having e-mail messages constantly reorder to-do lists. Google has introduced E-Mail Addict. It allows employees to cut themselves off from e-mail for 15 minutes at a time. Zero e-mail Fridays is another idea to cut down on the flow of e-mails." (The New York Times, 14-Jun-2008, National ed., p. A1). (Courtesy, Hewitt Associates daily E-MAIL news feed).

Another Comp Professional's View on Glassdoor.com

I just received this quote from a compensation analyst colleague and client of ours. I thought it was worth passing along (with permission):

"I already have looked at glass door and found how easy it was to put in false data (I started filling out a false report myself and stopped just short of saying “submit”). There apparently is nothing stopping me from saying that I work anywhere I want at whatever job title and job salary I care to enter. I can enter past or “current” information."

"I feel the same way you do and other comp professionals. Unfortunately, most employees look at this stuff like it is the gospel which makes it as difficult as heck to get them to believe the real survey information."

Keeping an Open (but skeptical) Mind...

A Seattle-area executive recruiter friend of mine brought to my attention that there are opposing views of the new employment and pay "intelligence" website, Glassdoor.com.

So, in the spirit of keeping and open mind, as well as welcoming alternative points of view, I am providing a link to an article/posting from the employee perspective (well, at least of one's particular perspective). You can visit this link at www.stalkingvenus.com.

Interestingly, even the opposing viewpoint addresses some of this writer's concerns:

• Potential confidentiality issues
• Potential (or purposeful) inaccuracies, or outright falsely provided information
• Cheer-leading or "slashing" company reviews for those with an agenda, or a score to settle
• The lack of data validation and data "vetting"

Actually, after reading the article on StalkingVenus and re-reviewing glassdoor.com myself again, I must say, the site does offer some interesting and cool approaches to reporting employer "intelligence" such as pay data, employee viewpoints about their employer, and company leadership. Kudos for creativity and a truly fresh approach. But this site is geared towards employees (or potential ones) seeking "data" and/or "ammunition" for their own self-serving purposes, not for empirical truth-seeking.

I must confess, I see the appeal of the concept and the website itself, but as a compensation consultant, my job is to provide clients and colleagues with valid and objective data, as well as dispassionate but incisive analysis, not the opinions of employees and data supplied by incumbents with no understanding (or care) about key compensation concepts. Concepts such as proper job matching (for true "apples-to-apples" pay benchmarking), a consideration of factors that impact pay, such as geography, industry, company size, etc.; the impact that a company's compensation philosophy has on the choices it makes with regard to pay and other elements of total rewards (base pay, benefits, short and long-term incentives, work-life issues, etc.). These are critical considerations in assessing a company's pay program, and this aspect is seriously lacking, at least as far as I can tell so far.

I could go on and on, but if you are an HR, recruiting or compensation professional, or company executive, and really want to know what's going on in the "real world,: review glassdoor.com and similar sites for anecdotal employee relations, attraction/retention data points, but rely on much more rigorous data sources and HR/compensation professionals that understand them for "real" compensation data and analysis.

I'm getting off that soapbox again...

Seattle area ranks third in venture capital growth

The Seattle area ranks third in venture capital growth over the past decade– Venture capital (VC) investments in the state continue strong, and the Seattle area is the third fasting growing region in the past decade according to a recent report. The two fastest growing areas, New Mexico and Pittsburgh, are much smaller in terms of dollars invested, so they have more room to grow faster. Of course, the 800 pound gorilla remains California, but relatively speaking, the Puget Sound region is stronger.

Investments in the area have remained strong in early 2008, although slightly below last year’s level, virtually ensuring that the relatively tight tech and related labor markets will continue for a while, at least. The areas doing well recently are software, biotech, wireless, and “clean” technology, such as biodiesel.

Most analysts and VCs believe that current funding levels are healthy and sustainable, barring a major hit to the economy and/or equity markets. This should keep the regional area from any near-term significant drop-off in labor demand in technology oriented industries, like what happened in the 2001 – 2002 period.

Glassdoor.com Offers Yet Another Source of Pay Data for the Masses

Doesn’t the world already have enough unverified and/or less methodologically rigorous sources of pay data for the masses? Apparently, the newly-unveiled glassdoor.com doesn’t think so.

We already have vault.com, salary.com, payscale.com and others to provide data-thirsty workers ammunition to “verify” their under-compensated belief systems and to complain to their employers with (of course, if the “data” shows them “fairly” compensated, then no one ever hears about that!). Vault.com, for instance, has been supplying employer pay data “intelligence” for about a decade already.

Glassdoor.com is brought to you by the some of the same folks that founded zillow.com, a truly revolutionary and “disruptive” technology venture that blew the lid off real-estate valuation. Zillow isn’t perfect either, but at least they use real and verified data (publicly available real estate sale and tax records).

Is glassdoor.com the same revolutionary or disruptive technology as zillow.com? This compensation consultant certainly doesn’t thinks so, unless I’m missing something (it wouldn’t be the first time!). Self-depreciating humor aside, collecting anonymous incumbent-supplied data and presenting it as accurate and statistically-relevant/representative data isn’t new, and it isn’t valid either.

I won’t bore you with my long-winded recitation on why real compensation professionals rarely ever use these data sources. Let’s just say that most compensation professionals tend to want more methodologically-sound data sources than websites that offer incumbent-supplied data and/or “proprietary” (i.e. secret) data sources or methodologies.

OK, I’m getting off my soapbox now…