For the fist time since 2003, per capita income in the world's largest technology playground, Silicon Valley, has dropped. Year-over-year employment also dropped for the first time in years as well.
According to various reports, until the past few months, the tech sector was feeling pretty smug about possibly taking a pass on this recession, but now it's arrived in full force. No one is immune.
According to an article in today's Wall Street Journal, quoting Jason Hancock, CEO of Joint Venture Silicon Valley, "There was a feeling that Silicon Valley had special assets to help weather the crisis, but we now know we're in for the same pain." "We haven't hit bottom yet and it will be a while."
Employment was down 1.3% over the past 12 months, while per-capital income is own 0.8% over the same period. Both numbers had been rising steadily since the area started recovering from 2000 tech bust, which hit the Valley area economy quite hard.
I remember that prior to the tech bust in 2000, many in the industry felt that technology was recession resistant, but it turned out to be highly cyclical. Proctor and Gamble is recession resistant, technology is not. People need soap, but they can run their XP machines for another year without loss of life, or even of personal hygiene.
We expect employment, personal income, job prospects, wage growth and salary budget to continue to decline until the housing and banking crunch have hit bottom and started to recover. Honestly, nobody knows when that will be at this point, not even Federal Reserve Chair Ben Bernanke or Treasury Secretary Tim Geithner.
Feb 7, 2009
U.S. Unemployment Rises 4.9% in One Year
The U.S. unemployment rate spiked up 4.9% over the past 12 months based on January's 7.6% rate. This is the largest one-year increase since 1975 (the year after I graduated from high school - yikes!).
While the 7.6% rate seems awfully high, and it certainly is by any recent standard, the sheer volume of job losses is more staggering. 3.6 million jobs have been lost since the decline started in late 2007, but the past three months (11/08 - 1/09) have averaged approximately 500,000 jobs lost per month, an unprecedented pace.
More scary perhaps is the the BLS (Bureau of Labor Statistics) “U-6″ rate, that includes disaffected workers who have dropped out of the labor force in frustration and those who are "marginally" employed (such as those working PT, but wanting FT work, etc). This wider measure is now at an astounding 13.9% rate (up from 13.5% in December), or about one in seven workers in the U.S.
We at AHRS believe that joblessness will continue to rise at a fast clip, and unemployment will approach (or maybe even exceed) 10% before we hit bottom.
Merit and other salary increase budgets will continue to decrease, even though they are near historic lows already.
Our hope (and it's just that, a hope) is that the labor market and business demand will bottom in the second half of 2009. This hope assumes that the alleged stimulus plan (that full of all sorts of non-stimulus pork) has its intended affect, that the banking system can be stabilized (at taxpayer expense, of course), and that business and consumer sediment bottoms and starts to improve.
Even if all of these good things occur, it will likely be the second half of 2010 (at the earliest) before the labor market would start to rebound. The labor market tends to be a lagging indicator, as employers are generally reluctant to open their wallets, until they feel confident that a true turn-around is in place.
While the 7.6% rate seems awfully high, and it certainly is by any recent standard, the sheer volume of job losses is more staggering. 3.6 million jobs have been lost since the decline started in late 2007, but the past three months (11/08 - 1/09) have averaged approximately 500,000 jobs lost per month, an unprecedented pace.
More scary perhaps is the the BLS (Bureau of Labor Statistics) “U-6″ rate, that includes disaffected workers who have dropped out of the labor force in frustration and those who are "marginally" employed (such as those working PT, but wanting FT work, etc). This wider measure is now at an astounding 13.9% rate (up from 13.5% in December), or about one in seven workers in the U.S.
We at AHRS believe that joblessness will continue to rise at a fast clip, and unemployment will approach (or maybe even exceed) 10% before we hit bottom.
Merit and other salary increase budgets will continue to decrease, even though they are near historic lows already.
Our hope (and it's just that, a hope) is that the labor market and business demand will bottom in the second half of 2009. This hope assumes that the alleged stimulus plan (that full of all sorts of non-stimulus pork) has its intended affect, that the banking system can be stabilized (at taxpayer expense, of course), and that business and consumer sediment bottoms and starts to improve.
Even if all of these good things occur, it will likely be the second half of 2010 (at the earliest) before the labor market would start to rebound. The labor market tends to be a lagging indicator, as employers are generally reluctant to open their wallets, until they feel confident that a true turn-around is in place.
Feb 2, 2009
Merit Budgets Continue to Plummet
Just released results from the WorldatWork Salary Budget Survey Special Update reveal that merit budgets continue to plummet, and that Seattle-area budgets are down more than the nation as a whole.
Overall, results from the Special Update (data was collected in early December) show the average merit budget dropping to 3.1% from the 3.9% projected for 2009 when the survey was originally done in the spring of 2008.
Back here in the Pacific Northwest where we hail from, budgets have dropped even lower, to 2.8% in both Seattle and Portland, tied for the lowest large metro area merit budgets in the country.
Approximately 1 in 6 employers reported a 0% salary increase budget for 2009, a dramatic increase over recent years.
Merit budgets are back to historic low levels, last seen early in the decade, after the stock market collapse starting in 2000, and 2001 recession.
We at AHRS expect salary increase budgets to continue to drop from current levels in early 2009, although the pace of the decrease should slow, barring new unforeseen major economic events yet to unfold.
Overall, results from the Special Update (data was collected in early December) show the average merit budget dropping to 3.1% from the 3.9% projected for 2009 when the survey was originally done in the spring of 2008.
Back here in the Pacific Northwest where we hail from, budgets have dropped even lower, to 2.8% in both Seattle and Portland, tied for the lowest large metro area merit budgets in the country.
Approximately 1 in 6 employers reported a 0% salary increase budget for 2009, a dramatic increase over recent years.
Merit budgets are back to historic low levels, last seen early in the decade, after the stock market collapse starting in 2000, and 2001 recession.
We at AHRS expect salary increase budgets to continue to drop from current levels in early 2009, although the pace of the decrease should slow, barring new unforeseen major economic events yet to unfold.
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