Employment and Income Drops in Silicon Valley

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.