IT looks like any other day in Silicon Valley. The freeways and expressways aregridlocked, a situation made worse by long bouts of rain, which exposes the poor drivinghabits of many motorists, many of whom brought their driving styles from outside thecountry. But I don’t intend to go on about the weather and the traffic. Somethingelse is happening and it has taken everyone unawares. And it is the severe downwardmovement of the US economy.
Everyone has heard of the Great Depression and the crashes of recent decades. But notmany here have personally experienced a downturn as severe as this. One can hear all sortsof reactions among colleagues and acquaintances. Mostly echoing the views of the expertsfrom the media. The dreaded R-word is mentioned a few times. Even though the pundits havepronounced that it is too early to start thinking about recession yet. There has been noperceptible downward trend in retail sales. Indeed, the shopping mall parking lots lookbusy as ever.
But what exactly is happening? Fine, a lot of people lost a lot of money in thestockmarket. Like that has never happened before. They took their risks and they should beprepared for bad times, one would think. What else? Stock options? It’s not likeit’s your own investment, is it? Sure, on paper it looked like a million dollars justsix months ago, and now only the zeroes remain, the leading one got knocked over. Fine,everyone had a glimpse of heaven for a while, but now, it is time to grit teeth and playthe waiting game and hope for better times.
(The plot thickens when it comes to the tricky issue of stock options. The lure ofenjoying a tax break by exercising the stock [read: buy at the low grant price] andholding on to it for a year led to many putting down their own or borrowed money for thatpurpose. While this seemed like a smart move when the going was good, it backfires badlywhen the market goes down. With the rapid descent of the stock prices, many had to resortto panic selling in December to recover enough money to pay taxes on the exercise. Due tocomplex tax laws, one can end up with a huge tax bill without even selling the stock. TheInternal Revenue Service considers that you made a profit when you exercised the stockbased on the difference between the grant price and the fair market price on the exercisedate. Even if you did not see a single cent of it. One will have to wait a full yearbefore recovering the tax from the irs, while they enjoy it interest-free for a wholeyear.)
But that is not the whole story. Accompanying the news of yet another earnings reportfrom yet another big company are the announcements of reduced earnings forecasts (read:another dip in the stock price) and layoffs. This has been a regular occurrence for manyweeks with the layoff figures in thousands or tens of thousands.
The threat of layoffs looms large over the huge temporary workforce that is in thevalley on HIB visas, mostly from India. Even those not financially impacted have to worryabout staying employed so they can retain valid visa status. A layoff would imply seekingalternative employment, which, just a few months ago, seemed like a fun sport. Notanymore. With most companies slashing budgets drastically, the jobs market is anything buthot. No indicators have appeared in the media, but messages from the grapevine suggestthat the demand for temporary workers has tapered off.
While these announcements are becoming a regularity, the air is thick with whispers ofactual names of people who were laid off. It was a colleague here and an ex-colleaguesomewhere else. Someone you knew or someone else, who you knew, knew. Whatever be thecase, the proverbial sword had been conjured up by the spirits that be and it is hangingover everyone’s head. United by a common fear, people are huddling together in groupsand trying to calm their nerves doing the only thing that they can do. Talk. And hope.Some excerpts:
And so on. The managers who have to deliver the bad news are also hit very badly. It isclear that being the ones to deliver the bad news is a traumatic experience for them.
Stories have appeared in the media about how the layoffs are actually carried out. Thereare companies where you are told to leave and a security guard accompanies you as yougather your personal belongings and escort you to the door. No doubt, concerns aboutmalicious and disgruntled employees have caused paranoid companies to resort to thispractice. After all, it takes a smart hacker but a short while to wreak havoc on theorganisation’s support systems. There are also the more reassuring stories aboutcompanies that are sensitive to the impact this sort of thing has on the laid-offemployees, as well as the demoralising effect it has on those that escaped the axe. Someeven allow a generous time period (and access to company resources) for the laid-offemployee to find alternative employment within the company. There are also reports abouthow the US workforce is not impacted too much, with most of the cutback occurring outside.
Affected offices resemble a ghost town with empty cubicles all around, where they wereabuzz with activity before. The hiring freeze that is in effect seems to be a universalphenomenon. Those that remain don’t look all that happy. It appears that everyonejust woke up from a kaleidoscopic dream and all it left them was a sore, aching head.
Some are faced with the prospect of doing the work of two or three people and some findthemselves without any work due to the abrupt termination of projects. Most are copingby hoping for a quick turnaround. Whatever the state of each individual, the blueshave certainly arrived and there is every indication that they would be here for a while.
The above situation may seem a little extreme and could be limited to a feworganisations. There are a few opinions that run counter to this portrayal of gloom. Someargue that while the jobs market is not as hot as it used to be, there is no cause forundue concern. Job seekers in the valley have been spoilt by the princely treatment thatthey have received in the last couple of years. If you try hard and are patient, there area number of good opportunities out there, they say. Just don’t expect the headhuntersto beat a path to your doorstep, that’s all.
Meanwhile, life goes on. The valley is rocked by a mild earthquake, causing someexcitement. The evening commute seemed significantly lighter in terms of traffic on theroad. Is it an indication of a gradual exodus or is it just my imagination?
(The author [not his real name] is an Indian software engineer on a temporary workpermit based in Silicon Valley.)
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