Workforce Innovations

Feature

Silicon Valley Sees its Shadow -
A Long Winter Ahead for the Labor Market?

By Michael Curran, NOVA Director

During the last half of the 20th century, the Silicon Valley area of California where I live and work became a leader and a model for the economic development of the rest of the United States. As computers and related technologies took hold and captured the imagination – and the business – of the nation, talented technologists came like pilgrims to Silicon Valley, and there were jobs waiting for them.

Whether it was by simply following the lead of the tech revolution or by emulating the model of a concentrated nucleus of high-knowledge industries (or parallel evolutions like North Carolina's Research Triangle), many communities around the country began to find themselves moving in the same economic direction as Silicon Valley.

In time, it became feasible to re-attribute the old adage "as General Motors goes, so goes the nation" to the high-tech economic engines of Silicon Valley. This was never truer, perhaps, than in the late 1990s, when the Internet and tech boom added jobs, income, and prosperity throughout the nation, but first and foremost in Silicon Valley.

Of course, tying the fortunes of the nation to those of the Valley can be a double-edged sword. The employment attrition generated by the bursting of the tech bubble hit hard in Silicon Valley. As the dust settles, it is apparent that a number of those jobs aren't coming back, at least not in the same form or for the same people. If Silicon Valley is something like a harbinger of future directions for the U.S. economy, that puts me in a unique position to spot the implications of that direction on the workforce development system. As director of the NOVA workforce board, I have the advantage of the crow's nest to look out for future needs even as I try to help devise strategies for Silicon Valley's present.

What we have realized in the five years or so since the high-tech shakeout is that major structural change is occurring in the way work is happening. We cannot attribute our area-wide job losses to declines in our most important industries, since many of our economic power players are still in the same high-tech industry clusters that drove Silicon Valley's rise to prosperity in the first place. In fact, we may need a redefinition of the idea of a "declining industry," since industries that have shed workers in recent years are actually expanding in every area but employment.

Here's what's happening: Work in Silicon Valley area is becoming more contingent, more volatile, offering fewer guarantees that talent and a specific degree or a fixed quantum of education will ensure a good job, or even basic employability. Silicon Valley has a plenitude of riches when it comes to the talent and educational attainment of much of its workforce. But such a rich endowment of well-educated talent doesn't mean that we are immune to the consequences of a rapidly changing economy and work environment. Quite the contrary; more than 70% of NOVA's job seeker clients today already have a baccalaureate degree.

I hesitate to reduce our workforce situation to any simple analogy, but fresh from Super Bowl Sunday, I find a sports metaphor comes readily to mind to describe the categories of available workers that have emerged from the high-tech employment attrition of the last five years:

The A Team. You might also call these the "elite workforce." These are individuals who have or somehow obtain the knowledge and skills necessary to find work in expanding industries. They are highly compensated, can and do move from team to team when they become free agents, and are often drafted/recruited from other teams. We still have players who made, on average, 9% higher salaries last year than they did the year before, and they are still the drivers of the innovative economy that will continue to generate our region's and nation's wealth.

The B Team. These workers are not necessarily any less talented than those on the "A Team," but for one reason or another, they have been dropped from the team. They have to search out a new team (most often with reduced pay) and often have to spend some time in the "minor leagues," hopefully with a franchise that will do well and create new opportunities down the line.

Time to find a new sport. Then there are those individuals who, because they've been cut from the team or just get tired of the wear and tear, can't see themselves playing the same game anymore. They need to find a new sport, and even if they were exceptionally gifted at their old game, they can find it very difficult to learn the ropes of a new one, especially if it means having to hang around in the bush leagues for a while. (Think of Michael Jordan's transition to minor league baseball.)

The burnouts. Some people, whether they have been ejected from the big leagues or - for any number of reasons - have never made it out of the ranks of the semi-pros, decide that they can't do it at all. They just don't want to play anymore. Some will leave the workforce; others may leave the area in hopes that they can find a new team or a whole new game elsewhere.

The workforce system in Silicon Valley must adapt to meet the needs of all these groups of players. Unfortunately, we have far to go along the road of systemic re-engineering to address these major changes. We do have some ideas of where to go on that road. It is clear that, no matter how we go about doing it, there is a common path to success in the new economy. It involves job seekers, counselors, one-stops, and the entire workforce system. All of these groups need:

1. To know what makes an economy work and how they can be successful at taking the next steps. Labor Market Intelligence, Career Ladders, and industry cluster analysis all fit in this stage.

2. To believe that they can be successful in taking that next step. This is why our counselors are often the "brokers of hope." They help folks understand their capabilities and to build the willingness to take actions. Included in this area also would be the Career Ladders/Lattices which individuals can understand the pathway to a goal that they otherwise could not aspire to attaining. An attitude adjustment is sometimes required. Those who were used to being hot commodities in the gold rush tech boom years must understand the need to shift gears, to stay up-to-date, trained, and sharpened, even if what they were doing before was highly lucrative.

3. To be appropriately resourced to accomplish their mission. For Silicon Valley in 2005 this means the "training capacity" that is available and responsive to adults in transition and to the workforce who may be preparing for their next job or career. This element is crucial – with the extremely high cost of living in Silicon Valley, people cannot afford to spend too much "down time" in training, for fear of losing their mortgages. Meanwhile, some employers experience great difficulty recruiting and retaining the qualified workforce that they need. Hospitals, for example, are starved for trained and qualified nurses and cannot hire more fast enough to meet their needs.

4. To feel appropriately supported in their search for new possibilities. This means broadening the network of support available to job seekers, to include not only counselors, but other job seekers or established professionals in their field or related fields into which they might like to transition. These networks help people find out what they don't know, make connections they don't have, and create visions that were before unseen. They can help encourage people to maintain skills and push each other to keep up a competitive edge. If training and networking are not enough, often individuals need coaching from experts so that they don't invest their time and energies in strategies that are counter productive.

5. To want to make the changes. Often the reality job seekers face entails significant reductions in pay, employment status and/or future job security. It often requires starting over, which is different for a 25-year-old than a 65-year-old. Our experience is that those that are willing to make the change and understand economic realities are most often able to do so. However, many are also unwilling – these people sometimes drop out of the job market, or visit our one-stop day in and day out without success. They are sometimes the most bitter, as they believe that the "contract" they had was violated when someone "moved their cheese."

The way we work in Silicon Valley and the nation is changing fast, and the pace of change is only accelerating. Here, we are already playing catch-up with the needs of an economy and a job seeker population that we might not have anticipated even five or six years ago. Maybe – just maybe – if Silicon Valley continues to be a weather vane for the direction of the US economy, our situation can help those of you elsewhere in the workforce system who may just now be seeing the leading edge of these phenomena in your community. Our esteemed furry colleague in the east, Punxsutawney Phil, saw his shadow a short while ago, predicting a prolonged winter for the nation. We're seeing shadows here on the West coast, too, but we do not plan to crawl back into our holes and hibernate. We know that significant work must be done in our communities if we are going to continue to enjoy the quality of life we have grown to expect – a worthy challenge for us all.

About the author: Mike Curran has been the Director of NOVA (or North Valley Job Training Consortium) since 1986. NOVA is located in the heart of the Silicon Valley, California, and has continuously been challenged by the rise and fall of business opportunities, the constant churning of the workforce, the substantial workforce transitions caused by the evolution of the knowledge-based economy, the deployment of distributed networking and production, the advancements in high technology and manufacturing, the birth and death of industries and businesses, and the creation/elimination of hundreds of thousands of jobs.

NOVA was the recipient of the 1992 Presidential Award for Outstanding Training Program in the nation for its innovative efforts serving dislocated workers, and was selected for the 1998 National Enterprise Quality Award as the one organization that best demonstrates both superior results and rigorous application of the Malcolm Baldrige Performance Excellence criteria. Mr. Curran himself was recognized in 1995 as the "Job Training Professional of the Year" by the National Alliance of Business.