My name is Marcia Stein and I am a Human Resources professional in the Silicon Valley. I'm concerned about our economy - are you? I started this page mid-2003, and some things are better, some worse.

Our unemployment rate is high, jobs are going offshore and operational costs are rising in the U.S. for a wide variety of reasons including out of control insurance costs. Unless we pay attention and start to make some noise - it's only going to get worse.

We've seen our national debt go up, almost every state has budget problems and cities are suffering. When people are unemployed, the tax base just isn't there to take care of all the basics and extras we've become accustomed to. Taxes and bond measures are likely to pass while services are being cut - we'll be paying more while we have lowered salaries and that means less disposable income.

It's gotta stop.

We sponsored an open event for the community May 18, 2003 in San Jose, CA to make a statement and call attention to unemployment and underemployment and the ravaging effects on our economy. If you'd like to read my email for the original rally, please click here for a PDF file.

Marilyn Messer, Ewa Kalman and I met to strategize and plan future events, and Diane Nelson worked on PR.

We planned a public brainstorming session for July 13, 2003.  We invited the public, the press and local politicians - none of whom came.  It was our intent to utilize the brainpower in the Silicon Valley to think of ways to stimulate the economy, talk about new ways of doing business, and discuss what we could do to improve the situation.  Please click here for a press release. Elected officials were invited to attend and speak.

What have we learned so far? We've seen that people do care about the economy, that they are not likely to show up in person to talk about it, and that it may be more comfortable to ask for ideas and opinions in other ways.  So keep checking in - we're planning another approach.

I'd like to give you a few things to think about. This website will address the following topics:

1.  How'd we get to this point
2.  Here are some statistics.
a. Tracking Unemployment Claims and Statistics
b. National Unemployment
c. Silicon Valley Unemployment

3. Why the unemployment statistics don't show the whole story
4. Insurance
5.  Cost-cutting trends from 2002
6. Outsourcing
7. Employment visa process (H1-B and L1)
8. Technology and Unemployment - why it matters even if you're not in technology
9. "Jobless Recovery"
10. What are we going to do next?
11. And this thought - good things about building a business now
13. Comments, feedback and ideas

1. How'd we get to this point, anyway? I have a few ideas and you can read them here.

2. Here are some statistics...and why they're probably not the whole picture.

a. Tracking Unemployment Claims and Statistics:
The Department of Labor weekly Unemployment Insurance Claims website offers information broken down by states.

b. National Unemployment
As of June 6, 2003 nearly 9 million people are unemployed nationwide. According to MSNBC's article on June 6, 2003, the long-term unemployment rate is now at highest level in 20 years. "More than three million Americans considered 'long-term unemployed' - out of work 15 weeks or more. Nearly 38 percent of the unemployed now fall in that long-term category - the worst long-term unemployment problem in 20 years."

The San Jose Mercury News, May 22, 2003 noted that in the last 3 years, 2.6 million private-sector jobs have vanished, and Santa Clara County cut 239,000 positions.

Parade Magazine's March 14, 2004 article noted: "The nation has lost 2.3 million jobs since 2001. Job creation has been weaker than in any economic recovery since 1945:

• Some 22% of the 9 million Americans out of work last year were unemployed for six months or longer—the highest level in 20 years.

• Almost 4.5 million people worked part-time because they couldn’t find full-time work.

• Layoffs were 26% higher in January 2004 than in December 2003.

Job creation finally picked up last August, but mostly in lower-wage positions. And when unemployment figures fell—as they did last December, going from 5.9% to 5.7%—it was only because so many discouraged job-seekers gave up looking, according to U.S. government data."

c. Silicon Valley Unemployment:
Per the San Jose Mercury News, May 22, 2003 - the unemployment rate was 8.5% in San Jose. This paper noted that as of May 10, 2003, the number of jobs in the Santa Clara County was 876,400, the lowest number since April 1996. The number of unemployed people in April 2003 was 76,700, 8.3%. And in the paper on May 2, 2003, we lost 200,000 jobs in the past 2 years. {Keep in mind that during the boom people moved here from all over the country, all over the world. Our unemployment rate was less than 2%.} In April 2003, Silicon Valley Manufacturing Group's President & CEO Carl Guardino wrote that 191,500 jobs had been lost in the last 24 months. He wrote that number was more than every man, woman and child in Mountain View, Palo Alto and Cupertino combined. Due to the downturn, as of May 2003, the Silicon Valley has more than 40 million square feet of office space available for lease.

The San Jose Mercury News reported on March 17, 2004 that the number of workers who exhausted their unemployment benefits in January were: 3,240 in the San Jose area; 10,140 in the Bay Area; and 59,634 in California. The region's legislators used this data to push for extending unemployment benefits at least another 13 weeks.  Such an extension would cost about $6 billion. We're all paying dearly for continued unemployment.

3. Here's why the unemployment statistics don't show the whole story:
The Department of Labor tracks the people currently receiving unemployment benefits. Once you use the maximum benefits, you're no longer counted. How about when you receive benefits and take just any job, maybe at 1/3 of your previous salary - you don't show up in the stats. The Silicon Valley in particular, but other regions were also utilizing independent contractors, paid individually on a 1099 basis, and none of those contractors were ever counted by the DOL. And if you take a part-time job, you're underemployed, or you've simply given up - you don't count.

4. Insurance:
According the San Jose Mercury News article on May 15, 2003, 41 million Americans are uninsured. Worker's Compensation Insurance has increased significantly and the cost of providing medical benefits has increased 20-30% over the past few years. That means higher operating costs for businesses and they are passing along the costs to employees in the form of higher co-payments and higher contributions to the plan.  All of this means less money flowing into consumer spending. We need laws to protect the cost of doing business and enable people to have reasonable insurance at a reasonable cost.

Parade also noted in the March 14, 2004 issue that employer benefits are decreasing, and more than 43 million Americans have no health insurance - even if they are middle-class and employed. With this many people lacking insurance, the people contributing to the insurance pool and the medical facilities and providers are carrying the financial burden or deciding to reduce services.

5. Watson Wyatt studied trends from 2002 and found that 8 out of 10 employers used at least one of the following budget-cut tactics:

53% of employers cut staff
46% cut budgets for raises
46% froze or greatly reduced hiring
38% increased employee contributions for benefits
21% eliminated or severely cut bonuses

6. Then there's Outsourcing:
CNN Money had an article about outsourcing:

"By 2004, more than 80 percent of U.S. executive boardrooms will have discussed offshore sourcing, and more than 40 percent of U.S. enterprises will have completed some type of pilot or will be sourcing IT (information technology) services," Gartner Inc. (IT: Research, Estimates), a technology consulting firm, said in a study late last year.

'Over the next 15 years, 3.3 million U.S. service industry jobs and $136 billion in wages will move offshore to countries like India, Russia, China and the Philippines,' Forrester analyst John McCarthy predicted in a report last year. 'The IT industry will lead the initial overseas exodus.'

NASSCOM predicts that the Indian 'business process outsourcing' industry -- a narrow category that includes customer-support call centers -- will export $21 billion to $24 billion worth of services by 2008 and employ more than 1.1 million Indian workers."

Can we really afford to send all those jobs and money overseas?

7. Let's make a point about abuse of the employment visa process:
When I arranged a rally in 2003 to call attention to our problems, I received many emails about the abuse of the H1-B and L1 visas. The U.S. Department of Labor Employment & Training Administration has disclosure information about H1-B visa applications. The problem with this website per a DOL representative is that it only reflects applications, not visas that move past the application process. Many were withdrawn or never used. It also does not show how many people have returned to their native countries. Nor does it reflect the number of people out of status - those who were laid off and are seeking other work or just waiting and hoping for some way to stay in the States.

The New York Times had an article about the L1 visa.  They noted: "Unlike the H-1B visa, the L-1 does not require employers to pay workers prevailing wages. In addition, there is no cap on the number of L-1 visas."  The San Francisco Chronicle had an article about L-1 visas on May 25, 2003 outlining some of the problems with this visa.

USA Visa Gateway, regarding the H-1B, noted that "The INS reported that 60,500 H-1B visas were issued between October 1, 2001, to June 30, 2002, down from 130,700 in the same period the previous year; another 18,000 requests for H-1Bs are pending. Additional H-1B visas were granted to foreigners requested by educational institutions and nonprofits. The annual limit is 195,000, but is scheduled to revert to 65,000 in FY03; some 163,200 H-1B visas were issued in FY01. Most estimates put the number of H-1Bs in the US at 400,000 or more, including 20 percent in California.

There are more DOL investigations of firms that bring H-1Bs into the US without jobs, and then fail to pay the H-1Bs when they have no work, a practice called benching. The American Competitiveness and Workforce Improvement Act of 1998 outlawed benching, but DOL did not issue regulations implementing this provision until January 2001."

There are websites claiming to know how many H1B's and L1's are being used, but since the government doesn't know - how can anyone else know? And as you can see from the statistics about jobs being cut or outsourced overseas - not all of the jobs are going to foreign workers.  That said, businesses must stop abusing this process.  It's bad for American and foreign born workers - they are sometimes subjected to lower pay and longer hours and they can't say anything if they want to stay in the States. They can be cheated out of money and denied basic work rights. Do you think this is right?

8. Technology and Unemployment - why it matters even if you're not in technology:
A significant portion of the U.S. economy is tied into technology companies. There are many professionals in this industry and countless investors counting on technology stock for investments: personal portfolio, 401(k), IRA's, money market funds, and pensions.  Companies invest in other companies - start new technologies, invest their own funds. When the technology sector isn't working, it impacts global economy. And when there is massive unemployment or underemployment (part-time jobs, work at a significantly lower rate), there is a lack of discretionary spending money. And that fuels or stalls our economy.  

The San Jose Mercury News noted on March 19, 2004 that the city of San Jose's budget deficit is $85 million. The city may lay off as many as 200 people, and they are looking at new bills and increased fees for services, in addition to cutting back on services. The state of California is facing a $12 billion shortfall next year.  Whether it's increased fees for services, increases in property tax, or added state and local taxes, we'll all pay.

What's going to happen to our society if we don't change?

9. "Jobless Recovery". Huh?
Please point me toward the person who thought that one up! Millions of Americans do not have health insurance. Nine million people are unemployed and countless others are underemployed in lower level jobs, different occupations and lower salary.

The March 14, 2004 Parade Magazine noted: "Some 3.3 million jobs are expected to leave the U.S. over the next 12 years, including positions in computer programming, law, architecture, financial research, tax accounting and medical technology, as well as call-in center and data-entry jobs."

When people do not have enough money for the basics, they are not going to spend money on: bond measures for schools, movies, theater, ballet, orchestra, plays, amusement parks, basic daycare, summer camp for kids, lessons for children (martial arts, music, dance, etc.), gaming machines and games, PDA's, computers, printers, new hardware or software, manicures, shopping, dining out, cell phone/service. Multiply that times 9 million and let's throw in another 3 million who are underemployed or who are worried about their jobs and not spending.  You can see the ripple effect on other businesses.

When companies cut employment in the States, they then wind up with fewer IT needs.  Less corporate spending = cuts to vendors, companies that make software, hardware, hubs and routers and any other business needs you can think of, including employees.

With unemployment and underemployment, we have a lower tax base and a larger budget deficit.  That means we cut services: everything from trash pickup to Medicare.  And we increase taxes. We're looking at parcel taxes and in Santa Clara County - we're facing the possibility of a 9% sales tax. (Doesn't that make you want to shop here?) Many small businesses have closed and many are hanging by a thread.  There is anger and backlash from unemployed workers and dissatisfaction and fear from employed workers.  There's the possibility of unionizing tech workers which may encourage more companies to close, downsize or move more parts of the business offshore.

The San Jose Mercury News noted in their article on June 10, 2003 that San Jose faces "a general fund shortfall of $77 million to 81 million, depending on how it's calculated, and probably millions more once the state budget is approved."  Many other cities are also suffering - how much more can we cut services and employees?

10. What are we going to do next?
We've got a lot of work to do and need creative and dedicated people to do it.  We have to stop the skyrocketing cost of insurance, make government rules and regulations that are more business-friendly.  We have to put a lid on outrageous salaries.  Maybe we need tax incentives to keep employees here. How about deductions for small businesses to cover the cost of insurance?

We need to build a team of thinkers, movers and shakers.  We need not minds with great ideas and the clout to work on them.

11. And this thought:
This is a great time to build a business!  You can negotiate a favorable lease.  We have a ready and experienced workforce.  There's a great pool of talent from our universities.  We have built businesses before, we understand pitfalls and have grown as a result.


We must call attention to this problem and it's imperative to have top businesspeople and our elected officials onboard.  Fixing our economy must become a top priority.

What will you be doing to call attention to this problem?  What are you willing to change? What are you ready to sacrifice?  What can you contribute?  As Ewa has reminded us, we do not need to feel helpless and we do have some power. How about:

  • Writing letters to the editor
  • Being a guest columnist for business and news publications
  • Making television appearances
  • Guesting or calling into radio talk shows
  • Call, write or fax public officials
  • Show up for rallies

13. If you have comments, feedback, or ideas please click here. Please keep in mind that unless you provide me with your email address I cannot reach you.

"When you get into a tight place and everything goes against you, till it seems as though you could not hold on a minute longer, never give up then, for that is just the place and time that the tide will turn."

-- Harriet Beecher Stowe, 19th c. American novelist

Last modified February 12, 2005

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