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March 5, 2009
Economists are predicting that when the government releases its report on Mar. 6, that payroll employment will have declined by the largest amount in 60 years. In an article published today in BusinessWeek, Brian Fabbri, chief economist for BNP Paribas told my colleague Peter Coy that he estimates the unemployment rate will hit 8% in February. “I’ve gone through a number of cycles as an economist on Wall Street, but this one’s different,” he said, adding, “This one’s scary different.”
That may be true for sectors such as retail, construction and finance but as of January 2009 technology sector jobs were faring better than they did after the dot com bust in 2001. “Then, the unemployment rate of tech workers was over 7% and now it’s at 4.8%,” says Tom Silver, senior vice president and chief marketing officer at Dice.com, a technology job board. [Update: Unemployment is now at 8.1% for the general economy and 5.4% for tech professionals, according to a new report from the Bureau of Labor Statistics released Mar. 6]
In San Francisco, after the bubble burst in 2001, it was keenly felt in neighborhoods like South Park, formerly home to Wired Magazine and many Web companies. In fact, the bust was so deeply felt in this neighborhood and morale was so low that Lisa Meckler, one of the original employees at Wired, scattered tumbleweeds throughout South Park in February 2002 to make a point. The photos are here. At a party this past weekend in San Francisco, Web designers who work near South Park generally agreed that while the economy is frightening, the tech sector is not tumbleweed-bad yet. To be sure, there is some bad news, like an expected decline in desktop PC shipments of 31.9%. But, for many, it doesn’t feel quite the same as 2001.
Lane Becker moved to San Francisco at the end of 2001 to work at Adaptive Path which mainly did Web design in those days. Back then, Becker says it was much easier to find parking around South Park. Today he is president at Get Satisfaction — a Web-based community for customer service – located at the southern tip of South Park. He says that this past Fall when the economy started to get rough, he thought, “here we go again.” Yet, Becker has changed his mind and now says he thinks the Web will do o.k. mainly because many businesses are looking to the Web to increase efficiency and cut costs.
He says that the joke in the neighborhood is that you can tell the state of the industry by how long the line is at Caffe Centro, a café in South Park where the technorati fuel up on lattes. During the bubble, the line got much longer. “When the line got out by the picnic tables, then you knew it was time to sell,” he says. Today that line is just to the door, maybe a little past. Caffe Centro is still buzzing with activity and, so far, the tumbleweeds haven’t returned.
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