In SIlicon Valley: Profits up. Employment Down.

popo writes "The New York Times (free yada yada) has an interesting report on the changing landscape of Silicon Valley tech companies: Profits are soaring but employment figures are not. This dynamic points to significant future shifts down the road for Silicon Valley companies like Electronic Arts and Cisco. Interestingly, the culprit isn't just outsourcing. Huge leaps in worker productivity and automated processes are also responsible for the decreased need for new labor."

Comments

Mandatory overtime

[EWIPlayer]

Not to mention the recent trend (last 5 years or so) of mandatory overtime... If everyone works the equivalent of 1.5 people then employment doesn't need to go up. Profits are starting to match effort level, and that effort level will just equal burnout eventually. When that happens, employment will go back up or profits will start to go down.

Re:Mandatory overtime

[zerocool^]

If everyone works the equivalent of 1.5 people then[...]

In the Sysadmin world, we call this .5 of a person "shell scripts".

It's a dichotomy - you get really good at shell scripts so that you can make your life easier, take care of some of the tedious stuff automatically, and then they expect you to fill your free time with more work! Whatever happened to "if I'm smart enough to make the system work for me, I deserve to do less work"?

~Will

Re:Mandatory overtime

[bwalling]

The idea that hours equates to productivity is ludicrous. As long as you get your stuff done, it shouldn't matter to your employer how long you work. My wife took over a job that took the previous person (actually, each of the last three) 70-80 hours per week to do. She was able to get it done in 40-45 hours. Her employer was thrilled. The point isn't how long you work, but whether you get your work done.

Re:Mandatory overtime

[EWIPlayer]

My favourite T-shirt in my collection says, "Of course I don't look busy. I did it right the first time.".

But you're totally right. I've written tons of scripts and cron jobs in the last 5 years, yet i still work 9.5 hours a day on average. Where's my raise? :)

Re:Mandatory overtime

[malkavian]

In the long term, it's more likely that profits go down. I've seen this mentality before. Push people to the limits to make more profit.
In a tech team, one guy falls due to burnout, which means that load is spread around the remnants of the already overstressed team.
New guy comes in to learn the code/system, so the whole job needs doing, and new guy needs to be taught (if he's going to be any more use than a chocolate teapot).
Which leads to a second member falling, as there really is too much to do, and now less time to do it.
Which leads to another new guy.
More than once, I've seen this take out a whole team as management keep moving stuff onto the remaining originals who know the system, or the new guys who sometimes walk out one day and don't come back because of ridiculous pressure.
Eventually nobody knows the whole system, or can use it all effectively.
Then the product dies a long and messy death, possibly taking out the whole company surrounding it.
Net result, lots of job losses.

Working in the areas I have so long (systems and networks), I find it really odd, how companies are running around yelling "Resilience, reliability.. We need everything able to withstand emergencies", and buy two of every server, RAID the disks, redundant routing, offsite backups..
Yet they have their tech team cut to the bone, with highly compartmentalised skills.
One leaves, and for a significant time, they're shafted in one area (at least).
There was a very good reason companies always used to have more staff than was strictly necessary to complete a task.
It wasn't just morale, and making the job comfortable enough that people wanted to stay..
It was for the ability to obtain an "emergency tolerant" skillset.
You could lose a good few staff from any area, and your knowledge base wasn't significantly impacted.

All this 'on the edge' company structuring isn't sustainable.
And by the time the West has finally come full circle, and discarded all the bits that have cost if a fortune in the long term as it's chased short term gain for a few decades (until it can't get any more short term gain, and they hit the wall), they'll be facing a fully geared up Asia and China, who have taken the long term view, with fully staffed and skilled departments who can outmanoeuver and outperform any Western company going..

Re:Mandatory overtime

[el_womble]

This irks me. If somebody employees me to create a tool for them I am happy to do so and will hand it over to them copyright an all. If somebody employes me to do something for them, and I choose to automate that task using a tool, using skills that I have aquired to build that tool, then the tool should belong to me, not that company - so when I leave that company the tool leaves with me. Otherwise where is the bean counter incentive to keep me on?

I once had a job in a call centre for Dell (groan). They job was tedious. I was told I had to take data from a disk, print it out, then input it into a seperate program. They employed me as a call centre grunt, so I wasn't getting paid geek wages. I created a macro, and did a weeks worth of work in under an hour (the restriction was bandwidth). What am I ethically obliged to do in that situation? I tried telling my super, but they weren't interested as it threatend their jobs. In essence I had made myself, and my coworkers redundant in a little under a morning. Should I ask for more work when I was already doing more than they were employing me for? When I left I took the macro with me.

Re:Mandatory overtime

[digidave]

It's one thing for a single male like you to say that, but try working 80 hours a week and remaining a good husband and father. It won't happen.

The main point that the GP didn't quite make isn't that a person can't work an 80 hour week, but that consistently doing so results in burnout and a less productivity. Very few people can work 60 - 80 hours a week for five years. It's not just that the extra 20 - 40 hours per week will be less productive, but that the first 40 will be as well.

It's one thing to call someone lazy because they don't like work, but quite another to call them lazy because they don't want to spend every waking hour at work. For most people, work is not their lives.

Re:Mandatory overtime

[asdfghjklqwertyuiop]

it is a misdeed
how all your sentences
end with a linefeed

sort of like prose
perhaps your intention
or not i suppose

:)

Re:Mandatory overtime

[tourvil]

The idea that hours equates to productivity is ludicrous. As long as you get your stuff done, it shouldn't matter to your employer how long you work. My wife took over a job that took the previous person (actually, each of the last three) 70-80 hours per week to do. She was able to get it done in 40-45 hours. Her employer was thrilled. The point isn't how long you work, but whether you get your work done.

The problem is that at some of those companies that require overtime, if you are getting your work done in 40-45 hours, then they just give you more work.

Last year I left a job like that. When I started (before they required overtime), I didn't mind the thought that I may have to work extra during crunch time to get the job done. The problem was that the company started mandating a minimum of 48 hours from everyone. So if you were someone who could "get the job done" in less than 48 hours, then management figured you weren't getting enough jobs.

There was also an expectation that with more senority and skill, you should be working more and more hours, and they would plan projects for you as such. My boss actually told me (during a time when I was working 55+ hours) that by leaving at 5:00 most days, I was setting a bad example for the newer guys. This is in spite of the fact that I was coming in early and working weekends...

Needless to say, I am now happy working in my new 40 hours-per-week job. :)

Re:Mandatory overtime

[GoMMiX]

120 Hours in a 5 day work-week.

80 Hours worked.
10 Hours drive-time. (30 minutes to, 30 minutes from)
10 Hours maintenance time. (shower, shave, whatever)

That leaves 20 hours to sleep. What about your family? Wife, kids? Yeah right!

Sure, an 80 hour workweek once or twice a year can be ok. Really, it's bull -- but tolerable. The employer SHOULD be responsible for managing their resources better to prevent such things - or be forced to pay mandatory overtime (which Bush saw to it that doesn't happen - specifically for IT people).

But it's not just one or two weeks a year. It's EVERY week. I've worked at one of these 80-hour-week companies before. It's all promises and lies when you're being hired on - then you are slowly introduced into the 'emergency' firefighting atmosphere and before the end of your first month you're on STEADY 70-80 hour work-weeks.

Anyone who has worked these insane hours for prolonged periouds can tell you the things that happen to your body and your life are cruel, to say the least. Cruel, very cruel.

The first thing you notice is memory loss. Constantly losing things, can't remember what you worked on earlier, sometimes you can't even remember what PROJECT you are CURRENTLY working on. You start forgetting peoples names, etc.. Your family? HA! Just a distant memory, they don't even come to mind.

Eventually, you end up with this glazed look on your face. These are the people you can tell a great joke too and they won't get it for several minutes - and even then probably won't laugh because they don't have the energy.

Bush saw to it IT people could be abused like this, now the US Government scrables to get enough IT people in the military.

Most of my friends have moved to other COUNTRIES to work, because working in IT in the US is a joke. Unless you are among the lucky few - your job belongs to an H1-B visa worker, invloves insane overtime, or involves being in another country. And I must say, many of my friends work in Japan now.

That or they've gone for a career change. Which is what I'm doing right this moment. I'm working with my old college counsellors to work up a masters in education. Yaup, I'm going to teach.

Sure, I'm not going to get rich teaching - but I will get to spend time with my family -- my son. I'll have two solid months off during the summer, I _will_ have Christmas off. I won't have to attend my sons birthday parties via telephone call.

$50,000 a year starting is awesome for me.

I must say, 10 years in IT has tought me one thing -- free time IS more important than making more money. I'm going to live my life, rather than working massive overtime so some genocidal executives can have more money.

One day these people will be exposed for the trash they are, and I hope they pay dearly.

Re:Mandatory overtime

[James Youngman]

It was for the ability to obtain an "emergency tolerant" skillset.
You could lose a good few staff from any area, and your knowledge base wasn't significantly impacted.

An important metric for any software project is its Truck Number. This is the minimum number of your staff that would need to be hit by a runaway truck hitting a bus queue in order to completely derail your project.

So, if your project truck number is 2, you could afford to lose one member of staff due to a random event (sickness, quitting, etc.) but not two.

The real question

[Mad Merlin]

Where are those profits going? To the low level workers that actually make it happen, or to the CEO who is already wildy rich? I wouldn't be surprised to see wages not going up for the majority of workers despite increased profits.

Re:The real question

[the eric conspiracy]

Where are those profits going?

While CEO salaries are going up faster than lower level workers, the CEO salary is a cost to the corporation subtracted from the calculation of the amount of profits.

Corporate profits are used in a number of ways - funding acquisitions, paying dividends, buying back stock, etc. Generally profits end up in the hands of the stockholders in the form of increased dividends or stock value.

Spreading outside Santa Clara County

[eltoyoboyo]

A significant number of tech people were never attracted to the area since the cost of living increase exceeded the salary increase. Companies have moved to spread their tech base outside the main "Silicon Valley" proper. The jobs have spread up the East Bay to Sacramento, while headquarters remained in the Silicon Valley area. Jobs have also spread to other outlying cities. With the advent of cheap broadband in rural areas, software engineers and project managers can live anywhere from Alabama to Oregon and maintain a nice home instead of two bedroom apartment.

Technology makes things easier and cheaper.

[Anonymous Coward]

Same thing happenned to machinists.

You start off with a blacksmith. Lots of them are needed to do anything and it costs a lot and they are highly skilled and treasured.

Then the blacksmith learns to build metal bending machines. You take a bar, put it in the machine, pull hard on the lever and it bends.

Thus it makes more complex devices easier to build. The blacksmith becomes more highly educated, more refined. Becomes the inventor.

He uses the metal bending machines to build complex machines. shavers, benders, cutters, drills, and such. Those in turn make making more and more complex machines that are larger, stronger, and at the same time more exact and easier to use.

Then comes interchangable parts. Things that took generations to figure out, years of discipline hard work to learn how to build, can now be built in previously unimaginable large numbers AND be more exact AND be made by semi-skilled labor.

Then they build entire factories. Machines the size of apartment complexes. Things so automated and exact that it boggles the mind.

Were is the place for the original blacksmiths that started all this? No were. All you need is a highly educated guy at the top doing the design, and somebody with a IQ hirer then a 105 to stamp out the molds and feed the machines the raw materal.

Such is the same thing with the programmer.

The original blacksmiths were the guys that took individual transistors and designed thinking machines. They used wires coated in varnish and wrapped around metal pegs to build curcuits.

They developed their own languages to go with the custom machines.

Then along came wide use of intergrated curcuits. Discs and memory to store instructions. Machine language became well understood technology and people built and documented assembly.

Then you had standardizations happenning. Fewer new unique machines were built and ones that were created were built with a eye on backward compatability with previous generations of computers.

Then along came C and Unix to make realy portable programs. Fewer and fewer machine archatectures were built, with standardized abstractions and ISAs for compatability.

All the computers resembled each other in operation and performance. They became faster and faster. Software that was not portable became obsolete as soon as it was finished written.

Now we have a few archatectures. They resemble each other closely in theory and executions. Portable software is the norm. Nobody fucks around in assembly unless they absolutely have to and that's avoided as much as possible.

Nobody is hand-making curcuits. Nobody is building memory from hand or wiring up peg boards. It's all done thru IDE's and thru standardized libraries provided by large monolythic system developers. The computer is disposable and faster then ever, the software can be gotten from the internet in minutes and new programs can be written in weeks that would of taken years to accomplish just a couple decades ago.

That's how technology works. It makes doing complex things very easy.

A person can go into Enlightenment 0.17 or use Python with Gstreamer framework to build a DVD player with fewer then 100 lines of code, and have it run on AIX, PPC, ARM, x86, x86-64, IA64, Sparc and others with almost the same level of effort.

7 it was very expensive just to have a computer that could even play DVDs.

Designers/Administrators get paid

[putko]

From reading this, and another article by Richtel about US mom and pop businesses outsourcing their manufacturing, it seems that people who run things or design things still have jobs. That's just not many people.

The assembly has moved to China. You probably don't want those jobs anyway -- when they were here they were lousy jobs, but now they are unthinkable (unless you like breathing lead). Design and prototyping still gets done in Silicon Valley.

Even so, actual engineering is moving to Taiwan. Imagine you want to make a board. The assembly guys (Chinese, in Shanghai) need to talk to the engineer and ask some questions about a substitution. Better if he is Chinese in Taiwan, right?

Even more disturbing (as a non-Chinese-speaking American) is that actual innovation (the stuff we are supposed to be good at) is getting done in Taiwan. E.g. stuff that allows a cheapo processor to have 5 fast ethernet interfaces. Your routers were probably designed in Taiwan, and labled "Cisco" or "D-Link". But Cisco didn't design it -- it was probably someone like these guys: Zyxel (Taiwan)

Americans need to lose the laziness and start working harder (if they want to be able to pay for enough gas to fill a SUV). This is inevitable. As long as there was no China, the Taiwanese could make decent money on the bottom. Now that Red China is here, they are getting pushed up; they have to do fancier work, or they will live like the Chicoms.

If the Africans ever get their act together, their wages will be lower than the Chinese, and that will be it for the rag trade. North Carolina will not make any textiles/clothing at that point.

Re:Designers/Administrators get paid

[drsquare]

So the 'bread' that americans get for their efforts, and through the efforts of their ancestors, should be given away just because other people don't have bread?

They didn't get the bread through efforts. They work no harder than anyone else. They only get it because of where they were born:

1. American works, gets large loaf of bread.
2. Malaysian works harder, gets tiny slice of bread.
3. Company decides instead to give more bread to the Malaysian.
4. American sits on the dole wondering why the gravy train's dried up.

The world is equalising. No longer will you get guaranteed a higher standard of living and massive wages just because you're born in the right country. And that's a good thing. Unless you're biased because you're an American, but tough shit. America has never given a shit about the rest of the world, and now you're crying because the rest of the world doesn't give a shit about you.

Chicken little on line two

[Reality Master 101]

Sheesh, I already see "greedy bastard" comments and "this proves the economy is in the toilet! Whaaa!"

Why does anyone believe Silicon Valley represents the economy as a whole? SV was unbelievably inefficient during the dot bomb era. It's never going to be like it was.

Quick story: I was involved in a company that got $19 million in VC capital. What did they spend it on? Employees. Lots of employees. What were they supposed to do? The idiots in charge didn't care what they did -- they just wanted to grow as fast as possible, and give the illusion of a large company so they could go public. This was the thinking during that period.

You can't use SV to make ANY predictions about the overall economy. That area is too screwed up and too overpopulated.

We're talking about different stuff

[Moraelin]

As far as I can tell, your argument basically seems to be "if I do the same job in 2 hours (yes, via scripts or whatever) that a bad worker does in 8, I should get the rest of 6 hours free". Which is a strange request, seein' as it basically asks to set everyone's job requirements to the slowest possible worker.

It's not how any other job works, nor how progress happened. E.g., the reason we have an abbundance of consumer goods today is that, yes, we can produce in 8 hours _more_, say, cloth than a 16'th century weaver could produce by hand. If the line of thinking had been, "yay, I produced 10 ft worth of cloth in 10 minutes, that someone would have needed all day to make by hand, therefore I can go home after 10 minutes" we'd still be living in the 16'th century kind of poverty. We'd have lots of free time, but wouldn't be an inch closer to having today's standard of living.

Anyway, when the rest of us rant about overtime, we don't mean "waah, but they make me work a whole 8 hours a day." What we mean is more along the lines of having to work 12-14 hour days, 7 days a week.

E.g., since Electronic Arts is mentioned, I can't help remember the recent story (you know, the employee's wife's blog) about EA over-working its employees to the maximum. In fact, until some of them couldn't even focus any more. And they were demanding that kind of hours not because the project was desperately over the deadline or over the budget, but from the start. Just because some greedy fuck figured out some version of "muahahaha, so I can get more than twice the work out of them for the same money. And if they burn out afterwards, who the f-word cares about them?"

I find it inherently abhorrent to read about EA bragging about profits and _reducing_ the number of jobs, while demanding that kind of massive overtime.

Now I can see some excuse in asking for short-term _temporary_ over-time to save a project in the final stages, or until more people can be hired to handle the unforeseen load. But actually planning to _fire_ some more, because, hey, you can overwork the rest to make up for it (and then fire them too when they get burned out), has a certain slimeball quality to it.

Re:We're talking about different stuff

[Atragon]

I think the point is that because the person in question is working smarter, why should he wind up getting paid the same as his co-workers while being more productive?

I don't think anybody is arguing that we shouldn't increase productivity, the argument here is that finding an innovative solution to a problem thus increasing your productivity should be rewarded.

If you have an environment in which working smarter merely results in you doing more work for the same pay as the people who are doing less work where is the incentive to be more productive?

That's fine, but....

[King_TJ]

As a "30-something" myself, and realizing I have practically no savings - I think the problem runs a little bit deeper than "skipping the purchase of that 60" plasma screen".

I know a surprising number of guys like myself, who worked hard in our 20's and started "getting ahead" in I.T. careers, only to start back at the bottom due to divorce. These often lead right into being forced to file for bankruptcy, compounding the problem.

My 401K savings was wiped out with legal fees, and I haven't been able to get another job that even offers one since then.

It's fine to talk about wealth being more "widespread" due to things like 401K's and mutual funds, but those of us who primarily work for smaller businesses don't often get in on any of that. You hear a lot of talk about the small businesses being the "real future" and "cornerstone" of America - but working for them seems to rarely connect someone to any of this wealth that's supposed being "spread around".

It's called an 8-hour work day.

[Inoshiro]

The problem is that, by and large, the software industry is stupid.

If you work a 9.5hr shift regularly, you are not as productive. If you had just worked 8 hours, you'd notice that you'd do about as much work as in 9.5hr. That extra 1.5hr of labour at the end of the day, a day where you are already tired of work, and likely to make mistakes, is not good. At first you gain a benefit, but then the lack of leisure time cuts into sleep.

At that point, you arrive for work less rested, and productivity keeps declining from there. You can't recover. It's why, over the 17th through early 20th century, labour hours decreased. The most recent being when Henry Ford proclaimed that thereafter the minimum wage in his industries would be five dollars for a day of eight hours.

I don't know why there is this huge cult around working long hours, with no vacations, and killing yourself with overtime in the US and in tech jobs. I don't hear about people dieing from stress in th EU, where they have 6 weeks of vacation a year.

"if I'm smart enough to make the system work for me, I deserve to do less work"