As predicted, things are getting worse in Tech, especially for the high-flying "unicorns". Zero Hedge recaps several recent signs of accelerating layoffs and fast-declining compensation packages in Silicon Valley:
Said otherwise, the mass layoffs have arrived.
As TechCrunch confirms, "a handful of job placement executives confirms what recent headlines about layoffs already imply: The market is softening for numerous sectors of the startup world, as well as at publicly traded tech companies."
This means that it is not only the energy/shale sector where well-paid workers (according to Credit Suisse estimates as much as 250,000) are getting wholesale pink slips: the even better paid West Coast tech sector is next.
Numbers from California’s Employment Development Department illustrate part of the story. In October, for example, the Bay Area accounted for 40 percent of all job growth in California, even though it represents less than 20 percent of the state’s population.
Data in December only hints at a shift, with the overall number of employed Californians down just 10,000 from November, according to the same state agency. Still, recruiters largely believe the situation is starting to change, particularly for certain jobs.
“I think what we’re seeing is bigger than a small correction,” says Paul Gomory, an executive recruiter who’s been placing C-level professionals for more than 30 years and seen his share of cycles. “Everyone thinks it will be different this time, but it never is.”
This means that the BLS will be busy coming up with even more ridiculous seasonal adjustments to mask not only the collapsing jobs in the energy sector, but also those resulting from the bursting of the "Zerocorn bubble."
For those wondering why, the answer is simple: the money finally dried up:
Teri McFadden, VP of recruiting at Norwest Venture Partners, believes a slowing funding environment is largely to blame. “I think companies that had planned to grow through acquisitions don’t have the war chest they thought they would,” she says; it’s leaving those professionals with a lot less to do.
There is another problem: as layoffs begin, those workers used to pocketing massive bubble-induced paychecks suddenly taste the bitter reality of real-world wages :
The problem, he says, is, “Where are these people going to go that offers the same level of compensation?” Public company employees don’t have it so great right now, Lonergan acknowledges. In addition to plummeting share prices, pay packages at tech companies are shrinking — by a somewhat surprising 20 to 25 percent from early 2015, he says.
Especially, since, as Mark Lonergan, founder of his own, 14-year-old, Redwood City, Ca.-based executive search firm, says "with private valuations falling more quickly than public ones, it’s just hard to see where these companies are going."
In short, the labor pain, whether in the form of lower pay or simply pink slips, is coming for everyone in the tech space, workers in both public and private firms. In fact, as the chart below shows, for many it already has.
The meltdown of Silicon Valley tech jobs accelerated Tuesday, as Intel announced 12,000 job cuts worldwide and a plan to dump product lines, despite reporting higher profits(...)
(...) Breitbart News has been reporting a string of mass layoffs hitting Silicon Valley technology companies since the first of the year. With growth slowing, big private equity player Morgan Stanley marked down the value of its private equity stakes in tech by 32 percent on Feb. 26.
According to Wall Street analyst Chris Martenson, Silicon Valley is about to suffer a wave of mass layoffs that could be “worse today than back in 2008/9.”
During the Great Recession, laid-off Silicon Valley tech workers could seamlessly transition to other companies that continued to invest heavily in expanding research and development.
But Martenson emphasizes that in the current job market for tech workers, there is “no ready stable of up-and-comers with similar potential to power through a recession.” He believes that the task “those laid-off to find open positions elsewhere will likely be more similar to the 2000 tech bubble burst.”
As a former Silicon Valley worker back then, Martenson remembers being amazed at “how fast [Highway] 101 changed from a crawling bumper-to-bumper experience to an uncrowded freeway. The number of jobs (and thus commuters) that vaporized quickly was astonishing.”
I experienced several feelings from this alert:
further validation of the thesis underlying my 'mass layoffs' article above
pleasant surprise that Breitbart follows PeakProsperity.com & uses us as source material for its articles
bemusement that the journalist who wrote the story mistook me for Chris. I guess even the fact-checkers are getting laid off these days...
Well, good news on getting read/noticed by a large outlet Adam. As people who attended Rowe can attest, you are, in fact, a real person and not an avatar I've created for the appearance of operational depth to this site.
Bad news for all the Intel folks…of course Intel just swallowed Altera in December so a few are probably coming from that…but otherwise this was a literal decimation of Intel's headcount.
It must be because Intel accidentally swallowed some fiction someone was peddling?
We live in a world of opposites… I particularly loved Chris how you coaxed out of Eric Hunsader the story of the IEX exchange and how TPTB in that space had spun the story (so far) to sound like IEX represented the forces of darkness, rather than light. Just amazing… think, "Patriot Act" and you get the picture.
In a world of opposites, growth can only be achieved through contraction. If you don't believe me, maybe the words of Intel's CEO taken directly from the memo he sent to his employees, will help you understand… here's an excerpt;
We expect that this initiative will result in the reduction of up to 12,000 positions globally. This will be achieved by voluntary and involuntary departures, global site consolidation, and efficiency initiatives. The majority of these actions will be communicated over the next 60 days, with some spanning into 2017.
These are not changes I take lightly. We are saying goodbye to colleagues who have played an important role in Intel’s success. We are deeply committed to helping our employees through this transition and will do so with the utmost dignity and respect.
Today’s announcement is about accelerating our growth strategy. And it’s about driving long-term change to further establish Intel as the leader for the smart, connected world.
As we drive this transformation, there is an extraordinary opportunity ahead. We will emerge as a more productive company with broader reach, and sharper execution.
Moody's just released results from its US Fiscal Stress Test covering the largest states in the country.They reported California coming in last in its ability to weather the next recession.Problems include weak financial flexibility,low reserve levels,reliance on the highly vulnerable tech industry and on personal income taxes.So far you have been correct on your tech thesis…And it looks like California is already a day late and a dollar short…
Pink is the most fashionable color in retail these days. Unfortunately, that's pink as in pink slips.
Ralph Lauren (RL) was the latest big brand name consumer company to announce layoffs, saying on Tuesday that it was looking to cut about 1,200 jobs – 8% of its full-time workforce.
That news follows recent layoff announcements from Macy's (M), Nordstrom (JWN) and Walmart(WMT).
Several other retailers – including Gap (GPS), Sears (SHLD) and J.C. Penney (JCP) – have announced plans to shut stores, which could lead to even more retail employees being let go.
And then there are the bankruptcies. Pacific Sunwear and Aeropostale both filed for Chapter 11 protection in the past few months. And Sports Authority is going out of business.
Much of the pain in retail is due to the upheaval in the apparel industry.
According to data from the U.S. government, nearly 13,000 jobs have been lost at clothing and clothing accessories stores in the past three months. Fast fashion upstarts are making life more difficult for some of the older mall-based stalwarts.
And more than 38,000 job cuts have been announced in the overall retail sector so far this year, according to data from job placement firm Challenger, Gray & Christmas. That's a nearly 40% increase from this time a year ago.
Credit Suisse analysts estimated in April that this could be the worst year for retail layoffs since 2010.
