Silicon Valley's Jobless Unplug From Tech

From the Wall Street Journal | Aug 10, 2009

As Region's Unemployment Rises to 11.8%, Above National Average, Clean Energy and Health Care Draw More Applicants

By PUI-WING TAM

SUNNYVALE,
Calif. -- Jobless workers in Silicon Valley are giving up on the
region's dominant technology industry and trying to switch to other
fields, as the area's unemployment rate spikes above the national and
state average.

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Brian L. Frank for The Wall Street Journal

Bob
Sutterfield outside a ProMatch meeting Thursday in Sunnyvale, Calif.
The government-funded organization, which helps unemployed
professionals network, retrain and land new jobs, has seen its number
of attendees reach maximum capacity since the beginning of the year.

Job
centers and community colleges across the region are reporting a surge
in enrollment of out-of-work techies, with many looking to move into
other industries. While data on the shift are scarce, the trend is
evident at ProMatch, a government-funded organization in Sunnyvale,
Calif., that helps unemployed professionals network, retrain and land
new jobs.

Since the start of the year, ProMatch has seen its ranks swell from
180 attendees to its maximum capacity of 225, says Connie Brock, who
helps run the group. Of those, about 80% are from the tech industry,
and a third are seeking to transition to nontech jobs, estimates Ms.
Brock. An additional 450 people have signed up for the waiting list to
use ProMatch's services since January, she adds.

Many of the jobless techies are targeting new gigs in the
clean-energy or health-care industries, according to ProMatch. Some are
shifting even further afield, looking for jobs in teaching or financial
consulting. People are leaving tech as "more tech companies are
offshoring and some are shrinking, plus people are burned out and tired
from having been there and done that," says Ms. Brock.

The activity at ProMatch illustrates how even workers in stronger
pockets of the economy -- such as tech -- are having to adjust in the
recession. For much of last year, unemployment in Silicon Valley
remained under control as the tech industry initially held up in the
downturn. But by late last year, tech spending had weakened, and
companies such as eBay Inc. were announcing layoffs.

As a result, Silicon Valley's unemployment rate -- which was below
California's average and largely tracked the national average last year
-- has soared, surpassing the state average in May. By June, the area's
unadjusted unemployment rate was 11.8%, worse than California's 11.6%
and the national rate of 9.7%, according to the latest figures from
California's Employment Development Department. The rate of job losses
was particularly steep in sectors such as semiconductor manufacturing,
where employment dropped more than 13% in June from a year earlier.

Only
a few segments of Silicon Valley's economy are now showing growth.
Employment in the local health-care sector rose 4.2% in June from a
year ago, according to the EDD. The clean-technology industry -- which
covers energy efficiency and alternative energy, such as solar and wind
power -- is also still attracting investment, pulling in $1.2 billion
in venture-capital funding in the second quarter, up 12% from the first
quarter, according to market-tracking firm Cleantech Group LLC and
accountants Deloitte LLP.

Some out-of-work techies such as Bill Palleschi are now reorienting
themselves to take advantage of that growth. Mr. Palleschi, 64 years
old, lost his job as an engineering-services manager at a
semiconductor-equipment maker in January. In April, he joined ProMatch
and decided to shift into clean energy.

"With all the offshoring in the tech industry, I want to look for a
job in an area that's growing," says Mr. Palleschi. After attending
some career workshops at ProMatch, he says he better understands the
credentials he needs to get into clean-energy companies and plans to
refocus his résumé to highlight those skills.

For other Silicon Valley jobless workers, remaining in tech is often
the first choice. Fred Slone, executive director of the San Mateo
Workforce Investment Board, a jobs organization in San Mateo, Calif.,
says most unemployed techies his group sees want to stick with what
they know. But with tech hiring so slow, some have little choice but to
broaden their horizons, he says.

That's partly the situation facing Bernie Maloney, 46, who was laid
off from Hewlett-Packard Co. as a project manager last year after a
16-year career there. Mr. Maloney has been looking for a tech job that
would allow him to create and launch products. But job interviews have
so far been "very thin for me," he says.

After joining ProMatch in June, Mr. Maloney widened his job search
to clean-energy companies and biomedical-device firms. He says he has
gotten some traction with clean-energy companies, but suspects it will
take several more months to land a job. "I'm looking at this as an
opportunity to look at other fields," says Mr. Maloney, who made
$175,000 a year at H-P, excluding bonus.

Others are happier to leave tech. Another ProMatch attendee, Minda
Cutcher, 53, was laid off as a finance manager at telecommunications
company Covad Communications Co. last year after a decade at the San
Jose, Calif., firm. In May, Ms. Cutcher launched her own
financial-consultancy business for the elderly.

Ms. Cutcher says she doesn't regret leaving tech after working in
the industry for 30 years. "I did a real re-examination of my
priorities," she says. "I'm done with high tech and fancy titles. Now
I'm going from high tech to high touch."

Write to Pui-Wing Tam at pui-wing.tam@wsj.com