Silicon Valley is changing. A workforce of former college drop-outs and the highly-paid, head-hunted cream of the IT crop have swapped flashy cars and 100-dollar tips for unemployment and an uncertain future.
Once home to a young generation who thought nothing of working an 80-hour week, the centre of the U.S. New Economy is in the grip of a dramatic Net crash.
At 29, Melissa Sheridan finds it hard to come to terms with what has happened.
“I never used to know a single unemployed person. Now everyone I know is out of work,” she says.
Until recently, 28-year-old Scott Heiferman was head of one of the many Internet start-ups which take a good idea and a substantial bank loan and try to make a lot of money, very quickly.
Last year his dream was shattered. He fell into a rut and, desperate for something to do, he worked the hot plate at McDonald’s fast-food restaurant for a couple of weeks, he told USA Today newspaper.
In addition to the losses at numerous Internet firms, there were spectacular waves of redundancies at online operations affiliated to big companies such as Disney, AOL Time Warner and the New York Times newspaper.
The Internet magazine Industry Standard set up an unemployed counter for the
sector, which is constantly updated on its website. It recently touched the 121,000 mark.
Robert Chope, a psychologist appearing on the NBC television network, pointed out that those hit hardest by the shrinking job market were young people who for a long time were spoiled by success.
Once the heroes of the Internet generation, they had grown accustomed to an economy blessed with continual growth. A large number of them were now gripped by panic, he said.
Those lucky enough to sell off their shares in time are enjoying the fruits of their once gruelling round-the-clock routines. “Losing my job was the best thing that could have happened to me,” beams 28- year-old Alli Ehrenberg.
A former web designer, she now enjoys life to the full. She has taken up Yoga, and instead of worrying about her next meeting, she is preparing to get married.
As the New York Times remarked, it is not always easy to feel sympathy for the affluent “golden boys and girls” of the Net, although not everyone received a golden handshake from the Nasdaq before they left.
The Internet itself offers some help for those less fortunate victims of the crash. The jobs site Monster.com has faced a deluge of applications over the last few months.
Many find a new position straight away, but that does not always mean job security. Thirty-two-year-old Stacy Drake was relieved to be snapped up by auction site Bidpath.com after losing her previous job at HomeGrocer.com. Just a couple of weeks later her new employer ran out of money and once again she was asked to clear her desk.
Brian Tobin, Canada’s Minister of Industry, said at a recent conference hosted by the Committee for Economic Development in New York City, that Canada now offers a highly educated workforce, plentiful electrical power, strong tax incentives, a favourable rate of exchange and an attractive lifestyle.
“There’s a revolution in Canada,” Tobin said. “The country has become entre-
preneurial.” He acknowledged that Canada in the past has not been seen as friendly to business, but said the country is now out to emulate the success of Ireland and other nations in luring high-tech companies that bring well-paying jobs.
Canada has strong economic fundamentals, including low inflation, substantial tax cuts and budget surpluses, said Brian Tobin. Canada is reducing taxes paid by business, and in four years the average corporate tax rate will be five percentage points below the U.S. rate. The short-term capital gains rate is now 23%, compared to 40% in the United States.
Canada also has a skilled labor pool. A recent study ranked it first among 59 nations studied in terms of per capita availability of knowledge workers.
Almost half of the top 40 electrical engineering programs in North America are offered by Canadian universities. All schools and libraries in Canada have been connected to the Internet for more than two years, and broadband Internet access is in use by 5% of Canada’s population, compared to 2% in the United States.
A study by the World Bank and Harvard University found that entrepreneurs encounter less red tape when starting a new business in Canada than in any other industrialized country, including the United States.
