The recession is over. Well, the recession is over if you're a big Silicon Valley firm, one of it's CEO's, or a shareholder. If you're jobless and looking for work, keep looking. You're still in the depression, er recession. According to Venture Beat, Silicon Valley firms are doing swimmingly well. As seems to be the pattern of the 'recovery.' Some just seem to recover better than others, eh? In fact, the combined stock value of the top 150 firms has reached the same point as during the peak of the dot com boom in 2000. The same VB article noted that:
"Companies responded to the growth by spending a lot on research and development, new plants and equipment, and stock buybacks. They also acquired a lot of smaller companies, but they haven’t yet hired a huge number of employees. That’s why Santa Clara County’s unemployment rate is still stubbornly stuck at 10.3 percent, compared to 2 percent in 1999. After shedding 62,000 jobs in 2009, the companies added a net 1,200 jobs in 2010, bringing combined worldwide employment to 1.1 million."
Quite underwhelming. Again, that's 62,00o jobs lost in Santa Clara County in 2009. A net of 1,200 hirings in 2010. Apparently less is more, as long as the 'less' are the workers, and the 'more' is the money. The 'smart play' from the point of view of many firms seems to be stock buybacks. Buybacks make shareholders very happy. As they've been applied to Silicon Valley stock, the value of the tech-based giants has now mushroomed to $1.55 trillion. These top 150 SV firms now have $116.7 billion in cash stuffed away in corporate mattresses. Santa Clara County still has an unemployment rate at about 10%.
But one could easily argue that the stock buyback craze is very shortsighted. It's one thing to build up reserves for a rainy day. But it starts to look more and more like managerial ineptitude as firms continue to pile up the cash. There's no innovation in hoarding. Across the country, there's still very sluggish demand for products and services in this fragile economy. The circular argument frequently spun to explain why there's not more hiring, is that firms want to see an increase in consumer demand. They'll hire if someone's buying. But the currently employed can only buy so much. And the currently unemployed, well, they find it kind of hard to be consumers without having a job. How to break this crazy cycle? As Robert Reich wrote at the end of the year, we have an emergency. And we'll remain in this stagnant, polarizing position for a long time until government starts to exercise some power. Invest in America or be taxed. A little direct prodding by the tax man would surely get our captains of industry and commerce off their money-counting behinds and back to work.