Ellen Chase never thought her life would be like this at age 52. More than a year ago, her husband, Russ, was laid off from his job as a quality assurance engineer in San Jose, California. Then last August, she lost her job as a secretary for a fruit-labeling company that was relocating out of the area. They’ve both been looking for work ever since. Between paying monthly rent of $1,114 and shelling out nearly $600 a month for COBRA health insurance, the Chases are barely able to make ends meet. No other healthcare company will insure the couple because Russ, 57, had open-heart surgery–putting them in the dreaded category of “pre-existing condition.” A few years ago, they brought in a combined annual income of $65,000 and were saving for retirement. Today, they live on unemployment benefits of less than $2,000 a month that will expire in May.
She describes herself as politically conservative, and yet Chase says that her plight has changed her views on issues like healthcare, workers’ rights and government responsibility. She now believes that the United States needs “socialized medicine, like in England,” and should offer more help to those who find themselves without a safety net. “I really feel that the government is not taking care of us,” she says. “For people who have worked as long and as hard as we have, a married couple who pay their fair share of taxes, it’s very upsetting.”
In Silicon Valley, long synonymous with an entrepreneurial spirit, free-market capitalism and libertarianism, more and more workers are, like Chase, rethinking their political views. Not that people are trading in their computers for picket signs, but worker protection, universal healthcare, affordable housing and other traditionally liberal causes are gaining popularity. This shift became evident last November when California bucked a national voting trend that put control of both the US House and Senate into Republican hands. Despite Democratic Governor Gray Davis’s low approval ratings, Californians elected Democrats to all eight of the top state positions for the first time since 1882. The California Congressional delegation is now overwhelmingly Democratic, and San Francisco Representative Nancy Pelosi reigns as House minority leader. Membership in the state Libertarian Party has dropped by about 5,500, from a high of nearly 95,000 in 2000, according to the party’s website.
Peter Leyden, a former editor at Wired magazine and co-author of The Long Boom, once imagined twenty-five years of free-market prosperity where government played only a supporting role. Today Leyden says that a backlash against globalization and corporate irresponsibility, coupled with terrorism and a Republican agenda that doesn’t support technological innovation like stem-cell research, are responsible for the shift in the laissez-faire Valley credo. “I really believe that we are entering an era where we will see a rebalancing toward more government and a conscious effort to force corporations to take more responsibility,” says Leyden, now a “knowledge developer” at Global Business Network and co-author of a new book, What’s Next?
The sustained recession in Silicon Valley has challenged many residents. For ten consecutive months through February, San Jose has reported the nation’s highest unemployment rate for metro areas with populations of more than 1 million. The jobless rate for San Jose in February was 8.5 percent–compared with 5.8 percent nationally and 6.6 percent statewide. Santa Clara County, the heart of Silicon Valley, lost 85,000 jobs between 2000 and 2002. The office vacancy rate in the Valley is 24 percent, compared with less than 2 percent in early 2000. In a Field Poll released on April 28, 82 percent of Bay Area residents surveyed said that jobs were scarce. And a first-quarter consumer confidence study of Silicon Valley by the Survey and Policy Research Institute found that the proportion of people who say their families are worse off now than a year ago grew to 41 percent–about 10 percent more than last year.
This growing lack of confidence can be partly attributed to joblessness, but it also reflects a widespread sentiment that the good life is out of reach. Despite the large number of people who have lost their sources of income, Santa Clara County remains one of the most expensive places to live in the country, with a one-bedroom apartment renting for about $1,200 a month. Foreclosure proceedings in the county climbed 8.2 percent from the first quarter of 2002 to the first quarter of 2003, yet housing prices continued to rise. The median home price in the Bay Area last December was $416,000, up from $377,000 the previous December.
Business is booming among social services. The first statewide study of hunger, released by the University of California at Los Angeles last November, found that one in four low-income adults in Santa Clara County has trouble buying groceries. Just north of San Jose, in the affluent town of Sunnyvale, a nonprofit group called Sunnyvale Community Services gave out nearly $600,000 in the 2001-02 fiscal year to help people on a one-time basis pay their rent and electricity bills, an 88 percent increase over 1999-2000. Second Harvest Food Bank, which serves Silicon Valley, now feeds 167,200 people a month; one out of four has a college education. Jennifer Luciano, communications director for Second Harvest, says she is witnessing a rising level of anger among those in need and a greater willingness to talk publicly. “People are starting to feel that if speaking out will help educate public leaders about hunger and poverty and perhaps result in changes to the system, then they will talk,” she says, “despite the dignity issue of coming forward.”
People are also expressing their views through the ballot box. In the 2002 election, pro-labor candidates for San Jose City Council garnered 61 percent of the vote, moving an already moderate Democratic council farther to the left. The growing population of Latino and Asian immigrants is contributing to the rising support for such candidates, because of immigrant worker concerns about housing costs, wages and benefits. Santa Clara County has the highest number of immigrants in the Bay Area, according to US Census data. Some believe a wider workers’ rights movement is brewing. “We are entering a more populist era,” says Amy Dean, executive officer of the South Bay AFL-CIO Labor Council. “I’ve been in grassroots politics for twenty years, and what we are seeing today is not just that people want workers to have more power–in issues like a living wage, holding developers accountable and renters’ rights–but we are seeing that people want unions to have more power.”
A national survey conducted by Peter D. Hart Research Associates last August for the AFL-CIO suggests that union support is higher than at any time since the group began collecting data in 1984. Half of workers who don’t already have a union say they would join one tomorrow if given the chance, compared with 42 percent in 2001, according to the report. Dean attributes this not just to the economic downturn but also to 9/11 and recent corporate scandals. “For the first time in decades, people are articulating positive views about the important role that government plays in their lives,” she says. “They are yearning for protection from corporate interests and terrorism.”
Those views are not confined to the working and middle class. “Companies today say, ‘Let’s hire people to meet investor needs, and then let’s lay them off,'” says an unemployed telecom executive in Silicon Valley who once earned $160,000 a year. “I’ve never been a political person, but now I see that unions keep companies in line. We need unions to defend workers, because companies sure aren’t thinking about them.”
Pete Bennett, a 46-year-old former software developer, has launched his own workers’ rights campaign. A father of two, Bennett says he folded his software development company in 2000 after being repeatedly underbid for contracts from companies in India. He looked for work at high-tech companies in the Valley, only to find, he says, that he was competing with Indian software developers here on H-1B visas, which allow employers to temporarily hire specialized foreign workers. “US citizens are getting a raw deal,” Bennett says. “But the H-1B workers are also being victimized by corporations because they aren’t getting a fair wage.” Bennett contends that soaring unemployment rates in Silicon Valley and other high-tech corridors are a direct result of a lack of worker protection in the United States and companies moving their software operations offshore. “It’s like we’ve created our own recession,” he says. “The damage has been done.”
During the dot-com boom, high-tech companies clamored for an expansion of the H-1B visa program. Congress complied, raising the ceiling from 95,000 in 1998 to the current 195,000. Now labor groups have stepped up their efforts to limit the program.
A Forrester Research report released in December projects that companies will move 3.3 million white-collar jobs and $136 billion in wages overseas in the next fifteen years, with technology companies leading the way. Silicon Valley companies like Oracle and Nortel Networks have already moved software development jobs to India and other countries to cut costs. Hewlett-Packard services chief Ann Livermore told Wall Street analysts in the fourth quarter of last year, “We’re trying to move everything we can offshore.” This strategy includes adding more workers to the several thousand the company already employs in India.
Not everyone agrees that foreign workers are the Valley’s problem. John Aaron Atkins, who was laid off from his job doing software quality assurance at Nortel Networks in November 2001, points out that some H-1B workers have lost their jobs, too. “It’s the boom-and-bust cycle of the Valley. If you’re going to live here, you have to get used to it,” he says. Peter Leyden of the Global Business Network argues that the exodus of jobs involving tasks that will become more automated over time will, in the long term, be better for California workers. These workers should instead be looking toward more creative and higher-paying jobs, like those in biotechnology, nanotechnology, wireless and sophisticated security industries, he says. “I hate to stand back and be a hard-ass about this because I know a lot of people are suffering right now,” he says. “But I do think that things are picking up. Old Internet jobs are going offshore, but I don’t think that will create a long-term vacuum here.”
President Bush stopped by Santa Clara in early May to push his $550 million tax-cut plan and pledge to bring jobs to the embattled region. He said “I know there’s people hurting here in Silicon Valley.” But this doesn’t help the many people like the Chases get through the meantime, when unemployment benefits are running out and no jobs are in sight. Ellen Chase has been repeatedly rejected for retail jobs at Target, Starbucks and Barnes & Noble. Her husband, Russ–near retirement age and with a bad back–is looking for work as a day laborer, hoping to make $8 an hour. After years of living firmly in the middle class, the Chases face an uncertain future. And yet, they say, what else can they do but wait for the upside?