… because nobody can see past 2010. That was my argument at lunch today with a friend who is founder and CEO of a local tech company that peaked at about 200 employees. I noted that most economic forecasts said that things here in the U.S. are going to be slow through 2010 but then pick up in 2011. They have some data that has lead them to conclude that things will remain slow for the next year or so, but no data at all for 2011. Nobody has a crystal ball so nobody can see further than about a year. Why then do they believe that there will be a recovery in 2011? Because they think that the default state of the U.S. economy is growth. As I noted in a January 2009 posting about England, it is possible for an economy to slide sideways for decades (Argentina provides another example).
What did this guy who has created 200 jobs have to say about the theory?
“Most businesses right now are sized under the assumption that there will be a recovery pretty soon. If the economy does not grow, they will have to make a lot more cuts. I don’t see anything on the horizon that would indicate a recovery.”
He is not planning to invest or hire anyone for his firm.
Anyone else have a tale of private hiring or investment to offer? A firm not in government or healthcare doing some hiring? (or not) If so, please tell us about it in the comments.
[Why was I lunching with a business guy? A friend had noticed a posting for a $9/hour part-time job with this company and asked for help in securing it. When I pulled out my friend’s resume during lunch, the CEO said “We’re hiring?”]
Southern Maine: Had an interview last week with a quasi-software company in Maine that’s hiring a programmer and a couple support people.
Most openings for programmers I’m seeing are in the Leech Sector: Healthcare, insurance, government, non-profits. People like me who’ve always worked in the productive economy, I think we’re classed as a “domestic terrorists” now. Everything that’s wrong is the fault of us evil, unmutual people who create wealth, as I understand it. I should probably start working for the tax leeches myself, just to keep my nose clean. You’ll be OK, Greenspun. You’re an academic. You’re in the clear.
The really sick thing about the ever-expanding leech sector is that you’re faced with a choice between turning leech yourself, or staying honest and carrying the leeches on your back. What about those of us who’d like to live honestly, yet not be taken for a sucker? Drop out, head for the hills and live off the grid, cash-and-barter? Not an appealing prospect.
We’re still hiring and participating in college career fairs (Olin is tomorrow). We tend to be very selective, stay smallish (around 30 people) but very focused. The general quality of candidates is no better or worse than in good times, although there are lower salary expectations. We’re not an employment agency – ie. we won’t hire someone because they are underpriced – the question is more of long term potential not short term savings. We just showed off our new product at a trade show last week and the response was enthusiastic so investing in new products can still provide promise of a return.
Financial firms are hiring!
Chris Martenson and his crash course at http://www.chrismartenson.com think that it’s going to continue to get worse through the “twenty-teens”. He brings up quite a few topics and most of his assessments are pretty hard to argue with or refute. He also subscribes to the theory that our economy is designed in such a way that it has to continually expand and grow to succeed.
Much of my investment is now overseas. I am partial to Brazil (rah rah olympics) and have done well there but there are some new taxes on foreign investors enacted over the last week.
As a member of a leech sector I know of many employees I would be happy to release back to the wild but am unable to fight inertia and unions. I don’t need any new hires.
I joined a local tech company that coincidentally was 200 people when I joined; I figured it was not quite at its peak. It did in fact continue to grow, and for 2010 we’re looking to hire on the order of magnitude of 1,000 people (I don’t know the exact numbers). This is in the make-something-people-want sector.
Yes, thanks, Peter, but I think using Google as an example is a textbook example of selection and survivorship bias! What happened to the average Silicon Valley company that had 200 people at the same time that Google employed 200?
Adjusted for its age, I believe that Google has been the most successful company in the history of the world. Yet http://investor.google.com/fin_data.html shows that currently Google employs fewer people than it did at the end of 2008 and would need to hire 600 people simply to get back to its Dec 2008 level. It will certainly be a boost to the economy when Google hires 1000 people (how many of those will be in the U.S.?). http://www.bls.gov/news.release/empsit.nr0.htm says that there are now 15.1 million unemployed people in the U.S. That does not count those who are discouraged or who are able to find only part-time work when full-time work is what they want. So we need approximately 15,000 Googles, hiring exclusively within the U.S., to clear out the currently unemployed and make room for the Americans who graduate high school and college in 2010.
Apple, Google, Microsoft – all hiring. Yes Microsoft.
I know many tech companies who downsized last year, but who used it as an opportunity to upgrade people – who are now growing revenues.
If you make products or sell services that make companies more productive, you are probably growing. Thankfully, we are coming back to an economy where growth will be driven by productivity, not driven by increased financial leverage. We really had no growth for *most of this decade*, because it was too easy to lever up, do an LBO, and “grow” that way.
Who wants to join a company where you need extremely low marginal tax rates to be competitive? And then be at the mercy of whatever the government decides to do or what political regime is in power? If your company lives, dies, or fails to grow because of that, sorry, you need to think about changing your business model so that you can add more value to your customers. Unless you are in a pure commodity business. But I am not sure that is a bad thing.
I am in B-school now and it appears that the Investment Banks are hiring again. Other sectors are more subdued this year.
I think UK is behind other countries in the recovery path …but lets hope for the best…
I’m hiring, but unfortunately I’m hiring in Perth. Indeed, I have the opposite problem: I’m only willing to hire superstars, and they’re quite hard to come by. When it comes to software professionals, I’m fishing from a much smaller pond than I’m accustomed to.
Perth has certainly had a correction — but for this city, that means we’re at 5% instead of 2% unemployment. The gurus, of course, are never unemployed for longer than it takes to make a single phone call.
If you know any superstar software developers who enjoy sunshine, abbreviations, and dinosaur blood, then I’d be happy to do my part by removing them from your overpopulated workforce.
Today’s economy is not as bad as that of 1980, and I don’t think Obama has been at the controls long enough to kill the business cycle.
Some recovery will happen in 2010. It is an election year after all.
Long term the prospects are not bright.
I work for a six year old software company that sells software into the private business sector. We’ve grown from four to about 20 people people, and will probably hire another 10 over the next 18 months or so.
I would be more conservative in hiring if I were in charge, but our CEO is convinced that we’ll have work for a bunch of new people.
Really, my only macroeconomic indicator is how long I get to keep people at below-market wages. (I mean, I’m paying them about what I’m paying myself, if you don’t count equity, something I’m extremely miserly with.) Normally, I find a friend of a friend or a customer who is underemployed for whatever reason, I hire them for a year or so, then s/he gets a real job for 5x more money. It’s a win-win situation, really; someone gets out of whatever rut they are stuck in, they get some experience, and later a good job, and I get someone who is fairly intelligent and willing to do things my way for a year or so. I’ve had my current guy for two years, though, which is bad news for the economy.
It’s a weak indicator. I target people who don’t interview well or who lack confidence (because that lowers their market value, but does not lower their value to me. Who the hell needs a confident Engineer?) I am growing by 20% a month, but that’s mostly good news for manufacturers of ram and microprocessors. It probably indicates bad things about the economy overall, as I’m competing on price, and tend to be somewhat miserly (I like to think efficient) with my human resources. For me to keep my head out of water, everyone has got to code themselves out of their job every six months.
Also, my costs for dram are up 40% over a few months back. I mean, it’s not gonna kill me, but it’s painful.
If the next 6 months look like the last 6 months, I will definitely be hiring a secretary type. (an organizational/logistics/relationships specialist. Like a manager, but without the decision making power.) I spent 6 hours on email today. It’s also likely I’ll bring my two part-time technical people to full-time. If the curve continues another year, I’ll be paying them real wages and health care and stuff.
uh, really, though, I plan on keeping the headcount low. automation is better than human intervention in most cases, and I firmly believe that “you get an answer when the guy who knows what he is doing gets up” is better than making you wade past some script-reading level 1 drone every time you need help.
Really, I think what we need to see is fewer facebooks and more people doing something as a sideline without involving venture capital. Starting a company, especially an Internet company is incredibly cheap.
Luke: Your last paragraph was especially interesting. There is a lot of potential for smart people to get a bit creative and create extremely agile companies that provide real value. As Wisconsin’s manufacturing declines I’ve seen medium sized companies get rid of their IT staff in favor of hiring contractors to do so. I’ve seen truly good technical people move from their regular jobs to starting their own companies. The biggest obstacle: Health insurance.
Similarly, cookie cutter web development is booming as prices fall. There are a lot of companies that in 2007 would charge $7,000 for web site with a blog and photo gallery. Their business has disappeared as their customers don’t find value in it. Now web frameworks and content management systems are so incredibly cheap that it is feasible to set these up for clients, charge $1,000 and move on to the next one. Most customers come back for more within 3 months. I need health insurance so I have to have a 9-5 too otherwise it probably wouldn’t need to be just a sideline.
This is a cheap, easy strategy that brings in enough money to support a few friends getting their pilot licenses. Customers appreciate the fact that we don’t spend money on $18/sq foot office space and keep our photo/video equipment as mobile as it needs to be. I hate to beat a dead horse, but if I wanted to take this sideline full time the only VC money I’d need is to cover health insurance!