Silicon Valley feels the crunch: cuts workers

The slowdown of the economy has finally hit home in Silicon Valley, with small and large tech companies cutting jobs earlier as a difficult year is expected.  

This situation might be alike to 2001 and 2002, during the burst of the Internet bubble and cut off hundreds of thousands of engineers in the area.

But the situation is different because the blame falls on the financial and housing sectors, not tech. And only a few see the layoffs having a long-term effect on the Valley's reputation as a cradle of innovation and risk-taking.

"In 2001, we were the epicenter, we were the cause," said Stephen Levy, director of the Center for Continuing Study of the California Economy. "Now it's a world-wide recession event."

Even if the world experiences the most paralyzing financial downturn in a long time, many say employment will remain better than it did after the internet bubble explosion. This comment came at a time when layoffs have already started in the Valley.

But this provides little comfort for the growing ranks of unemployed IT professionals trying hard to get by.

Vivek Sharma, a business systems analyst from India who is in the U.S. on an H-1B work visa, said he was working as an independent contractor on a project for Macys.com before the company suddenly cancelled in October.

"The job market is completely dead," Sharma said.

UNEMPLOYMENT RATE SLOWLY GOES UP

In Santa Clara county, the home to Silicon Valley, the rate for unemployment jumped to 6.9 percent in October from 6.5 percent in September.

This number will surely get worse. The recent weeks have been with daily job cut reports from Valley companies like Sun Microsystems Inc, Applied Materials, KLA-Tencor Corp, National Semiconductor Corp and Lam Research Corp.

Smaller companies are also cutting workers like Tesla Motors and LinkedIn. Employment consulting firm Challenger, Gray & Christmas has reported 140,422 job cuts overall by technology firms through October 31, up 31 percent from all of 2007. More than two-thirds of this year's layoffs have come since July.