Even programmers get the blues

As the economic downturn deepens, once-immune geeks are starting to feel the pinch.

Published March 13, 2001 8:30PM (EST)

In late 1999 and early 2000, Michael, 36, was a San Francisco programmer and a hot commodity. "I could have six or seven job offers in two weeks," he says. In the two weeks before Christmas 1999, he made $100 an hour as a contractor at a company that "begged and pleaded with me to become a permanent employee." Just two years before, his rates for programming had been $60 to $75 per hour.

By May 2000 when he was contracting for Spark Online for $89 an hour, a recruiter for yet another dot-com came courting. To work full time, Michael (who declined to have his real name used) demanded $80,000 a year and stock options worth one-fifth of 1 percent equity in the company. But to persuade him to leave his contracting gig a few weeks early to take the new job, the corporate suitor offered a salary of $110,000 and the options.

Ten months later, it's a different story.

Michael got laid off at the end of February, and gone with his last job are the pack of hungry start-ups, armed with too much venture capital, panting after his services. In his first two weeks of job hunting, he didn't have a single interview. After our conversation, he came by the Salon offices to print out his résumé, so he could avoid a trip to Kinko's.

Remember all that handwringing in the technology industry about the shortage of programmers posing a grievous threat to the national economy? And the attendant hue and cry for more H-1B visas to import the top talent we couldn't generate at home? Not to mention the promises that in the so-called new economy the rules had changed forever, especially for the technical elite, with a long boom bringing us an ever-rising stock market and a job market where candidates called the shots?

Tell that to Michael, a coder skilled in Java, C, Pascal, Fortran, Basic, JavaScript, Perl, XML and CGI: "Salaries are lower compared to what they were just a year or two ago," he says, "$75,000 to $90,000 for a serious engineer. And contracts are in the $60-to-$75 range. There are people who are looking for tons of skills, and they want to pay $60 an hour, when a year ago they were paying $100."

Programmers, so recently courted like college athletes, have become job hunters. "Companies are not as good at getting back to you as they used to be," Michael says. "A year ago, they were trying to get in touch with you, and now you have to try to get in touch with them." And the news keeps getting worse. Earlier last week, Intel announced plans to cut 5,000 jobs via attrition, and on Friday, Cisco, long the darling of Wall Street, revealed that it may lay off as many as 8,000 employees.

But Michael's still holding out hope of finding full-time work at his old high $110,000 salary. He's giving himself two months to do it, and he'll assume that any stock options are as good as worthless. "Luckily, I started saving last year. I suppose I could cash in the 401K, but that wouldn't be fun." Too bad he started investing in tech stocks two years ago. His savings have lost 25 percent of their value.

No one really feels sorry for the code jockeys who ruled the headlines in recent years with their options and their five-figure signing bonuses, their cushy perks -- a new car! an Aeron chair! a complete workstation at home! an all-expenses-paid trip to Hawaii! But even a few months ago, when dubious dot-coms were laying off fluffy content and marketing people left and right, few imagined that the geeks who write the actual code and make the servers run would feel the pinch. Someone has to make the products and keep the sites up, right? But as the dot-com downturn has deepened and a more general economic slowdown has taken hold, it turns out not even geeks are immune.

John Stauffacher, 20, a systems administrator for Cobalt Card, a subsidiary of American Express, tells his friends from back East who are just getting out of school to skip the cross-country road trip. "Stay back there! Don't come out this way looking for the California dream! It's not like before when you could walk around the corner and just get a job. Now, you really have to prove yourself before you can get a position." Stauffacher graduated from high school at 16 and DeVry Institute of Technology when he was 19.

Stauffacher wrote code for the Net start-up Epicentric, but decided to switch to systems administration. "There's greater demand for system administrators," he says. "Right now, they need more administrators than they do programmers. Engineers are still in demand. But what's really not in demand are the lower-end programmers. What people are looking for now are more skilled engineers."

Tyler, 30 (who asked that his last name not be used), programs in C++, PHP and MySQL. He left a small, floundering Bay Area company in mid-December, and is now considering making the same move to becoming a sys admin. "After a month with no interviews, I gave up looking and took two weeks off to teach myself Java. I'm going to try looking again in a week or so, and I'm going to be a lot less picky than before. I'm considering downshifting to sys admin if I can't find a programming position."

But if you think of becoming a system administrator as a fallback, don't try it in Seattle right now. Paul Beard, 38, the former director of technical operations for Fizzylab, a now defunct Internet infrastructure company, says that he's been looking for a job in I.T. since Jan. 19. "It's pretty bad. There are so many layoffs, and so many people out at the same time, and nobody is doing much hiring. They're taking a wait-and-see attitude. 'We're waiting until second quarter before we make any decisions.' It's a buyer's market, and the buyers aren't buying."

Even companies that do have jobs available aren't as feverish as they were just months ago. Tyler says, "Of the companies that aren't failing or laying off, they're either in a hiring freeze or they're growing much more slowly than they were before. So effectively they're looking, but they're not as desperate as before. They're taking their time. There are jobs, but it's not the feeding frenzy anymore."

Leslie Ayres, a recruiter, explains the skittishness this way: "If you heard a bomb go off in your neighborhood, even if it didn't hurt your house, you'd stop what you're doing, wait and listen and see what's happening. A lot of companies who really have no imminent threats to their business are doing exactly that. There are companies that have openings, and they've budgeted for those openings. But they're going to wait a month or two to see what happens. So there truly are fewer jobs."

At this point, Tyler would take either full-time or contract gigs, but he hears that the contract market is even worse. Mitch Balzer, an account manager for Prism Group, is a recruiter who places contract programmers in temporary positions -- when there are positions. "There's a huge surplus of labor, at least in the Bay Area. Our other offices have seen it as well. There's no shortage of talent at this point." That's a big change from just 12 months ago.

"A year ago, it was more of a chase to find the consultant to match the job, whereas this year, it's more of a chase to find the job for your consultant," says Balzer. And when bigger companies have to get lean, whether it's to appease the financial markets or just general belt-tightening, "the contract staff generally go first."

Leigh Shevchik, 30, has felt the contracting squeeze. She's been contracting for 10 years, most recently writing HTML, CGI, Perl and XML, mostly front-end Web stuff. In 1999, she was getting calls every day from all over the country asking about her availability. Her rates soared from $40 an hour to $75 an hour. But in 2000, when the last two dot-coms she worked for started to flounder, she sought higher ground. "I thought: 'I'm barely getting paid. I'm leaving just as the boat starts taking on water. I should find a company that can pay me, and isn't in jeopardy of sinking.'"

She's now contracting full time for Sun as a Web project manager in the Java Group, a position that she started in November, and feels that she scraped by in the nick of time. "About two weeks after I started, everything really started hitting the fan. Today, all the recruiters I talk to confirm my feeling that the jobs just aren't there. I'm really glad I found something before the market just completely dried up, because it's scary out there right now." She thinks this is the worst market for contractors since 1993.

Even those booming job boards, which are enjoying increased traffic as more people look for work, have less to offer. In August 2000, Monster.com had 40,867 job postings in the category of "Computers, Software." In February, it listed 30,677 jobs, a drop of 25 percent. As recently as February 2000, it had had 55,013 listings. The decrease is part of a more general trend, according to a survey by the Federal Reserve, which finds that the tight demand for the highest-paid workers in jobs in high tech and the Internet is easing.

Craig's List, the popular Bay Area jobs site, shows similar declines, with most of them concentrated in front-end Web work. "We have seen significant dropoff in job postings in the area of Web design and Internet-related software engineering, but the demand still seems to be strong. The demand for Java programmers in particular is still very high," says Craig Newmark, the founder of the list.

The changes are making life somewhat easier for companies looking to hire. Ron Theis, 28, a senior software engineer for Danger Research, a stealth start-up in Palo Alto, Calif., that is hiring, says that the pool of job candidates is getting better. "The quality of candidate that we've interviewed lately has gotten better." But he also thinks that programmers like himself who work with C++, Java and SQL will be fine. "If you'd moved out here a year or two ago, and if you only knew HTML, then boy, you'd have a tough time. But if I wanted to get a job, I could have my pick of a half-dozen within a few days, and it's true for anybody experienced with programming skills, not just me."

Mike Wertheim, senior systems engineer for Zhanra, a small start-up in Oakland, Calif., says that there's been a real change on the hiring front. "Getting qualified engineers last fall was really difficult. Any engineer who was decent could get a job just about anywhere. We have three open positions now, and we will have no trouble filling them. More people are applying and those people don't have nearly as many opportunities as they did just a few months ago."

Still, Jim Everingham, senior director of engineering at TellMe, a start-up with 250 employees -- over 100 of whom are engineers -- says that hardcore geeks have nothing to worry about. "The market is still really strong for solid people, and they still require a lot of work to get. Known performers are still at a premium, and they're just as hard to find as they were a year ago. They're still being snatched up left and right."

Ayres, the recruiter, agrees: "It's not that it's really that bad right now for the job seeker; it's just compared to a year ago when we had a gold rush. A year ago, it was actually hilarious to think that people with minimal experience could get multiple job offers at inflated salaries really quickly. So they got used to that."

Today, things aren't so promising for younger people with less experience or for front-end Web developers: "There are a lot more junior engineers available, and a lot more design and HTML coders. With a lot of design firms and the dot-coms going under, there's a lot more Web talent out there," says Everingham.

Thirty-year-old Hannah (not her real name) is thinking about giving up altogether on her technical skills -- which she spent two years at a technical college to acquire -- to go back to clerical work.

For this developer, who does HTML and ASP/VBScript, the job market in Seattle, where she lives, is grim. "It's pretty bad. I send out anywhere from three to 20 résumés a week, and I get no responses. In the month and a half that I've been unemployed, I've gotten two responses. There's no contract positions either. I would take anything. They're just not there."

One of the two companies that did call wanted to start her pay at $35,000 a year, $20,000 less than what she'd been making at Network Commerce, the dot-com where she'd worked for two years before they laid her off Jan. 23. The lowball salary was a shock. "When he said the dollar amount, I blinked. I was speechless. It was a really big wake-up call."

For now, programmers who have the more hardcore back-end technical skills may still be insulated from such indignities. Tim Gotch, a product specialist in the Internet equipment division of Netopia, a 500-person company in Alameda, Calif., says that his company is still offering $10,000 finder's fees for referrals of C programmers and software engineers who get hired.

So there's at least one way to make a buck -- maybe all the laid-off techies can get together and make a few extra grand by referring each other for new jobs. In the new, new economy, you've got to be creative.

By Katharine Mieszkowski

Katharine Mieszkowski is a senior writer for Salon.

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