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Down in the Valley: Silicon Valley

May 10, 2000 at 12:00 AM EST
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TRANSCRIPT

MARGARET WARNER: Now, a look at the less-familiar side of life in California’s high-tech heaven. Spencer Michels reports.

SPENCER MICHELS: The popular image of Northern California’s Silicon Valley is that the streets are paved with gold; that everyone is getting rich, or about to, off high-tech inventions that are changing lives and the economy. And in some cases, the dream actually comes true. Young entrepreneurs like Hotmail creator Sabeer Bhatia and his associates have made millions off their creations and their stock options.

SABEER BHATIA: Of the 62 employees that we had at the time of the sale to Microsoft, I would say almost close to half became millionaires.

SPENCER MICHELS: In garages and offices throughout Silicon Valley, software developers burn the midnight oil, with the goal of getting rich.

SPOKESPERSON: Of course, get rich in less than five years, maybe something in three years. Get IPO, and create great software.

SPENCER MICHELS: But it doesn’t always work out. At 33, Joe Rowe has had it with the commercial world of high tech. Instead, these days, he is teaching and fixing computers in a San Francisco high school, a job he got after stints with a computer maker and an Internet firm.

JOE ROWE: You had to work late, you had to work long hours, or if you worked 40 hours a week, you worked very intensely. You were seen as…as a slacker if you didn’t participate in that movement.

Poor working conditions

SPENCER MICHELS: Rowe is among an increasingly vocal group of high-tech workers who consider the working conditions degrading.

JOE ROWE: Impossible deadlines, expectations made by people who didn’t understand the work that was being done, corporate pressure for stock price — you name it. It was fine for a long time, until it slowly started saturating into your personal life, and then again you realized — or at least I realized, when I stepped out of it for a moment — what I was sacrificing.

SPENCER MICHELS: Brendon Macaraeg quit his high-tech job too, and now works at home. He complains about young managers who seem mostly interested in cashing in on initial public stock offerings, or IPO’s.

BRENDON MACARAEG: There are people that are just coming out of MBA schools just wanting to get… make a lot of money off an IPO, not caring about a product or a service, or delivering a high-quality product. You know, you’re working with people who have pretty big egos, sometimes, and people, especially in Internet startups, where the job roles are not defined very well, people can butt heads a lot.

SPENCER MICHELS: The view is different among mangers. Docent Incorporated is a Silicon Valley start-up company that makes educational software. Vice President for Human Resources Eric Campbell says sacrifice comes with the high- tech territory.

ERIC CAMPBELL: The idea behind a startup is, you know, it’s a lot of work at the front end, but as time goes on, and as the company becomes successful, hire more staff, you’re working less hours. You know, eventually one of these days, that company will go public, and you’ll be very, very wealthy.

Temporary workers in Silicon Valley

SPENCER MICHELS: Among those not sharing in the wealth are temporary workers, who get few benefits. In the Valley, temp agencies are increasingly being relied on by industry, especially to fill clerical, assembly, and janitorial jobs. Lucille Moyer, a temp, lives in an apartment in San Jose with her son, and pays $1,100 a month rent, which is low for the Valley. She has been temping as an executive administrative assistant for the last two years, after a series of permanent jobs.

LUCILLE MOYER: Instead of hiring us directly and paying us benefits, paying us sick leave, vacation, being able to participate in profit- sharing, being able to have access to 401(k) plans and retirement, we don’t get any of that. We get nothing. If we’re sick, we don’t get paid. We’re not allowed to grow with the company, and participate in the financial rewards of those companies.

SPENCER MICHELS: Labor studies claim that 40% of workers in Silicon Valley are temporary, part-time, or contracted out. Officials at Docent, which hires fewer temps than many firms, say there’s often good reason not to hire permanent staff.

SPOKESMAN: The idea behind hiring a temporary work force is you don’t know what the company is going to look like a year from now, and you want the flexibility to adjust your variable costs.

SPENCER MICHELS: Even for some permanent workers, surviving in the flourishing Silicon Valley is a struggle. An industry-sponsored study says that while the wealthiest 20% of the population saw big increases in their incomes over the last five years, the income of the lowest 20% of households actually declined.

SPOKESPERSON: I have one that’s seven, five…

SPENCER MICHELS: Christy Outen, a single mother, falls into the lower income group. Although she now has a permanent job in administration at a large pharmaceutical firm in Palo Alto, for several years she was a temporary worker here and elsewhere, making up to $15 an hour, with no benefits. That was barely enough to support her and her four children in this expensive area.

CHRISTY OUTEN: The rent is overwhelming; the child care is also overwhelming, as well, because by the time I pay the rent, pay the utilities, just the basic necessities, there’s no money left over to do “nice-cessities”, as I would call it — you know, the nicer things in life, like going to the movies, even renting a video, it would have to be a pre-planned deal for us to do that as well.

SPENCER MICHELS: An AFL-CIO study says that 55% of jobs in Silicon Valley pay too little to support a family of four. Housing costs have soared in recent years. The median home price in the Valley last year was $346,000, with many homes selling for over $1 million.

CHRISTY OUTEN: It’s stressful, it’s very stressful, wanting to achieve the American dream, and knowing that I can’t achieve it here, because of the high cost of living.

SPENCER MICHELS: While Christy Outen may not be considered poor elsewhere, in Silicon Valley, she qualifies. The cost of living is so high here that the Housing Authority considers a family of four making less than $46,000 a year as low income. And there are plenty of people poorer than that. Poverty doesn’t look as stark as in as urban slums, but the poor stand out here, in contrast to the affluence of the area. Social services agencies like Sunnyvale Community Services distribute food and emergency funds to hard-pressed residents. They are often low-paid workers who provide vital services to the programmers and engineers, but who are being priced out of the area. Nancy Tivol is the agency’s executive director.

NANCY TIVOL: If we want to eat, if you want a car wash, if you want clothes cleaned, and the people who have those jobs can’t afford to live here, then that’s going to affect us.

SPOKESMAN: Please, not to us, don’t throw away…

SPENCER MICHELS: This agency serves clients like 24-year-old Joanne Silva, who just moved into Silicon Valley so she can find a job to support her four daughters. She’s still looking. Tivol says for a surprising number of families, life here is a constant struggle, partly because of the affluence of the high-tech world.

NANCY TIVOL: An average case, the father will have a full-time job and a part-time job, the mother works, and if there are teenagers, the teenagers work after school — not as I did in my day, for fun money, but just to put food on the table.

SPOKESPERSON: An employee should be free to make their own choice, without interference from management.

Labor unions for high-tech workers?

SPENCER MICHELS: Low wages and poverty have spurred the AFL-CIO to try to organize employees in Silicon Valley, starting with the lowest paid, and later incorporating high-tech workers. 37-year-old Amy Dean, a union organizer since the mid-80′s, is the executive officer of the local labor council.

AMY DEAN: And so the issue is is that we really need to shine a public eye on these injustices.

PROTESTERS: …We just need a living wage!

SPENCER MICHELS: In 1998, she mobilized workers to pressure the San Jose City Council to enact the nation’s highest living wage, of $9.50 an hour, plus health benefits, for those working under city contracts. (Applause) Dean is currently concentrating on the problems facing clerical workers, hospital workers, and janitors, problems addressed by Will Yamada, a union leader of Justice for Janitors.

WILL YAMADA: We’ve gotten them health insurance, we’ve gotten them at least something enough to live off of, now let’s get them out of poverty. The money’s available here. These companies can pay it. Our janitors work for Cisco Systems, they work in Hewlett-Packard, in IBM. All these companies are billion-dollar companies. For them to pay these janitors 60 cents more an hour, it would cost them, like, an hour of profit in their whole year.

SPENCER MICHELS: The unions, and Amy Dean, are plowing new ground, trying to cope with high-tech companies that change their work force size quickly, and with workers who change jobs often and don’t get benefits.

AMY DEAN: The kinds of responses that the labor movement comes up with is to accommodate this new kind of workforce. That means creating portable benefit plans, health plans, pension plans; creating advocacy that allows workers to exercise their rights on the job, even as they move from job to job, and employer to employer.

SPENCER MICHELS: Dean says the Valley can afford to boost the fortunes of the lowest paid. But many executives argue strongly that labor unions for high-tech workers run counter to the entrepreneurial spirit in Silicon Valley.

SPOKESMAN: I think there was a time and a place for unions in our history as a nation. You know, you’re not having to worry about child labor, you’re not having to worry about companies not paying overtime for work in excess of eight hours in a day — you know, those were the reason why unions were brought in in the first place. You know, in an environment like this, I don’t think there’s any need for a union.

SPENCER MICHELS: For Joe Rowe, the answer wasn’t to join a union; it was to quit the high-tech industry altogether, and work toward a teaching credential.

JOE ROWE: I’m overworked as always, and I’m not making as much money, but I think I feel much better about myself, because I see the results on the front lines.

JOE ROWE: What that is, is that someone wants to chat online with you.

SPENCER MICHELS: But Rowe is in a distinct minority. Silicon Valley continues to draw workers and residents with its promise of the good life.