Posted on 06/19/2003 8:04:02 PM PDT by technochick99
The Smith family--yep, like Jayson Blair, I'm making this up--lives in Redwood City, 20 miles south of San Francisco and on the northern edge of what is known as Silicon Valley. The head of the household, John, works as a software coder at Sun Microsystems. He's a good coder but not a superstar on the level of Sun's cofounder, the legendary Bill Joy. John Smith makes $95,000 a year, which sounds plentiful to most Americans. In truth, it doesn't go too far in Silicon Valley, where the cost of a modest 1,900-square-foot house with three bedrooms and one and a half baths crowded onto an 8,000-square-foot lot is--hold your breath!--$786,000. But that's the house where John, his wife, Rosa, and their two children live.
Rosa met John at Sun, back in the early 1990s. She was a newly minted English major writing brochure copy for $38,000 a year; John was making $80,000. After marrying, John and Rosa's combined income was $118,000, plus bonuses. With one child on the way, that was a pretty good sum.
Even better financial conditions lay ahead for the Smiths. After Sun's stock started on its rocket ride during the late 1990s, John's options were worth $360,000. Wisely, in 1999 he and Rosa decided to exercise and sell half their options, using the aftertax $142,000 of their capital gains proceeds as a down payment on their first home in Redwood City. They purchased it for $420,000, which left a mortgage of $278,000. With John's $80,000 base salary (not counting bonuses that averaged $40,000 a year--an amount equivalent to the salary of Rosa, who had quit her job upon learning she was pregnant again), monthly payments were a snap.
Good times rolled for John and Rosa Smith. A second child arrived, and so did job opportunities for John. He weighed offers from software giant Oracle, as well as from three dot-coms--two of which were backed by brand-name venturecapital firms and looked like sure bets to do an IPO and make their early employees rich. This was a heady experience. John decided to stay put because Sun kicked up his base salary to $95,000. John's boss at Sun also granted John more options, a six-week sabbatical and more flex time. Now that was a package!
John felt like a master of the universe! Every employer inSilicon Valley wanted him. He was calling his own shots. The money was pouring in. The Smiths were almost millionaires--on paper, anyway. It was time to trade up to an executive-style house. Time to apply to a private golf club. Time to think about private schooling for their oldest daughter, Kirstin, now 5.
Slide Down the Matterhorn
Sun's stock peaked at $65 in September 2000--six months after the Nasdaq stock composite index peaked at 5031--and the Smith family's paper worth climbed to more than $1 million. John felt like a million bucks. When Sun's stock sagged to $40 in November, he wasn't too worried. The Smiths were in good shape. John's weighted average option strike price at Sun was, after all, $22. The Smith family's paper net worth might not have been $1 million anymore, but it was easily three-quarters of that, counting their home. Thus buoyed, John flew his family (business class) to Italy, where they enjoyed their six-week sabbatical, and spent $45,000.
But Sun's stock kept falling. And falling. It fell so fast that John and Rosa felt paralyzed and missed the opportunity to exercise their options and sell. When Sun's stock fell below John's weighted average strike price of $22 in early 2001, John realized that his Sun paper wealth had vanished. Another type of compensation also vanished later that year--John's bonus. Sun suspended bonuses in 2001, and again in 2002. By then, the company's stock price was hovering around $3.
The Smiths were lucky in two respects. They had their home. And John still had his job, with its $95,000 income. But now this income had to support the entire Smith family concern. Out of the $95,000 had to come the money for taxes, food, clothing, the monthly mortgage, insurance, preschool payments and vacations. Reluctantly, the Smiths put Kirstin in public school. The closest the Smiths came to Italy in 2002--and again in 2003--was a wet slide down the Matterhorn ride at Disneyland. The Toyota Sienna minivan that propelled the Smiths to Disneyland was paid for, but it had 107,000 miles on it and smelled like sour milk.
At work, John no longer feels like a master of the universe. He feels lucky to have his job. He suddenly feels like a commodity, and he doesn't like that feeling one bit. During the last three years, thousands of software jobs like John's have migrated to Bangalore, India. John is so worried about his job that he doesn't take the flex time promised to him. He doesn't sleep well. After two hours of coding at work, the trapezius muscles connecting his neck to his shoulders feel as hard as cast iron. He would like to go for a sauna and a massage, but the $95 that costs would blow the Smith's weekly budget.
The Smiths have dropped out of the upper middle class. Should we feel sorry for them? To be a middle-middle-class American in the early 21st century is to occupy the 99.99 percentile of human existence, in terms of nutrition, wealth and ease. But the Smiths don't feel that way. For a few years in the late 1990s the Smiths had tasted something better. They were upper middle class, or at least close enough to feel like it. They miss that. They are frustrated. They want back in.
Millions of American families are just like the Smiths. Politicians, take heed. The Smiths will decide the election of 2004.
You're not. That's what I'm doing, and what happens is a business will cut back on contracting and on buying software before they will lay people off
I wish he would have been fired with the other 6 guys who got the boot. Then he would not have had a choice. As it stands right now he thinks we need the medical insurance and other benefits he is keeping in his new demoted position.
The good news is I think he will be fired as soon as they glean the last bit of information from him and when the new kid thinks he is fully trained. I really look forward to the day. I hate the way my husband has been treated and I can't wait until they see what an asset he was to the company.
There is some talk from the 6 guys who were actually fired about an age discrimination suit, but before they were given their severance pay they were required to sign something saying they would not sue. I told my husband when they fire him not to sign the paper. I will give up whatever they offer him to leave quietly just so I can extract a pound of flesh from those greasy cowards.
I agree.
Your friend is part of the problem. He is tolerating the contractor's illegal business practices. Is his finger broken? Can he not telephone the local INS office and report this guy? The INS will come in and arrest the illegals and the contractor too with just one little telephone call. Do the right thing. Make the call.
In addition to my suggestion that he might want to start a consulting firm of his own, I'd also strongly suggest that he not do it alone. He should have a partner (maybe you?) who can take care of paperwork while he goes out and does what he does best.
So YOU say, but then how much do you really know? I'm one of the people who makes these decisions, and I have a lot of experience with offshoring, as do my compadres. In a word, it is useless for any but the most brain-dead work. Yes, we tried it because in theory it made good commercial sense. In practice, the overhead is difficult to justify for anything but loss leaders, and all the development that matters will stay in the US for the foreseeable future. Development in cheaper parts of the US is definitely price/brain competitive with anywhere else on the globe in the final picture.
The "investments" are not entirely what they appear. If you aren't a drone and offer real value on the engineering side, your job is safe for the foreseeable future. The bottom feeders in the US engineering market will likely be pushed out in many areas though. Once you move your engineering away from expensive places like Silicon Valley (or California in general), Americans give very cost effective bang for the buck. In the final tally, exporting to better States has proven to the be the best route. Even though we have assets and facilities all over the world, all our engineering is done in places like Florida, Texas, and Nevada, and it is actively being MOVED to these places. That is what the future is going to look like. Commie States are going to die, and the better ones of the bunch will thrive because they still comprehend what a reasonable business environment is. We'll invest in America, but America has to give us something to invest IN.
What can any politician do for such a guy? Pass a law mandating the return of the Clinton Bubble?
how about eliminating the H1B visa program. How about that?
That will make his $92,000 job more secure but it won't change the fact that the Clinton Bubble made these people think that buying $420,000 cracker boxes as entry level homes and relying on their own employer's vastly over-inflated stock valuations was the road to future financial security.
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