Survivors!

It may not feel like it, but your shot at the good life is getting better. Here\'s why.
By Carleen Hawn

The dark days of the bust, when our vital tech sector got clobbered and venture capitalists stole away in the night, seem like a bad dream most days as we sip our coffee and read the morning paper. "Silicon Valley jobless rate dips." "Foreclosures lowest in 13 years." "Executives' confidence in regional economy rebounds." And from the chiseled lips of the Governator on the tube: "There is this whole great aht-mose-feer, this positive feel-ingk here that, yes, we can do business, the economy is coming baaaaack..." While there's the occasional downer headline—"Corporations hit labor hard with layoffs" after the recent HP purge—many economists say that it's still a time of opportunity. "Job growth can and will come from new, smaller companies," says Stephen Levy, who runs the Center for the Continuing Study of the California Economy. "The Bay Area is still a great place to live and work." Only then does he add the inevitable punch line: "The bitch is that most new people can't afford to live here."

Truth be told, it's not just "new people" who are having a hard time feeling outright bullish. Whether you're a rainmaker at a Silicon Valley law firm or an editor at the daily fish wrap, you know people who've been laid off—or who've packed it in and moved to Texas. Maybe you've gotten a pink slip or two yourself. Or maybe you just wonder how you can toil 60 hours a week and still not be able to buy a bigger house, one that has enough bedrooms for all your kids. If the economy is really on the mend at last, why aren't we feeling the power?

It's not that the economic boosters are a bunch of deluded Pollyannas. Unemployment has fallen for five straight months, now averaging 4.2 percent across the Bay. That's lower than the national rate of 5.0 percent and below California's statewide jobless rate of 5.4 percent. And while the East and South Bays have taken a hit recently, losing nearly 10,000 jobs since January, mostly in the San Jose area, our little city on the hill has actually added 3,100 new jobs.

"I had a dinner party in 2001, and almost everyone there had been laid off—two editors-in-chief, two executive editors, and so on," says Robert Luhn, executive editor at O'Reilly Media in Sebastopol. "Together we had about 150 years of experience but only one full-time job. Now, finally, all of us have jobs again." Median wages, per capita income, and retail sales are all inching up, meaning that we're not just earning more than in recent years, some of us are feeling confident enough to spring for iPods for the kids or more dinners at Boulevard.

But do most of us get a warm and fuzzy feeling when we look at our paychecks? "I'm happy just to have a paycheck," says Luhn, who applied for 40 or so jobs over the course of two years after he was laid off from Cnet. "These days, I don't expect the perks we saw before in the tech industry," he says, recalling how companies used to hire concierges and massage therapists for their employees and offer extras from stock options to game rooms. "Maybe there's a bit of sanity returning to the market."

If you're one of the lucky ones who hitched a ride on the boom, you may have sailed through the economic storms and doldrums without getting battered. But if you're like most of us, your optimism is tempered with a healthy dose of caution. "I don't think we've recovered," says Mary Trigiani of Cow Hollow, a 15-year marketing consultant. "I'm always optimistic for the long term—I'm a capitalist. But I've become resigned to the bunker mentality that we've been living with since 9/11. We're not thinking big picture. Companies are not climbing out of the trenches, so the economy is not being led to the next level."

In fact, San Francisco is the fourth most pessimistic out of 11 major cities polled when it comes to the economy, according to Hudson Employment Index data released in July. Which begs the question: if the trend watchers are right and parts of the economy are beginning to rev again, why do so many of us feel like we're standing still?

BEHIND THE WHINES
Some of the answers are simple. More than half of the net new jobs added in San Francisco since last winter are in the leisure and hospitality industries, which tend to be hourly or modestly paid positions. The rest are primarily concentrated in government, construction (how about that Bay Bridge?), and health care.

God bless the tourists—they can wear shorts all year if they want, as long as they keep flocking to our bay. Still, that $11-an-hour gig as a restaurant hostess or $30,000-a-year job as a medical assistant isn't likely to snag even a two-bedroom condo within BARTing distance of the city.

And as fast as our average wages and incomes increase—both our median household and per capita incomes are among the highest in the nation—the costs of living in the Bay Area suck up the difference even quicker. The gradual job growth pushes us a step forward, but our steep taxes and utilities and sky-high gas prices eat up the gains. It's like rowing into a stiff wind.

Of course, the biggest obstacle to the average resident's sense of stability—for those of us who don't own a piece of the pie, that is—remains the real estate market. Incredibly, prices continue to appreciate, confounding the sourest doomsayers. Even some who own are stressed by the numbers; how will they ever trade up without chaining themselves to an even more imposing mortgage? You've heard about it ad nauseam; suffice it to say that the California Association of Realtors reports that the percentage of Bay Area households qualified to buy a median-priced home plunged last year, from 21 percent in January 2004 to 13 percent in January 2005.

In fact, the Planning Department of San Francisco says that fully two-thirds of city residents rent. Renting may be more cost effective than buying these days, but it's still tossing hard-earned income that should be securing our retirement into a black hole.

Enough whining already. Sure, getting by in the Bay can be stressful, but we tough it out because we want to live here, not in Austin, right? Besides, the stats aren't lying. The economy is improving. It's just that the growth—and the money to be made from it—isn't  found in the most expected places. So to get ahead in today's job market, we need to be flexible. "Go with the flow" is the mantra of the day.

WHERE THE JOBS ARE
One reason the economy's progress is hard to notice is that the growth is so fragmented. Little of it has been created by large, highly visible companies lately—witness the July layoffs at behemoth Hewlett-Packard.

Until early 2005, most of the new hiring was planned by small to midsized companies, according to Jim Wunderman, director of the Bay Area Council, a San Francisco-based business lobby. Larger companies intended to remain stable or downsize. The latest Business Confidence Survey by the council, however, released in July, is considerably more upbeat.

More than a third of the 515 local executives polled said they plan to expand their workforces in the remainder of 2005, according to the council's quarterly survey. And those CEOs were no longer overwhelmingly at companies with 500 or fewer employees. Now "large, medium, and small companies are planning significant hiring," says Wunderman.

Still, if you count on the shelter of a six-figure salary at a brand-name corporation, you need to open your mind. In 2004, 77 percent of Bay Area jobs were in establishments with fewer than 500 employees, compared with 50 percent for the rest of the country, according to the Bay Area Economic Forum. You want real opportunity? You'll probably have to take a chance on the little guy or on a less prestigious firm. But hey, this is the land of entrepreneurship, remember? The cutting edge is where we like to be.

There are some sexy establishment jobs out there; there just aren't a whole lot of them. Of the 700 new jobs created in the city's finance sector since January, for example, some are coveted posts with six-figure-plus compensation packages at chic hedge funds in the financial district. But such positions are few and far between, and we don't all have a Berkeley MBA.

Jim Buckmaster, president and CEO of Craigslist, says job postings in industries such as software, web engineering, and of course biotech are all growing—between 30 percent and 45 percent in the last six months. Still, that adds up to only about 100 to 350 listings in each category. Just 11 listings came up under the terms "digital" and "media," despite this being one of the most in-demand job categories of the last year.

And one reason these jobs don't impact the economy noticeably is that they're not newly created; most are existing positions that are turning over.

Professional gigs that come with a wage upgrade are even rarer—which might explain why many professional positions that are open remain unfilled. As people become disheartened by the quality of the jobs available to them, they sometimes stop looking, electing to wait it out until the job market improves.

"It's hard to hear people say that there are no high-paying professional jobs out there when we had a listing for a $90,000-a-year accounting position in our finance department go unfilled for more than three months because we received so few résumés from qualified candidates," says a finance manager who works for a top-tier consumer products company based in the Bay Area. "It was frustrating because we know there are folks in the area with the skill set we needed." 

FOLLOW THE MONEY
Instead of settling for a job we're not thrilled about, many of us are launching small businesses of our own. San Francisco doles out 10,000 to 12,000 new business licenses a year, 90 percent of them for operations that end up with payrolls of less than $160,000 annually.

The Peninsula's technology sector is regenerating with start-ups, too; Karae Lisle, who co-owns Wellbourne International, a Menlo Park business that helps tech clients—from emerging companies to Microsoft—develop sales strategies and build revenue, says, "Business is great these days. More people are getting funded—technology companies are in vogue again." And she's right: venture capital, one of our key economic drivers, is far from dried up. According to Dow Jones VentureOne, the bucks invested in new Bay Area businesses increased in 2004 to $7.1 billion, 7 percent over 2003.

There's another reason you might have missed any new additions to the labor market. It's what senior economist Christopher Thornberg at UCLA's  Anderson Forecast, which studies the California and U.S. economies, describes as the "invisible workforce."

The federal Census Bureau collects employment data from households, and the Economic Development Department surveys corporations for payroll statistics. There's often a gap between these two sets of data, Thornberg ex­­plains. Not all workers are employed by corporations. That's why Thornberg be­­lieves that as many as 1.8 million Californians who've created jobs for themselves don't show up in state employment data. If he's right about that, then as many as 400,000 such jobs fail to show up in payroll data for Northern California.

This invisible workforce isn't a bunch of Avon ladies. The self-employed army is increasingly made up of highly educated business pros, folks who've hung out their shingle and now work as contracted consultants. Take Kara Halvor­sen of Sausalito. A specialist in human resources who's been a consultant for four years, she "decided to take destiny in my own hands. As a consultant, I'm focused on doing work. I'm not distracted by politics or trying to get a promotion. Today business is very good—I'm turning work away."

Consultants often come from fields such as accounting, finance, marketing, and high-level information technology, and they're increasingly vital to our economy. Even as business picks up, plenty of Bay Area companies remain under pressure to cut costs, so they're turning to contract consultants in lieu of permanent employees to complete mission-critical tasks. Because contract workers usually don't earn benefits, they're comparatively cheap, even at several hundred dollars an hour. This explains why "business services" was the second-largest area of job growth in the Bay Area in 2004.

And that's why bean counting is suddenly a glamorous career. Peter Mazonas, a retired TransAmerica executive, has leveraged his professional experience into independent consultant gigs since 1996. These days, hordes of local companies pay him up to $350 an hour to walk them through the SEC's new accounting and compliance rules known as the Sarbanes-Oxley Act.

Mazonas isn't the only one making hay off business services. There are currently more than 1,500 job listings under the keyword "Accounting" on Craigs­list, and at least 62 request Sarbanes-Oxley expertise specifically—impressive for such a rarefied professional skill. According to the state's Economic Development Department, an accountant with this level of expertise will make $80,000 to $100,000 annually. That sure beats the hostess gig.

It's hard to know how big the community of consultants is, but according to the most recent data collected by the Bureau of Labor Statistics, independent professionals make up 6.4 percent of the labor market—that's 13 million workers. Marion McGovern, cofounder of the SanFrancisco-based firm M2,  believes the Bay Area has a higher proportion of independent consultants than other parts of the country do. And McGovern should know. She's used them on consulting projects here and nationwide since 1988. Needless to say, her business is booming.

"Consultants are in the primordial soup here because this is an intellectual capital environment. People here want more control over their income and more control over their clients," McGovern says. "As independents, they get to choose their projects." That's why during times of gradual economic rebounding such as we're currently experiencing, when big companies are relatively cautious, the ranks of self-employed professionals should rise even further. This kind of work may not make you rich, but it's a good living.

Plenty of Bay Area residents have learned to get creative and are making this funky, quixotic economy work for them. Some have even cracked the real estate riddle. The days when venture capitalists would throw money at any idea that popped into our heads may be gone, but we can still think outside the box. And make it in the Bay—so that we don't have to move to the Midwest anytime soon.