THE CHIP IS HERE TO STAY
Siegel, Lenny
THE CHIP IS HERE TO STAY Just the glitter is gone BY LENNY SIEGEL Three years ago, a group of up-and-coming politicians proudly proclaimed themselves "Atari Democrats." They believed that...
...But not all high-tech companies are feeling the pinch...
...Lockheed Missiles and Space Company can barely fill 1,500 professional slots...
...Some firms were stupid, but even those that grasped the dimensions of the market had little choice...
...It is here to stay...
...Those of us who place a priority on the creation of decent jobs for everyone willing to work cannot turn back the high-tech clock...
...The glamor industry has lost its glitter...
...Progressives must look beyond the current high-tech recession, since the dynamism of high-tech, not its occasional stagnation, poses a threat to the economic well-being of the United States...
...At semiconductor plants, chip sales dropped precipitously...
...Supply outstripped demand...
...Apple Computer, Intel, and National Semiconductor have been among the hardest hit...
...As unsold machines jammed warehouses, manufacturers stopped ordering components and even dumped surplus chips back onto the market...
...Firms which just months ago were rushing to bring new factories on line temporarily closed plants and laid off workers to cut costs...
...Workers, their families, and their communities suffer...
...Some computer equipment companies are also hiring, though this does not generate the news stories that accompany layoffs...
...Indeed, employment in the Silicon Valley electronics industry settled at 202,400 in May, down from December's level but still well above the mark of May 1984, according to a report by California's department of employment development...
...Business Week, hardly a prophet of industrial doom, warned of the problem: "Those Vanishing High-Tech Jobs" read the headline of its July story...
...To underproduce would be to abandon market share to their prolific competitors...
...But in 1985, the computer market leveled off...
...The sales of integrated circuits reached a record high in late 1984, at twice the 1982 level...
...line, and Apple released almost 3,000 of its 8,000 employees...
...Hewlett-Packard has also slashed the salaries of top executives by 10 per cent and stopped serving free pastries to its employees each morning...
...A significant minority will find more remunerative, interesting jobs, but the middle class of skilled and technical workers will find its skills downgraded and incomes reduced...
...As computers and microprocessors are introduced into virtually every type of American workplace, Lenny Siegel is Director of the Pacific Studies Center in Mountain View, California, and editor of the Center's monthly newsletter, Global Electronics...
...This process is already under way in Silicon Valley...
...Though the Atari company foundered, the Atari Democrats flourished, and high-tech took on all the characteristics of a cult, embraced by leaders across the political spectrum...
...This year, however, the bubble burst...
...Left unchecked, the owners and managers of businesses and government agencies will use high-tech equipment to divide the American work force...
...The Valley is far from an industrial ghost town...
...Even in periods of expansion, high-tech industry does not provide stable employment...
...What we can do is use collective action and influence public policy to minimize the destructive impact high-tech could have...
...IBM dropped its "PC Jr...
...In the early 1980s, companies making computers, software, components, and communications equipment grew at an explosive rate...
...And even some non-military suppliers are enjoying modest growth...
...But rumors of Silicon Valley's death are greatly exaggerated...
...Tandem Computers boosted employment 7 per cent in the first quarter of 1985, a lower rate than 1984 but still respectable...
...The launching of IBM's "PC" personal computer a few years ago set the stage for a new round of high-tech competition...
...High-tech firms, including such blue chips as Control Data, Data General, Mostek, Texas Instruments, and Wang Labs, laid off thousands of workers...
...Buoyed by IBM's success, hundreds of companies—from garage shops to such giants as AT&T, ITT, and Fujitsu—joined the microcomputing industry...
...In Silicon Valley, forty-eight microelectronics firms laid off a total of 10,000 employees between January 1983 and March 1985, even as employment in the industry rose by almost 20,000...
...Even when other jobs are available, the transition is often difficult and costly...
...They believed that America's future economic strength depended on the growth of the high-technology electronics industry...
...In the euphoria of a booming market, producers set unrealistic sales targets...
...At first glance, it appears that such high-tech enclaves as the Silicon Valley, Dallas, and Boston's Route 128 Corridor are well on their way to becoming high-tech ghost towns rivaling the all-but-abandoned factory towns of the Middle West...
...And total employment in Silicon Valley rose to an all-time high in May, with the jobless rate falling to 4.8 per cent...
...While entrepreneurs may move on to start new firms, and venture capitalists may concentrate on other parts of their portfolios, the assemblers and technicians are thrown out onto the street...
...The classes may cross paths in company cafeterias or parking lots, but otherwise they live in separate worlds...
...American society is likely to become much more polarized, with a vast number of unemployed workers and poorly paid operatives stuck on the lower rungs of the ladder...
...The current slowdown is but a small, ephemeral dip in hightech's growth curve...
...He is the author, with John Markojf, of "The High Cost of High Tech: The Dark Side of the Chip," which will be published by Bessie Books/Harper & Row this fall...
...millions of people are losing their jobs...
...The work force is sharply divided into two groups that are culturally, financially, and geographically distinct...
...Military electronics contractors remain, robust...
...Even Hewlett-Packard, considered one of the industry's most stable employers, has shut its plants for one or two days each month as an alternative to layoffs...
Vol. 49 • October 1985 • No. 10
