The Bust Hits Home
If you think the problems of the dot-com worldare limited to Silicon Valley, think again. Yesterday it was the McDonough warehouse workers; today it might be you.
About 450 warehouse workers in south Atlanta’s suburbs woke up unemployed yesterday, victims of the Internet recession.
They had taken their jobs with great hope (and some fanfare) just 18 months ago, lured not by the promise of Internet riches but by a regular paycheck in a state-of-the-art facility.
The warehouse in McDonough fulfilled Amazon orders from around the Southeast, cutting delivery times and (with volume) costs. Now the warehouse must be cut if Amazon is to earn the fourth-quarter profit Wall Street demands as the price of its survival.
Some of those workers had bought homes or taken out other debts based on the promise of their jobs. Most aren’t highly skilled, and they may have trouble finding new work. For some, the debts will go unpaid. Perhaps some homes and cars will be lost.
In a growing economy, this is no big deal, but for the first time in many years, Atlanta’s economy is no longer growing. So some of those homes may become a tougher sell than they were a year ago. The prices of homes may fall. The commissions of real estate agents will fall as well.
I have a friend, a lawyer, whose practice involves seizing property for creditors. His business should be helped by these financial troubles, but there aren’t many other winners. Just as few investors sell short, and few animals fill the vulture’s niche, so few businesses really benefit from hard times, and then only briefly.
The point here is that the problems of the dot-com world have a ripple effect in the real world, one that’s not limited to Silicon Valley or Silicon Alley. Many people in the Internet economy aren’t really Internet mavens at all, but ordinary working stiffs who are now looking for work.
The pain is growing at an accelerating rate. Challenger, Gray & Christmas reports there were more than 54,000 layoffs in the Internet sector this month, up 12,000 from a month ago.
John Challenger himself told the Los Angeles Times recently that the “ripple effects” of the Internet recession may be worse than in other industries because many firms relied heavily on outside consultants who are now left with unpaid debts and troubles of their own. UCLA economist Tom Lieser told the paper that for each Internet job lost, another 1.5 to 2 additional jobs are disappearing.
All this happens in slow motion. First the stocks fall and everyone laughs. Some high-priced talent loses his or her stock options, and we cry crocodile tears. Then some real jobs are lost, but we figure the market is so tight there is nothing to worry about.
Just in case, however, we put our wallets into our pockets for the Christmas season. So more jobs are lost, and a vicious circle is set in motion — a circle turning in the opposite direction from the virtuous one we lived in for eight years.
It’s a brand-new world out there, a harder and more realistic one. Those McDonough warehouse workers know it now. And it could get worse. My kids, for instance… they do like those Webvans.
