Economists often talk about the ripple effect — each job supporting X number of other jobs as spending ripples through the economy like the circles created when you throw a stone in a lake.
Ripple effects are often exaggerated for propaganda purposes, but let’s assume that “Every job created at Qualcomm generates about 2.3 jobs in the region,” as the San Diego Workforce Partnership and the San Diego Regional Economic Development Corporation stated in a study that examined the company’s impact on the local economy through 2010.
Qualcomm purchasing adds up
In 2010, Qualcomm directly accounted for a bit more than 1 percent of the county’s total annual output of goods and services, according to the study. Indirectly, taking the ripple effect into account, Qualcomm contributed 3 percent to the local economy.
Qualcomm’s daily purchasing activities generated $895 million in indirect economic activity, according to those 2010 figures. That, in turn, supported 5880 jobs throughout the local economy. The company’s day-to-day activities indirectly created 1090 jobs in drinking and eating places and 470 in real estate. (As employees wait to find who will go to the gallows, Qualcomm must be creating more jobs in drinking establishments.)
The question is this: can we measure the reverse ripple effect? Qualcomm intends to cut employment by 15 percent. Insiders say the cuts will come in mid-September. We do not know how many jobs will be slashed locally or what kinds of jobs, at what salary levels. The telecom giant has 31,300 full-time, part-time, and temporary employees, of whom 15,000 work in San Diego County.
Wall Street pressures Qualcomm
The company, under pressure from Wall Street, may also split itself into two enterprises — its chip business, which is a big revenue producer, and its wireless technology licensing operation, which creates fat profits.
If the company does that, some other semiconductor firm may buy or merge with Qualcomm’s chip operation. The semiconductor business is mature, and today’s mergers in that industry usually are for efficiency purposes — that is, employee heads roll as plants are consolidated. Perhaps Qualcomm’s semiconductor business could move its headquarters out of San Diego.
Says Kelly Cunningham, economist for the National University System Institute for Policy Research, “Given the ripple effect, I would say the effect [of Qualcomm layoffs] could be substantial. Tech jobs on average are paying $114,000 [a year]. The per-job overall pay for San Diego is $56,500 annually. If you subtract tech jobs from that figure, it is $49,300.”
Big bucks in telecom
Average pay for telecom jobs is $133,500, says Cunningham. Should some of those jobs be lost, “that money would not be spent on cars, houses,” he says. There could be layoffs in other industries, such as restaurants. “For every job lost at Qualcomm, at least one job would be lost [elsewhere in the economy], and perhaps two.”
Of course, there could be positive effects. San Diego’s home prices and rents are exceedingly high because supply is low and demand high. If some of the single-family homes and condos went on the market as a result of Qualcomm-related head-chopping, and more rental units became available, some homebuyers and renters might be able to find a place to reside without living beyond their means.
Workforce Partnership optimistic
Peter Callstrom, president of the San Diego Workforce Partnership, is optimistic. He says there is strong demand for jobs in technology, engineering, and mathematics — the kinds of jobs that might be whacked at Qualcomm. He thinks former Qualcomm jobs of all kinds can be absorbed in San Diego. “Demand for employees has increased significantly,” he says. “We see more openings than we have seen in quite some time.”
Statistics compiled by Tina Ngo Bartel, the partnership’s director of business programs and research, tell a promising story. She eyes data from Burning Glass, an online database that scans online job postings to measure labor-market demand.
Jobs in software
Between May 1 and July 31 of this year, there were 4002 local job postings for software developers. That’s almost double the number for the same period last year. “If Qualcomm is laying off any [software] developers, there is strong [local] demand to absorb that workforce,” says Ngo Bartel.
The same is true for secretaries. Between May 1 and July 31 of this year, there were 1332 secretarial job postings, more than double the number in the same period last year. Total job postings have grown sharply in the period — from 45,115 last year to 68,324 this year. Ngo Bartel cautions, however, that the individual numbers can be misleading; it’s better to look at the trends.
Full-year postings from 2010 through 2014 show strong jobs growth.
Qualcomm employees bitter
But don’t talk optimistically to Qualcomm employees. They are posting bitter anonymous messages at Qualcomm Inc. Layoffs. Some samples: “There are better options than [Qualcomm] now. It was good while it lasted but the decline has been in for last 5 or so years.”
“Working at [Qualcomm] is as good as working in a sweatshop in Bangladesh.”
“[Qualcomm] is [an] extremely corrupted environment.”
“If nobody does anything, these unethical practices will continue; this is not [a] third world country here (yet).”
“Layoff.com is showing true colors of unethical internal biz@[Qualcomm].”
“Do you say Qcorruption?”
Complaints about H-1B program
Many of those making posts complain about the H-1B visa workers, who come from foreign countries (heavily India) and work for lower pay, often replacing Americans. Here is an example: “Stop American Sweatshop @ [Qualcomm]. Lay [off] H-1Bs.”
“Chances are the American born will be targeted over the foreign workers (H-1Bs).”
“H-1B[s] bring Ghetto mentality to the workplace.”
“H-1B only benefit and wanted by the billionaires club and should not be here in the first place.”
Paul Jacobs gripes
Then, there are obvious jabs at Paul Jacobs, son of the cofounder, who was replaced as chief executive last year but continues to draw extremely high compensation. Last year, Jacobs and the chief executive who replaced him, Steve Mollenkopf, had a combined total of $117.7 million in compensation, much of it delayed. This is causing bitterness, to wit: “You’ve heard of the Midas touch? How about the [Paul Jacobs] touch — everything he touches turns to sh*t.”
“How do these people sleep at night knowing they are destroying people’s lives while raking in 8-figure compensation?”
After the layoffs, Qualcomm will have to repair morale.