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Labor in the network society 189ensure that those innovations quickly diffuse through the regional economy(Castells and Hall, 1994; Saxenian, 1994; Kenney, 2000; Lee et al., 2000).Intermediaries have also contributed to growth in the regional economy inimportant ways. As I argue in more depth elsewhere (Benner, 2003b), labormarket intermediaries help to reduce transactions costs, help both firms andworkers manage risk, and help to form the institutional infrastructure of thesocial networks and production relationships that have been such a critical partof the region’s economic success. At the same time, however, flexibility andintermediation have also contributed to the high levels of insecurity andinequality that characterize labor markets in Silicon Valley. 5Flexible work and flexible employment relations clearly increase insecurityfor workers. This has been made abundantly clear in the recent economicdownturn, as tenuous and mediated employment relationships facilitated therapid reduction in people employed in the region, with unemployment jumpingfrom 1.3 to 7.7 percent in the space of thirteen months. The level of insecuritygoes deeper than simple employment figures. In the highly volatileinformation-technology markets, workers have to continually upgrade theirskills, through both formal training and informal learning. As the pace of technologicalchange increases, workers frequently discover that their skills arevalued less by employers, pushing them to return to school for significantretraining or to develop an entirely new career. Periods of unemployment,therefore, are not simply the result of cyclical patterns in the economy, butmore a reflection of structural changes, and, as a result, people who experienceunemployment often have a difficult time finding employment again, and facelonger periods of unemployment while searching for new jobs (Baumol andWolff, 1998).Gaining the skills necessary to be successful in the labor market has alsobecome more of an individual’s responsibility, as the growth in flexible workand flexible employment relations has served to undermine the investment offirms in training. The intense pace of competition means that firms feel theyhave little “luxury” for providing training for people without readily identifiablevaluable skills, and thus they expect to hire people with the exact matchof skills for a particular job or project. Most employers are reluctant to investin retraining their workforce for fear that the workers will leave and take theskills with them, or, if they do stay, that the demand for the skills will not lastlong enough to make the investment worthwhile. The lack of retraining exacerbatesimbalances between supply and demand when markets shift becauseemployers have to wait for employees to train themselves in the new skills,typically waiting for the next generation of graduates (Cappelli, 2000). Thus,rapidly changing work requirements can create significant labor marketshocks for people, increasing the risk of serious misfortune.The most negative impact of flexibility on workers’ outcomes in the labor