My experience as a senior dev who is often involved in the recruitment process (admittedly in Sweden and not Silicon Valley) is that there are hundreds of people applying but they all lack sufficient skill. We still have a severe shortage of people who can actually do the job without requiring so much hand holding that they have a negative impact on productivity. There seems to have been a surge in “quick-fix” educations that are a couple of months long, and the new iPad kids are already behind when they start the education because they don’t understand how a computer works. They have no interest in the craft and don’t enjoy it, they just want to check off a detailed todo list and get a fat pay check. We need people who can think, extrapolate from unclear requirements, and ask smart follow-up questions.
The demand is still there, the supply isn’t. Half of these applicants couldn’t even implement FizzBuzz.
I feel like all fresh out of school employees are productivity drains. But the profession doesn’t get experienced employees without hiring inexperienced people and training them, so it’s worth doing a little on-the-job training to make them useful, otherwise you end up in the state you’re describing where you want experienced devs and there aren’t any.