Hard Times -- Tech workers trying to find jobs face a bleak future

Computer World ^ | April 29, 2002 | Julia King

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Hard times


Tech workers trying to find jobs face a bleak future

By
(April 29, 2002)
In interviews, more than 50 CIOs, high-tech hiring managers, recruiters, consultants and out-of-work IT professionals in different regions of the country told the same story: Two years of heavy corporate merger activity followed by the dot-com bust and a general downturn in the economy have brutalized the IT job market, victimizing even veteran, highly skilled IT professionals.

The result is the largest pool ever of unemployed computer specialists, who are alternately bewildered, angry and, increasingly, bitter. A harsh economy has forced many into lengthy unemployment, fueling two urban myths: Jobs are being lost to less-expensive younger or foreign workers. The mere mention of the federal H-1B program, designed to enable foreigners to supplement the U.S. workforce, often triggers extreme emotions.

It's true that most H-1B visas are used to hire computer workers, primarily as systems analysts and programmers at vendor companies. And younger workers are clearly a budgetary bargain.

But efforts to gather the statistics needed to capture a full picture of the state of IT unemployment revealed that in many cases, the experts don't agree, and in others, they don't even track the issue anymore.

Sobering Changes

What's certain is that IT employment is changing on all fronts, with the advantage sliding over to employers. Experts don't expect employment to climb back up to where it was in the heady dot-com years. The days of big perks and high salaries are gone. Job hopping is risky. Employees must be versatile and flexible.

Unquestionably, the brunt of the economy has come down full force on the employee side of the coin. The reasons for that are many.

More than 200,000, or up to 2%, of the country's estimated 10.4 million IT workers are now jobless, according to Harris Miller, president of the Arlington, Va.-based Information Technology Association of America. The industry group, which has lobbied for H-1B increases, also maintains that there is a major shortage of skilled technology workers.

But that just doesn't fly with the swelling ranks of unemployed IT pros, which include plenty of people like Mark Scoville, a 44-year-old software engineer with a computer science degree and 18 years of experience, as well as current Unix, Java and other skills. Since being laid off in November after three years at Campus Pipeline Inc. in Salt Lake City, Scoville has sent out hundreds of resumes and landed five interviews, with no success.

"I consider the situation rather bleak," said Scoville, who was told by one interviewer that he's one of more than 2,000 qualified but unemployed IT workers in his area. "This is the most difficult period of my entire career. A year and a half ago, I could have gone anywhere and named a price. This is definitely not the case now.

"I don't think my age has been a factor," Scoville added. Instead, it's his experience level and his corresponding higher salary. "There are people who are very well equipped coming out of schools. They're fresh, with quick minds, and they're very inexpensive entry-level people as opposed to someone like me who has been in the industry for 18 years and demands a higher salary," he said.

A second sizable group on the unemployment line are IT workers who have a wealth of experience in a particular job or industry but whose skill sets are relatively narrow. Once a project is over or as their companies evolve their computing infrastructures to include newer technologies, they risk losing their jobs.

For example, companies have severely cut back on large SAP projects. Rather than signing on for multiyear, enterprisewide implementations, the trend now is for companies to embark on SAP projects a small piece at a time. Companies with mainframe needs want workers whose skills extend significantly beyond the mainframe.

Dot-com job cuts also continue to add significantly to the unemployment numbers. Many of those workers laid off in previous years have yet to find jobs. Rounding out the jobless ranks are tens of thousands of consultants and contractors who have lowered their rates after being cut from projects.

And come next month, all of these unemployed groups will be competing for jobs with a flood of new computer science graduates.

Age Issues

Since younger workers are cheaper to hire, experts say the potential for age discrimination is greater than ever. Indeed, the Equal Employment Opportunity Commission reported in February that age discrimination is its fastest-growing type of complaint.

"It's true that when companies are trying to cut costs, they tend to lay off higher-paid workers, who also tend to be older workers,'' said Lisa Guerin, an employment attorney and legal editor at Nolo.com, a Berkeley, Calif.-based legal publisher. "And when they bring workers back, they tend to bring in younger workers. The incentive [to discriminate based on age] is there."

Still, some IT managers acknowledge a preference for younger, less-experienced workers who they can pay less and train in-house.

Looking Ahead

Even as the economy begins to bounce back, new IT jobs won't be added in significant numbers. This is because companies have adapted to operating with tighter resources and fewer employees and are reluctant to grow labor and the other costs they worked so hard to slash.

"Any hiring we're doing is primarily replacement hiring for people who have left the firm," said Mike Lowe, vice president of staffing at Newark, N.J.-based Prudential Financial, which employs 5,200 IT workers. "We'll keep growth under control."

Where does this leave the unemployed? In addition to a broad array of skills and experience, management skills can help you get your foot in the door, even for highly technical positions. Having cut out middle managers, companies need staffers who can self-manage, said Ed Jensen, a partner in Accenture Ltd.'s human performance practice in Atlanta.

In the meantime, many unemployed workers like Mark Scoville will continue to collect unemployment. What he's hearing on the street is "almost always the same story: When the economy comes back, there will be jobs. They just started saying this at the beginning of April," Scoville said. But he believes that people "are generally more hopeful than the reality holds."

Reporter Brian Sullivan contributed to this story.

The IT Job Market by the Numbers
In an effort to present the most accurate picture possible of the state of IT unemployment today, Computerworld staffers talked to researchers, recruiters, employment specialists, academics, government officials, H-1B experts (both pro and con), unemployed workers and employers. We perused statistics back to 1990 and found ourselves virtually stymied in our attempts to find government data beyond 2000. We believe the data presented here provides the best statistical view currently available.

THE AVERAGE H-1B HOLDER

HIGH-TECH EMPLOYMENT

COUNTRY OF BIRTH *China: Just under 10% †Canada: Almost 4% MAJOR OCCUPATION Computer-related occupations in general account for 53.5% of total H-1B petitions. 60% of the petitions that don’t apply to the cap were computer-relate. Systems analysts and programmers account for 47.4 % of approved petitions, more than half of which do not apply to the cap. (This comprised nearly 89% of the people within the computer- related fields. ) ANNUAL WAGE The median annual wage reported by employers for all H-1B workers is $50,000. Half of these workers are expected to earn between $40,000 and $65,000. Workers in computer-related fields had the fourth-largest median income, $53,000, with workers expected to earn $45,000 to $64,000. The median for cap workers was $50,000; it was $62,000 for noncap workers. HIGHEST DEGREE EARNED Bachelor’s degree or equivalent: 31% Master’s degree: 31% Doctorate: 8.1% Master’s degree or higher: 31% or more Source: U.S. Immigration and Naturalization Service, based on applicants approved to begin employment for the period from Oct. 1, 1999 to Feb. 29, 2000. Top five H-1B employers, October 1999 to February 2000, in terms of approved petitions: 1. Motorola Inc. 618 2. Oracle Corp. 455 3. Cisco Systems Inc. 398 4. Mastech Corp. 389 5. Intel Corp. 367 Note: Among the top 25 H-1B employers, which account for slightly more than 17% of the total petitions approved during the first five months of 2000, are the following high-tech companies and consultancies: PricewaterhouseCoopers, Lucent Technologies Inc., Nortel Networks Inc., Sun Microsystems Inc., Compuware Corp. and KPMG LLP. IBM ranks 35th; AT&T, 55th. Source: U.S. Immigration and Naturalization Service

10.4M Total number of IT workers in the U.S. 9.5M Total number of IT workers at non-IT companies 100,000 to 200,000 Estimated number of IT workers currently unemployed in the U.S. (up to 2% of the overall IT workforce of 10.4 million) Source: ITAA, an association of high-tech vendors and a proponent of the H-1B program TOP TECH AREAS 1. Silicon Valley 2. New York 3. Los Angeles 4. Philadelphia 5. Chicago Note: Boston was once a top five staple. Source: Dice Inc. IT Unemployment Statistics of Note 50% How much longer it takes older workers to find a new job vs. workers under 30 50% Probability that mature workers will experience a pay cut in future endeavors 80% Portion of layoffs due to some form of corporate restructuring 106:1 The odds of finding an entry-level position on one of the four largest Internet job boards* *According to a March 2002 analysis by outplacement firm Challenger, Gray & Christmas Inc. in Chicago. The firm arrived at the statistic by surveying popular Internet job sites, where it tallied up a total of 11,291 job listings and divided them by this year’s 1.2 million spring college graduates. Outsiders Need Not Apply Source: New York outplacement firm Drake Beam Morin

Related stories and links:

• Emotions Run Hot on H-1Bs, April 29, 2002
• The Picture of Frustration, April 29, 2002
• Landing an IT Job in Today's Tough Market, April 29, 2002
• A Survival Plan for the Unemployed Job Hunter, April 29, 2002
• What do you think? Share your thoughts and experiences in our online discussion forum.

[SoDak]

I love my job. I love my job. I love my job.

[UnBlinkingEye]

Bend over American hitech workers, prepare for the joys of globalism.

[RLK]

Eight months ago there was there was horrible compaint about the critical shortage of people. Now those in the business are screwed.

[glc1173@aol.com]

The fastest, surest way to create one job for one downsized native-born American IT worker is to send one H-1(b) back home to India.

And best of all, it costs nothing.

IMMIGRATION resource library: public-health facts, court decisions, local INS numbers!

[UnBlinkingEye]

The Republicrats have no concern over jobs lost in the U.S. Their goal is re-election and corporate sponsors direct their agenda and finance their campaigns, perhaps some day they will all be hoisted on their own petards.

[Joe Bonforte]

After 10 years, NAFTA has cost the USA 30 to 40 million jobs...

Uh, you wouldn't happen to have a source on that, would you? Nah, I didn't think so.

Our average unemployment rate since enactment of NAFTA has been lower than any other period of the same length since the late 1960s.

[SoDak]

Yes, I have three good friends who took IT courses and changed careers in the last couple of years that are now wondering what they possibly could have been thinking.

[RLK]

When, exactly was NAFTA implemented? What was the median adjusted income for white males before and since?

[Joe Bonforte]

Downturns are not pleasant, but they have a reason to exist. When the boom times of the late nineties caused unprecedented demand for hi-tech talent, many workers flooded into the field that were not suited for it by ability or experience. This downturn is shaking those people out. In the long run, that's good. When the upturn comes, those who are good will have less competition for jobs.

However, those accustomed to near-six-figure salaries for routine work are going to have to adjust their sites a bit. I'm not sure they were ever worth that much, and they certainly are not going to get it now.

[ijcr]

Quit whining! They're doing jobs Americans won't do, and they do not have student loans.

[Age of Reason]

Our average unemployment rate since enactment of NAFTA has been lower than any other period of the same length since the late 1960s

Sure--there's been lots of jobs around, and good thing, too; because I know a few people who need to work two or even three jobs to get by.

[apochromat]

Are CS programs just a diversion for keeping the EE job market bright? :)

[Joe Bonforte]

NAFTA began at the beginning of 1994. I don't have ready figures on income before and after, but real income (adjusted for inflation) has been slightly higher every year for which I've seen figures. Unemployment since then has averaged under 5%. For comparison, unemployment during the 1980s averaged 7.2% and during the 1970s it averaged 6.2%.

[Joe Bonforte]

I know a few people who need to work two or even three jobs to get by.

So do I. When the government is taking close to half of a middle class income in taxes, you might need two jobs (or a working spouse) to keep up. I don't blame anyone in the private sector for that, nor NAFTA or any other free-market reform. I blame politicians that can't keep their hands out of everyone else's pocket.

[UnBlinkingEye]

Downturns are not pleasant, but they have a reason to exist. When the boom times of the late nineties caused unprecedented demand for hi-tech talent, many workers flooded into the field that were not suited for it by ability or experience. This downturn is shaking those people out. In the long run, that's good. When the upturn comes, those who are good will have less competition for jobs.

You don't have a clue Joe, millions of jobs have been lost and the H1-B program is a major factor. Combine that with the flight of jobs outside the U.S. and we have a problem never before seen.

However, those accustomed to near-six-figure salaries for routine work are going to have to adjust their sites a bit. I'm not sure they were ever worth that much, and they certainly are not going to get it now.

What kind of work do you do? My guess is that you don't add much to society or production, please prove me wrong.

[Dominic Harr]

I think that the real issue is that the high-tech industry is at a crossroads.

The old software world is dying. Shrink-wrapped CDs you purchase at CompUSA will be completely gone in 5 years. Software is evolving from simple tools to complex, web-enabled "distributed applications".

The same thing that is happening to music -- and is about to happen to movies and TV -- is happening to software. Software is no longer a 'product'. It's now correctly realized to be a 'service'.

By far, most of the tech industry is planning on taking the 'head in the sand' approach for the next few years. Just like the music industry's reaction to online music.

There's a massive glut of technical talent out there.

And no vision in these corps for how to use it.

The corporate executives in charge of making the IT decisions have no idea how to proceed. They're completely baffled by the new world they find themselves in. Someone is going to have to write a best-selling book with a catchy title -- "Swimming with the Software" or "The Software Practices of Atilla the Hun" -- before these executives will flock to the new paradigm.

And when that happens, the cycle will start again.

[Age of Reason]

So do I. When the government is taking close to half of a middle class income in taxes, you might need two jobs (or a working spouse) to keep up. I don't blame anyone in the private sector for that, nor NAFTA or any other free-market reform. I blame politicians that can't keep their hands out of everyone else's pocket.

The tax rate was a lot higher in the 1960's.

I seem to remember the federal rate alone was something like 90% for the higher brackets back then.