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.

[Joe Bonforte]

You can look at the graph of unemployment before and after NAFTA on this page .

Note that it was around 6% when NAFTA came into effect. It declined steadily for several years after that.

[RLK]

Engineering in this country has been dead for years and is getting deader with the exception of a few specialties. I was just telling Don Myers privately that I had just cut two cylinder lenses for my second personal laser-driven interferometer tonight. I elected to retire. I'm very good at what I do. I would work in research and development for expenses just for the fun of it. It's a dead field in this country. It's all being done elsewhere.

I'm an instrument machinist in the Swiss mode, a scientific glassblower, knowledgeable about electronic engineering, a real time data acquisition computer programmer, and about a dozen other things. There is now little use for any of it over here. The Washinton Post employment sections are as thin as toilet paper.

[Dominic Harr]

However, those accustomed to near-six-figure salaries for routine work are going to have to adjust their sites a bit.

I agree, this shakedown is overall a good thing.

It should also prove to be a hotbed of new development, if there's enough 'Capitalist' left in America. That's how this is suppose to work. Out-of-work developers better not be just sitting around on their tuckus watching Oprah. Developers develop. All good developers have 'hobby' apps they're working on.

Altho I do worry that the software market isn't a 'free' market. If one of the giant software companies can just copy and bundle any new software that comes along, will there be enough incentive to developers to risk spending all that time and effort on developing something that will just be taken away?

[sinkspur]

Hi-tech workers (or any person with a specialized skill) would do well to find a company like an EDS or IBM Global Services that outsources services. There are many smaller companies that do the same things.

The biggest trend in this decade will be a focus on core competencies. IT, HR, even repetitive manufacturing will be given to those who can do it best.

[TheDon]

The job market in Orange County, CA, "Silicon Valley South", is pretty bleak for software/firmware engineers these days. Most of the people I know who have gone through a RIF here are unable to find any openings. Many of the recruiting firms are going through "adjustments", as they have no jobs to pitch.

[Dinsdale]

would do well to find a company like an EDS or

Flip burgers before you work for EDS.

[Joe Bonforte]

"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."

Then why did our unemployment go down during most of the nineties when the H1-B program was at its height? The H1B program was a response to a severe shortage of tech talent in the 1990s. For several years, anyone in the industry who was any good could write their own ticket. Without those resources helping to bridge the gap in demand, our entire economy would have suffered.

And we will hit that point again in the future, despite the current downturn. In the long run, there has always been and will always be more demand for thinking, problem-solving individuals than the available supply. Using those resources effectively helps the economy as a whole, both here and where those people live. If you don't get the idea behind that, try reading Ricardo's work on comparative advantage, or any other good free-market-oriented economics book such as Basic Economics by Thomas Sowell.

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

I don't see why you feel the need to villify someone just because they hold different opinions (opinions that happen to be very free-market oriented, by the way). But to answer, I have worked in the computer industry for 25 years, doing everything from coding to running tech support to managing a good-sized consulting business. There are many systems that I have written out there doing productive work, some of which have been doing it for many years.

[RLK]

The page is interesting. The recruiters I talked to noticed a flattening and decrease im demand for professionals in the last quarter of 88. There was an economic upturn in 97 after years of disaster. I'm still interested in knowing income distribution and how many people are underutilized. Accordin to my figures Median adjested white male income had decreased about $4,000 between 1973 and 1997.

[Joe Bonforte]

I agree, this shakedown is overall a good thing.

Feels a bit strange to be in agreement with you on something in the tech industry. Glad we have some common ground, however.

[Dominic Harr]

There are many smaller companies that do the same things.

CSC isn't such a small company . . . :-}

But I actually think there's a major software revolution right around the corner. We're building internal tools that are amazing. It'll take broadband, but when broadband penetrates to enough homes, suddenly a laaaaarge amount of 'rich-client' systems, everything from movies and music to every single type of current application, become profitable.

Very profitable.

If a web app can just get a few hundred regular paying customers, they can generate a living wage. And the upside is huge -- Ultima Online has 10,000 customers paying $10 a month. Ch-ching!

With very little actual risk.

My advice to many of these developers is to start trying things. Let Capitalism work.

[Reeses]

up to 2% of IT workers are now jobless

Isn't the general unemployment 6 to 8 percent? If that 2 percent figure is accurate then IT is an employment haven. Personally, more than 2% of IT workers I've known should be unemployed.

[SamAdams76]

The pendulum has certainly swung in the other direction. I manage a branch for a high-tech firm and two years ago, I lost most of my best people to companies like Nortel Networks, Verizon (then Bell Atlantic) and others. Now many of them are laid off and knocking on the door to come back in. My company is mid-size and the pay is modest. But it is a very decent place to work. Upper management treats you well, the benefits are good and the company rewards loyalty. Many people in my company have been there over 20 years, which is unheard of in most high-tech companies. I also had opportunity to jump ship for a higher salary but decided to stay where I was. For those who left, well, they made their choices. All that extra money they made by jumping ship is being washed away as their time on the unemployment line grows.

If you find a decent place to work, stay there! For those places are few and far between.

[SoDak]

I believe it. It's getting thinner here too. Especially for some of the things you do. I'm a jack of all trades. I've got a degree in Business Administration (basically worthless) and worked in sales for 10 years. 7 years ago I taught myself computers and began collecting certificates from IBM, Sun, Unisys, and Cisco while working for my current company who afforded me the chance to learn on the go. At this point, I'm in IT pretty darned solid and can fit into any organization, however I work for a very stable niche company that is busier than ever. If things go down the tubes though, I know how to use a hammer, a tractor, and a shovel, so I'll get by.

[Dominic Harr]

Personally, more than 2% of IT workers I've known should be unemployed.

Oh, man, you said a mouthfull.

I work for a corp, so have no control over some of the people I have to work with.

It's interesting -- corps are sloooowly starting to realize that IT is a market similar to the sports market. IT employees are the 'talent'. A 'good' IT worker can produce 4-5 times what an 'average' IT worker can. And a true 'Guru' can make the impossible into the sweetest architecture you've ever seen.

[SoDak]

I was offered an obscene amount of cash to take over the IT department of an Insurance firm in Mpls two summers ago. I declined simply because I didn't want to live in the city, and didn't want to be trapped in an office. I'm SO happy I saw past it and stayed where I am. I work for a great little company, won't ever get filthy rich, but mgmt is great and I travel a lot, so the variety of scenery is refreshing.

[FITZ]

Do you live in an area affected by NAFTA? It's killed this part of the country which was declared an economic disaster in the 90's when other places were supposedly booming. The middle class is moving out of the region and all the jobs are going out. Someone from one of the maquilas was telling me that the maquilas in Mexico aren't doing so well and are laying off workers ---for one it's even cheaper (cheaper than $3 a day for a Mexican) to move these companies to China where the worker quality is better.

[Joe Bonforte]

I'm still interested in knowing income distribution and how many people are underutilized.

It's very hard to get good numbers on changes in income because there are many factors to account for - inflation, taxes, etc. For example, if the inflation figures used to get your numbers are incorrect (and many experts believe inflation is overstated in government figures), then over a span of time that could result in big differences in adjusted income figures.

I prefer to look at measures of living standards, because those are much more objective. Here is an article that details increase in living standards in the past couple of decades:

Here

I've seen a more recent version including a nice table of changes in things like average size of a house, percentage ownership of cars and air conditions, and so forth, but I can't lay my hands on it.

[nutmeg]

Bump to read later

[apochromat]

Hi,

I was reading about all your talents and thought you might be interested in a telescope camera control project I'm thinking about. The unique twist I'm contemplating in a telescope camcorder combination is to use the large LCD screen on the newer camcorders as a surface for a removably attachable optical sensor made of a small number of photosensitive semiconductors, perhaps having 16 or 32 photosensors in total.

The main operating idea is to fix the telescope on any bright star, and physically plop the sensor down onto the camcorder LCD, over the star's image there. From there on, the sensors will maintain the star in the same place in the field of view, using a simple feedback control algorithm with amospheric turbulance averaging. I'm also thinking of using glass fibers at the connector to divide the sensor area and permit the sensor devices to be mounted on a location that won't weigh down the LCD. Software support for inputting the star's name to a redirection controller would be the next step.

It's just a hobby for me. I don't have any time to make money from it, so I'll leave that to whoever might want to try. Maybe you could let me know what you think. :)