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

Computer World ^ | April 29, 2002 | Julia King

[Mini-14]

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]

Do you live in an area affected by NAFTA? It's killed this part of the country...

I think all parts of the country are affected by NAFTA. But some of them are affected for the better and others for the worse. Overall, free-trade theory says, and the stats back it up, that the effects for the better outweigh the effects for the worse by a wide margin.

[SamAdams76]

You and I think alike in that respect. I know I could make more money elsewhere but I like where I am. I know all the executives in the company all the way to the chairman. More importantly, everybody at the corporate offices know who I am. I'm not just an employee number on an HR spreadsheet. I have all the support I need to run my branch effectively. I've turned a profit and made bonus just about every year. It's a fun place to work. I always look forward to Monday morning and I usually don't bother taking all my vacation days because I can't stand being away from the office for more than a few days at a time. That said, I'm not a workaholic either. I'm usually home by 5PM everyday and I haven't worked a weekend or a holiday in 15 years. The people in my department who left for that extra $5,000 a year are fools. They went into a high-stress environment in huge companies where they were unknown outside their "group" and when the layoffs came last year, they were the first ones to go.

[apochromat]

And I could've sworn I pressed the "private reply" key. <:^O

[FITZ]

that the effects for the better outweigh the effects for the worse by a wide margin.

I don't see the evidence of that at all. We're in a recession, Mexico is in a recession, the entire border area is now being considered an economic disaster in need of huge amounts of federal money. Social program spending is higher than ever. In spite of jobs leaving this country at a very high rate, unskilled immigrants are flooding over the border and wages are dropping in many job categories. The national debt rose in the 90's and more people foreclosed on homes than ever before.

[RLK]

There's no reason why it can't be done. You could probably use two DC motors that could be speed controlled by voltage on the X and Y axis. Take a photocall output on a distant pinpoint star. A computerboards DSI 08 Jr. card on an IBM compatable would allow you to read the photocell outputs. The same card could be used to adjust the current to the motors. A BASIC program could analyze any slippage at the rate of 1000 times a second very easily. You's want tome kind of variable transform operated by step motors to do it.

[lewislynn]

It's just a hobby for me. I don't have any time to make money from it,

Not being in the tech industry (believe it or not, not everyone is) I have no idea what you're talking about, I don't even know what "IT" stands for, BUT, I do know It's ideas like yours that create companies, jobs and careers.

It's layed off people with ideas and intellect like you that are capable of creating their own work rather than whine about being layed off...Which might explain why you don't have time. You're possibly already busy creating for someone else.

[brat]

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

[technochick99]

bump

[UnBlinkingEye]

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

You: "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."

Sorry Joe, I shouldn't have gotten personal about this and I have no doubt you make a great contribution. I am a software engineer who was coding Windows applications and leading projects for the past fourteen years, my last employer went bankrupt and I have been out of work for several months. It's not much of an excuse but I am one of those engineers who was making a six figure income and now find myself and my family trying to live on unemployment compensation of $478 a week.

Once again, please accept my apology for my ill considered remarks.

[Joe Bonforte]

Once again, please accept my apology for my ill considered remarks.

It's Ok, I have friends in the same boat. I went through such a period myself in the late 1980s. No work in my area, no matter how good you were. After eight months of looking, I took a job doing Unix, which I've never cared for.

But two years later the industry began to come back, and by 1995, salaries for developers were rising 15-20% per year. That boom lasted six or seven years. The key to getting by in this industry is to realize that today's big money may be gone tomorrow, so save, save, save, and don't get dependent on the high income. Hard advice to follow at this point, I know.

[Toddsterpatriot]

I don't see the evidence of that at all. We're in a recession, Mexico is in a recession, the entire border area is now being considered an economic disaster in need of huge amounts of federal money. Social program spending is higher than ever. In spite of jobs leaving this country at a very high rate, unskilled immigrants are flooding over the border and wages are dropping in many job categories. The national debt rose in the 90's and more people foreclosed on homes than ever before.

And Nafta is to blame for all of this? Wow, powerful legislation.

[irgbar-man]

Would you count me as #4?

[fightu4it]

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

What about per capita income for the same period. Adjusted for inflation, of course.

[savedbygrace]

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 US average is around 6% now, isn't it? And these weenies are complaining about 2% unemployment? Sheesh.

[Rev DMV]

That number doesn't sound right.

We had a similar experince here where I work. For several years they couldn't even hire a single person(Manufacturing company in Silicon Valley, wages were not even close to the going rate and the working conditions are very blue collar), turn over was high. Now, we are fully staffed and every single person that left has called back in the last year looking for work.

I had several chances to leave but I entrenched myself in some mission critical stuff and expect to hang on through this downturn.

If history show anything, there will be another computer boom. Somewhere, some geeks are currently creating the next thing, and we'll be off and running again.

[Joe Bonforte]

"What about per capita income for the same period. Adjusted for inflation, of course."

As I said in another reply, it's very hard to get any reliable numbers for such a measure. We hear the horror stories of decreasing incomes, but hard measures of living standards (percentage of people who own their own homes, have a car, a telephone, VCR, etc., plus things like average home size) have had a steady increase as long as numbers have been recorded. See here for one example of a report. (I've seen an updated version of this that says basically the same thing, but I believe I saw it in print and I can't find it on the web.)

The numbers you want would depend heavily on government statistics. Do you trust those numbers? I don't. Neither do these people.

In short, while some incomes go up and others go down, every objective measure says the trend is toward better living standards, even when increasing taxes, etc. are taken into account. So I take all these studies on incomes with a huge grain of salt. They can't even come up with a decent measure of inflation! It is well know that the CPI has some serious flaws because it does not take technological evolution into account very well.

[A. Pole]

The US average is around 6% now, isn't it? And these weenies are complaining about 2% unemployment? Sheesh.

This 2% number is obviously false.