Study: IT worker unemployment at 'unprecedented' levels

Computer World ^ | SEPTEMBER 17, 2003 | Patrick Thibodeau

[Mini-14]

About 150,000 IT positions were lost in 2001 and 2002

SEPTEMBER 17, 2003 ( ) - DALLAS -- Unemployment for IT workers reached 6% this year, an "unprecedented" level for a profession that was once a sure path to a well-paying job, according to a new study that also found that foreign-born workers now account for a fifth of all IT employees in the U.S. The report also found that the percentage of laid-off foreign-born IT workers is slightly higher than for U.S.-born workers.

The study, which was presented at a congressional forum today by the Washington-based nonprofit group Commission on Professionals in Science and Technology (CPST), affirms what IT managers have seen in response to help-wanted ads. "I'm sure the number is 6% or higher," said Michael Russo, a data center manager at Wyeth, a Madison, N.J.-based pharmaceuticals giant.

A recent third-shift job in the company's operational data center drew 168 applicants. "There are a lot of people who are out of work," Russo said.

Randy Rosenthal, manager of computer operations at Southwest Securities Group Inc. in Dallas, has seen the same trend: highly qualified people with multiple degrees applying for jobs IT managers once had trouble filling. "That tells me that 6% has hit the IT area pretty hard," he said.

About 150,000 IT positions were lost in 2001 and 2002, about two-thirds of them in programming, the report said.

Two years ago, Phoenix-based water and electric utility Salt River Project had an open position for an operations analyst and received about 15 applications; last year, it posted a similar position and had 50 applicants. This year the 800,000-customer utility has a hiring freeze, said operations manager Dewayne Nelsen.

There was a sense of grim resignation about the latest report among some IT managers at a conference held here by AFCOM, an Orange, Calif.-based data center managers user group.

Several IT managers, some requesting that their names not be used, told of data center consolidations that led to layoffs or offshore plans. For the future, automation improvements and the development of "self-healing" applications will also hurt some IT career paths. The career advice from one IT manager was to avoid the technical aspects of the profession and focus more on IT management training.

IT unemployment rates were as low as 1.2% in 1997, shooting up to 4.3% in 2002.

But the overall number of IT jobs has seen remarkable growth, tripling in the past 20 years, according to the CPST, which conducts labor force and educational research for a range of scientific organizations and companies. The IT labor force grew from 719,000 jobs in 1983 to 2.5 million at its peak in 2000.

With the growth of IT came an increasing reliance upon foreign workers. This increase was facilitated by legislation expanding the use of H-1B visas, which allow skilled foreign workers to take jobs in the U.S. for up to six years. A cap of 195,000 on the number of visas that can be issued has been in place for each of the past three years, but the cap will drop to 65,000 on Oct. 1. L-1 visas, which allow companies to transfer foreign employees into the U.S., have tripled in use.

The report, sponsored by the Alfred P. Sloan Foundation in New York and the United Engineering Foundation, an umbrella organization for engineering groups, draws no firm conclusion on the offshore outsourcing trend. But it recognizes predictions made by analyst firms, including Gartner Inc., which in July estimated that 10% of all U.S. professional jobs in IT services companies would be transferred overseas, along with 5% of IT positions in other businesses.

Long term, the report says more research is needed on the effects of offshore outsourcing and the workforce issues raised by it: "Can the U.S. continue to be a prime market for the rest of the world if it is a stronghold for neither manufacturing nor technical services?" the report asks. "What are the long-run implications of these trends for American standards of living?"

The CPST report concludes that while the job market for IT professionals has weakened, it remains sizable.

"For the near run, normal turnover alone will generate opportunities for people who are determined to work in the field," the report said. "The long-run outlook is more problematic. The United States does not lack, either now or in the foreseeable future, sufficient numbers of capable people who would like to work in IT. But those people may not be willing to conclude that long-run demands for their services will be good enough to support IT as a sensible career choice."

[Glenn]

I just believe that if you do what the rest of the herd is doing, you're going to eat a lot of dust.

There is no way to predict the future 25 years in advance that I am aware of. You are looking at IT in retrospect and you ARE gloating. You remind me of a small child singing, "Na, na, na, na, NA, na".

[Gorzaloon]

There just aren't and won't be as many EVEN if we get another PT Barnum in office who finds a way to create another tech bubble - because the next artificial bubble will most likely be in a different area.

Buzzwords for the New Boom and bust:

1: Nanophase.

2: Hydrogen Energy.

3: MEMS.

Remember, you heard it here. A person who suggests you invest in them is NOT your friend.

(38 years in R&D with patents in those fields!)

[Gorzaloon]

They were surprised at work cause I'm a natural blonde and they all thought I was just a geeky space cadet.

That's called a "Stealth Blonde". I married one. She belongs to Mensa and Intertel. I still e-mail her blonde jokes, but we both know better...

[fortaydoos]

When an IT professional is forced to take a job at starbucks he is not unemployed. What he is is just another former Bush supporter.

Rove needs to wake up on this issue and soon.

[Gorzaloon]

>>>> Pointy haired idiots with no real idea as to the limitations of SQL, playing stupid data mining games...

>>>>That's about when my phone rings and I commence to milk them.

Gee, I wonder why the IT people are the first one's laid off?

Usually they are laid off because they are an overhead department, and in haste to make the current quarter look good at the expense of the future, the infrastructure is gutted. This is one of the three or four tricks MBA's know.

The contempt technical people feel for "Professional Managers" is universal to all such fields. Generally, most of my middle managers were promoted out of the lab to prevent injuries. They were propelled by personal greed, to collect bonuses on the efforts of those who were technically competent. This is probably the origin of the Dilbert cartoons, whose popularity seems to validate the theory!

[Gorzaloon]

Years have passed through economic good and bad and nothing changes. I still get jobs handily. I noticed this when I was younger as well; in other industries. But when you look at the math, it's not hard to see why. If the unemployment rate is only 6%, that means you really do have to suck to be out-competed by the 6% that no one wants to hire. Think about it.

Something I constantly preach to my nieces and nephews as a central creed:

Talent always wins. It may take years, but when you become good at something, particularly something that comes really easy to you, you will always have a job.

One VP once told me, in a flash of insight, "You have enough skills to keep you in the middle-income bracket forever".

OK, fine.

Because he lost his job, and was out of work for two years. Two years at Zero income pretty much levelled our decade-income average, didn't it?

[FreedomPoster]

>>I'm a business process analyst and work across multiple technologies, creating or redesigning business processes and writing the requirements for enabling technology.

That's where the leverage is at with IT right now, from a business perspective. It isn't in giving everyone Word and Excel and email, which is really much of what was happening 5-6 years ago.

25- and 30-year-olds able to install and maintain MS server solutions and such, generally don't have a clue about business process.

[ChemistCat]

Oh, let me make it worse for you, then, if you're so very determined to be offended:

I'm a stay-at-home mom. I've never had to work.

Nyayaha nyahaha.

[BabsC]

Yep, I probably have the same collection of blonde jokes. I fiqure the blacks, jews and pollocks couldn't take it anymore so they picked a group either with self esteem too high to be bothered or to shallow to understand.

[SauronOfMordor]

But I'm open minded. If you can explain to me why the market will not adequately punish this poor business judgment (if indeed it is), then my major objection would be removed.

Over two hundred years ago, Adam Smith described a problem "the tragedy of the commons", where the incentive to each person having access to common pasture was to maximise use of it for his own livestock, even though over-grazing would ruin the commons for everyone

Company executives have access to the US "commons", an environment where their lives and property are protected by the nation as a whole. That protection relies upon the US economy being robust enough that the middle-class can pay the taxes that are required to keep the nation defended and the streets patrolled.

As individuals, their incentives are to maximize short-term profits in their particular companies, regardless of the long-term consequences. You see, long-term consequences do not apply to CEO's at Fortune 500 companies, when the average tenure of a CEO is 5 years before they go off to spend their stock options. The incentive to the CEO is to maximise tha short-term value of his stock options by whatever means necessary.

One example of this tendency is the Y2K problem, and why there was such a rush to deal with it starting in 1998, rather than starting earlier: the cost of handling it fell upon the current managers' budgets, but the benefit of having it dealt with would go to whoever was manager on Jan 1, 2000. So it was pushed off in favor of other projects, until managers decided that the problem would show up during their tenure.

[hopespringseternal]

One VP once told me, in a flash of insight, "You have enough skills to keep you in the middle-income bracket forever".

It all depends on where you fall in the middle-income bracket. Near the top is nice, near the bottom stinks. Some managers know that the best is far more valuable than the difference in salary, but most managers figure anyone below their level is instantly interchangeable with the next warm body willing to fill the position for less. That is why H1b visas are so popular.

[HamiltonJay]

The CAP should be no more than a few thousand, perhaps 10k annually for those FEW truly highly skilled workers who bring experience from overseas that cannot be found in US..... The whole system is a SCAM.

[StolarStorm]

You are really have no right to discuss an issue of which you no nothing. Well... you do have the right, but no one should bother reading your opinions.

[StolarStorm]

You really have no right to discuss an issue of which you know nothing. Well... you do have the right, but no one should bother reading your opinions.

Typo fix... trying to multitask and failing.

[hopespringseternal]

Typo fix... trying to multitask and failing.

Six percenter. ;)

[ChemistCat]

I think I no a little more than you no. (Or did I spell too many of those words right for you to understand me?)

I actually know some people who work in IT. My father is an electronics engineer. My husband did it for the Air Force. I actually have time to read. Can you refute my points without resort to ad hominem? I don't believe it's impossible that I'm wrong.

[StolarStorm]

Your contention that we all should have made a better "prediction" and chosen a different career path is absurd. No one expected the massive outsourcing going on today. Study after study, even fairly recent studies, indicated that IT was the place to be. It is not reasonable to asume that anyone should have predicted the wholesale sellout of American workers as is occuring today... with the h1-b, the L1 visa programs and the offshoring. Of course, I'll be laughing when all these execs that proposed ofshoring solutions get outsourced as well. No reason that a company can't find a bright MBA from India to do their job for half the cost. Oh wait, I forgot that execs protect their own. No outsourcing for them... as they are the chosen, the elite.

Regardless, I wasn't one of those that jumped on the band wagon during the .com era. Even if IT had a poor outlook, I still would have pursued it as an occupation... as I love what I do. I've been programming since I was 6. I learned assembly when I was 8. Wrote an arcade game when I was 12. No band wagonneer here.

[ChemistCat]

All I said was that if you join any major trend, if you take up the most popular career training of the moment, you will be, statistically, at higher risk of unemployment if the field of your choice becomes too saturated with people. It's obvious. It's not gloating--it's simple fact.

Those of us who are interested in preparedness, as a way of life, know that depending for your livelihood on the highest-tech around means you will be vulnerable to being unwanted to any number of changes. Are you a nanotechnologist specializing in superconducting carbon polymers that must be kept near absolute zero? SUPER DUPER--as long as things stay good for high tech industries. You'll write your own paycheck for as long as it lasts. Will it last? If it does, it's guaranteed that in 25 years there will be two YOUNG, HEALTHY nanotechnologists with fresh training and a willingness to take a MUCH lower salary for a chance to do your job. I don't know if you've noticed but employers do look for ways to get out of paying retirement benefits. It's simple supply and demand! Demand goes up, supply goes up, demand goes down--and so does the price. Read your Thomas Sowell's BASIC ECONOMICS.

A man I know was a major part of the Human Genome project. No one knows more than he knows about sequencing deoxyribonucleic acid; he is a big part of the mouse genome project, and has done rice, hundreds of bacteria. Guess what? The big job done, the funding has dried up, and his lab is in real danger of having to do layoffs. The rumor is that he'd have sex with anyone for a grant.

I've watched my dad lose jobs because he finished a project too well...there was no continued need for him because he set up the system so that a much cheaper engineer could maintain it. Big mistake, eh? Do your job right, lose your job. That's another way it can happen. I'm sure it happens in pure IT--write the code so well the customer stays happy and doesn't need you again. (Microsoft, of course, never made THAT mistake.)

What is with you and that other guy, taking such offense at an obvious fact? Whatever causes a field that was once in shortage of workers to become a glut of workers, it's easy to see it coming. 9 million people and 10 million jobs is a happy situation for the worker. But it becomes not very happy when 2 million of those jobs go away. You and the other guy counted on those 10 million jobs forever, and you think you're a victim because it didn't work.

[StolarStorm]

"You and the other guy counted on those 10 million jobs forever, and you think you're a victim because it didn't work."

We didn't count on our own government selling us out. There is just as much demand for IT as ever, perhaps even more demand than before. BUT, the jobs are going to foreign workers, here via the h1-b slave trade and overseas via government assisted offshoring.

[ChemistCat]

Why is it the government's job to prevent that?