First Quarter Sees Largest Tech Job Losses Since 2002
April 20, 2009 Timothy Prickett Morgan
If you were getting the impression that the IT job market in the United States hasn’t been this tough since the dot-com bust, your worries have just been confirmed by outplacement expert Challenger, Gray, and Christmas. According to the company’s estimates, the job losses in the technology sector in the U.S. have not been this steep since the end of 2002.
Specifically, Challenger says that some 84,217 IT-related jobs were cut in the first quarter of 2009, which was a 27 percent rise over the 66,312 jobs that were cut in the fourth quarter of 2008, when the economic meltdown was in full swing. While that was bad, it is nowhere near as bad as the situation was in the fourth quarter of 2002, at the height of the last recession in the wake of the dot-com bust and the 9/11 terrorist attacks, when companies laid off 133,511 workers. Even though the U.S. economy was in recession a year ago in the first quarter of 2008 (and had been since December 2007, we learned a few months ago although the government never copped to it at the time, as governments never do as they hope against hope), only 17,345 IT jobs in the United States were lost in the year ago quarter. This year’s first quarter saw a factor of five increase in IT layoffs. In fact, according to Challenger’s estimates, the IT job losses in the first quarter represents 14.6 percent of all job losses in the quarter, which amounted to 578,510 lost jobs.
Now, these are just the job losses in the tech sector, by which Challenger means companies that make or sell telecommunications, computing, and electronics gear. These numbers do not count the job losses of companies of all sizes and shapes that may be letting go of IT staff and managers as they trim their own payrolls. I have still not found any data that shows employment and unemployment by job title, rather than by industry, and that includes the monthly statistics coming out of the U.S. Department of Labor’s Bureau of Labor Statistics. (This strikes me as perfectly idiotic, and I have said many times in the past, since what you really want to know is how many carpenters, COBOL programmers, marketing managers, or taxi drivers are gaining or losing jobs. You can’t manage an economy with industrial data, you need the fine-grained personnel data to see where we need workers and what the pay is.)
It is not at all clear to me why the Challenger data is so different from the BLS data, which reported a total of 741,000 jobs lost in the U.S. in January, another 651,000 jobs lost in February, and yet another 663,000 jobs lost in March, for a total of 2.06 million lost jobs. The difference between 1.22 million and 2.06 million lost jobs seems pretty big to me. And I also think that in the 21st century, not knowing exactly how many jobs of which type come and go each month is ridiculous. We are all paying our payroll taxes as employers, right? We fill out paperwork, right? This seems to be a data warehousing problem that can be solved.
Anyway, in the first quarter, Challenger reckons that 18,972 jobs were lost at telecom firms, 31,850 were lost at computer companies, and 33,665 were lost at electronics companies. In 2008, there were 1.22 million job cuts in the U.S., with the tech sector shedding 155,570 jobs. That’s 48,648 job cuts in telecom, 64,860 in computers, and 42,062 in electronics.
While this sounds awful–and it is–in 2001, U.S. tech companies shed 695,000 jobs, and in 2002, they shed 468,161, according to Challenger. And while the numbers dropped in the ensuing years, to a low of 107,295 cuts in 2007, from 2001 through 2008 inclusive, tech companies shed 2.14 million jobs, and that is a huge and permanent hit on the economy. There is not, as far as I know, a category for tech job additions, and based on the past eight years of history, I don’t expect one any time soon. And that is the real problem with offshoring and outsourcing, as far as I am concerned. Multinationals living quarter to quarter and benefiting from all kind of tax breaks from local, state and federal governments are simply allowed to do whatever is good for them, regardless of what is good for all of us.
A cynic–or perhaps just an interested observer–might say that governments and analysts and others don’t count job losses by job type, and don’t do a real census using already-computerized data, because those in control don’t want to come under scrutiny. You can’t manage what you don’t measure, after all, and this seems to be perfectly intentional as far as I am concerned. And the reason why is simple: the powers that be benefit greatly from the status quo of taking government hand-outs as they shut down facilities and destroy towns and livelihoods. Employing people, and making the numbers work, is hard. Being selfish, as the Global 2000 most certainly is, is taking the easy way out. And that is what happens when you value a stock price more than a job. How could it be otherwise?