IT Job Creation Outpaces The U.S. Economy In August
September 8, 2014 Timothy Prickett Morgan
The economy in the United States faltered a bit in terms of job creation in August, ending a pretty strong run where the number of jobs created were not only large enough to keep pace with population growth and new workers entering the workforce but also to make a dent in the number of people who were looking for work and could not find it.
According to the latest report from the Bureau of Labor Statistics, not only was job creation weaker in August than expected, with 142,000 non-farm jobs added compared to an expected 225,000, but the numbers for June and July were revised downward by 28,000 jobs on top of that. So if you were, like many of us, sensing a pinching in the air, this was probably part of it.
Those numbers are based on the so-called establishment data, which surveys employers in all industries, sizes, and geographies to get a sense of the comings and goings of workers by industry subsector. The BLS also does a monthly survey of American households to get a sense of how many hours people are working, what their pay is, who is looking for work, and who has stopped. By definition–well, the definition of the U.S. Department of Labor, anyway–people who have stopped looking for work are not unemployed. To be unemployed, technically, you have to be looking for work and not finding it. The unemployment rate based on this household survey dropped a tenth of a point to 6.1 percent, the same level it had been at in June.
Ahead of the Great Recession, which started in December 2007, the unemployment rate was 4.7 percent, so we have a long way to go before we get back to that level. In 2008 and 2009, the U.S. economy was shedding several hundred thousand jobs per month, if you can recall that horror, losing more than 800,000 per month at the worst of it in the fall of 2008 and the spring of 2009 and forcing the unemployment rate up to 10.1 percent. People do need other people to do business as companies, thankfully. And thus the unemployment rate has come down four points. There are many, myself included, who believe that there is no easy way to get unemployment down further because companies are so averse to hiring that they only do it as a last resort. It is hard to imagine interest rates going lower–they are negative in France and Germany right now and are very low here in the States, and if free money can’t stimulate growth, it is hard to imagine what short of war or the discovery of a massive energy source like Spindletop or Alaska will do it. (Discovering oil like that for a national economy is a bit like finding $1 million in the couch cushions.)
Officially, there are 9.6 million people who are unemployed, and it is a fair guess that about that number have stopped looking. We have a long way to go, and no one really has any idea how to do it. Particularly as we continually, and I would say gleefully, automate more and more work.
The biggest job gains in August were in professional and business services and healthcare, which added 47,000 and 34,000 workers, respectively. The leisure industry added 22,000 workers, and construction firms added 20,000. Manufacturing companies held pat for August. State and local governments continue to shed jobs–down 4,000 and 1,400 people for the former and the latter–but nothing like was happening during and after the Great Recession.
The IT sector is not treated as a single entity by the U.S. Department of Labor, but we can use some of the industry sub-sectors as a kind for an IT sector. Manufacturers of computer and electronic products added 1,200 workers in August, and there is a base of 1.06 million employees that wiggles a little up and down over the course of a year. Those making computer and peripheral equipment actually added 3,200 workers last month, for a pool of 170,800 employees. Employment among semiconductor manufacturers and communications equipment makers were essentially flat.
In the information sector, telecom companies shed 1,800 workers, to a pool of 859,200 people, and data processing and hosting companies added 1,000 people, creating a base of 273,200 employees across all players. Companies engaged in the computer systems design and related services sub-sector added 1,500 workers, a drop in the bucket of the 1.76 million people who work at such firms. Management and technical services forms added 3,000 people in August and there are 1.24 million people employed at such firms.