U.S. IT industry shrinks as an employer in the past decade

 In overall numbers, the IT industry employed 6.5 million people in 2001. That number had slipped to 5.9 million by mid-year.

In short, the U.S. tech industry as an employer is shrinking, even as it continues to regain jobs lost during the recession.

Although the U.S. continues to lead the world in everything from microprocessors to tablets to supercomputers, overall tech employment is being hurt by an erosion of manufacturing and telecommunications jobs. Some of that loss is being offset by growth in software services, according to the annual Cyberstates report by the TechAmerica Foundation, an industry group that tracks employment and other trends in the tech sector.

Tech firms have been, overall, one of the few bright spots in this economy. The industry added 115,000 jobs so far this year after losing that exact amount last year, according to TechAmerica.

But the tech industry has seen declines in certain tech employment areas.

This map shows the number of private-sector jobs lost (red) or gained (green) by state in the technology sector. Click on a state for more tech employment information. Source: TechAmerica’s Cyberstates report from U.S. Bureau of Labor Statistics data.
In 2000, tech manufacturing employed 1.8 million in the U.S., but only 1.27 million by June this year.

Communication services, which includes the telecommunications industry, including wired, wireless, Web search portals, data processing and hosting services, was also at 1.8 million jobs in 2000 but fell to 1.2 million by June.

One bright spot was software services employment, which was at 1.6 million jobs in 2000, increased to 1.77 million by mid-year.

Another large category is engineering and tech services jobs, which employed 1.64 million in June. In 2005 there were 1.5 million employed in this category.

“There has been a shift in the technology industry,” said Matthew Kazmierczak, senior vice president at TechAmerica.

The industry is becoming more specialized, Kazmierczak said. The manufacturing and the technology services that are being done in the U.S. are often for the design and creation of new products and are not necessarily the labor intensive, production part of it, “but the high value creation of it,” he said.

Kazmierczak points to the latest iPhone, for instance. The design is done in the U.S. but the manufacturing is completed overseas.

Cyberstates uses U.S. Bureau of Labor Statistics data for those businesses that are classified in these tech sector categories. It only captures data about people who are working directly in the technology industry. IT professionals employed by a retailer or financial services firm aren’t included.

Some types of IT work are becoming less labor intensive, said Kazmierczak. “You can have massive data centers and a very low number of people who are actually employed there,” he said.

The shift to higher value work is also reflected in the tech industry’s wage rates, Kazmierczak said. Those rates have generally gone up.

For instance, high-tech manufacturing wages rose from $83,900 in 2009 to $88,600, or 6%, in 2010.

In software, wages rose from $93,100 to $95,200 by 2% over that same period. Wages for tech jobs across the board for all IT categories were up 3% from 2009 to 2010.

Wages vary by state. California, for instance, has the highest tech wages at $110,600.

Unemployment rates in 2010 ranged from 6.4% for computer programmers, to 4.7% for software engineers, according to the report.

The Cyberstates report looks at tech employment in each state. The leading employer remains California with 931,000 tech jobs, followed by Texas, 456,500, New York, 294,700, Virginia, 277,600 and Florida, 267,000.

States that lost jobs last year included Illinois, which saw a decline to 6,400 tech jobs, according to the report. These cuts are having an impact on the job market.

In Chicago, Ilya Talman, president of IT recruiting firm Roy Talman and Associates Inc., said employers are being careful about filling positions, vetting candidates over a period that may last months.

“The perception is that the market is very tight and as such these people are going to be around,” said Talman. “The urgency is not there,” he said. Companies “are still interesting in hiring, but they are not in a hurry,” said Talman.

Jerry Irvine, the CIO of Prescient Solutions, an IT services firm in Chicago, has been trying to filling some open positions but said it is difficult because he is looking for people with multiple specialities, such as someone who is both a Microsoft and Cisco certified engineer.

“People with lots of experience are employed,” said Irvine, and the recession “is scaring people from looking.”

Whether another recession sends IT employment downhill remains to be seen, but Dan Cobb, vice president, enterprise solutions for Yoh, a technology staffing firm, said he is seeing some changes.

After the dot.com crash, companies cut IT departments, and in 2008 some of that cutting happened again, Cobb said. But companies also realized these IT cuts were having a big impact on their firms and these companies will be more cautious in the future. They have also been more incremental in their hiring, “which I think will make [IT] more stable,” he said.

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Jim Love, Chief Content Officer, IT World Canada

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