Tech Job Cuts Slow Because We Hit the Bone

The AeA says that loss of U.S. technology jobs this year will be less than half that of last year, but we're still losing headcount. Here's some tips to avoid getting cut.

The sort-of good news: A recent American Electronics Association study showed tech job loss dramatically slowed in 2003. AeA projections peg the number of high-tech job losses around 234,000 for 2003, a 57 percent decrease over the year-ago number of 540,000 jobs.

The other sort-of good news: According to Michaela Platzer, vice president of research for the Washington-based AeA, attendees at the recent AeA Financial Classic confab were upbeat about future hiring plans.

"My boss and some people attended, and they said there was a very positive feeling in the room," Platzer said. "Many times, companies were very positive about the future. My boss, [AeA President and CEO William T. Archey], says the Classic is often a leading indicator, so it could be suggestive of a turnaround."

The bad news: Except for one, sole bright spot—in R&D and testing labs, where employment went up by 7,000 in 2002—boy oh boy, were still losing jobs. High-tech-related manufacturing was particularly pummeled, accounting for more than half of all tech jobs lost, with electronics components manufacturing slipping in headcount by 21.7 percent in 2002. Here are some other low points in the high-tech economy:

  • Cellular and other wireless telecommunications services shed 13.3 perent of their workforce.

  • The ISP sector lost 19 percent of its headcount.

  • For the first time in the seven years the AeA has been publishing this study, the once healthy-as-a-horse software sector lost jobs—to the tune of some 150,000 jobs cut.

Anecdotal evidence of renewed cheer doesnt necessarily translate into renewed hiring. As Platzer noted, companies are maintaining a "pretty lean and mean attitude," in spite of AeA members relatively upbeat attitudes. "Its the overall global economy theyre operating in, and the pictures not very stable," she said. "You have a very schizophrenic view of whats going on: In the morning you get good numbers and in the afternoon you get bad. Retail numbers may be good, unemployment may be bad, and the stock market may go up. What do you do with that? You dont have one, uniform trend, and uncertaintys not something businesspeople like very much. Its hard to plan in an uncertain environment."

Another aspect of this dismal situation is the loss of salary for those lucky few who still can get what jobs there are. "There are more engineers on the market, so some salaries are going down a bit," Platzer said. She doesnt think its a dire situation, however. "They only go down to a certain level. These are highly skilled people. Youre not talking about $30,000/year jobs. Even in todays economy, those people can demand good salaries, because there arent enough people around with those skills," she said.

Salary experts would beg to differ, however. David Foote, president and chief research officer of Foote Partners LLC, a firm that studies compensation in the high-tech sector, said that salaries are falling across the board. "People are just making less in IT right now," he said. "Prices are going down for people who are better-qualified than ever for those jobs. [Employers are] interviewing people early on in interviews who are great candidates but who dont match up to the 30 things theyre looking for. Theyre just going to keep interviewing people until they find the needle in the haystack."

Many are pointing to a mitigating fact: IT professionals, when negotiating salaries and jobs, now must compete with high-tech workers in areas such as India, China, the Philippines and other areas of rock-bottom wages.

The AeAs Platzer shrugged off this argument, saying that its basically an unmeasurable data set. Foote, on the other hand, believes he has a new line of analysis opening up to him. For the first time, hes being asked by clients to come up with compensation data for programmers in India. Apparently, wages are on the rise offshore, and U.S. businesses have no measuring stick to gauge what their offshore vendors are telling them as far as what the going rates are.

None of this is good news, and none of it points to jobs coming back to our shores. In the meantime, are there any safe harbors? Foote pointed to security as being relatively immune to job cuts—so far. "Nobodys outsourcing security," he said. "Its an area where you would still see job growth." However, that job growth is decelerating, he said, so investing time and energy in switching to this field probably wont pay off for those who are starting from rock-bottom.

Taking a look at the regional data in the AeAs report is another way to gauge where job-loss danger is highest. All but three of the states in the study—the District of Columbia, Wyoming and Montana—lost jobs in 2002. The fact that the District of Columbia gained 2,200 jobs underscores eWEEKs findings from a year ago, when we took a look at what regions of the country were still hiring and why in the "New IT Job Hot Spots" package. In that package, we found that high-tech employment in the Beltway was still holding strong due to hiring by defense contractors—one industry that has done well in these times of strife.

Now is a good time to take a reading on other industries that are growing, such as health care and insurance. Find out what skills and industry knowledge their technology jobs require. Take a look at your own industry. Is it moribund? Have the newspapers recently been filled with stories of companies in your industry that are offshore-outsourcing jobs? Take a look at your own skills. If you havent had new training in five years, its time for a retrofit.

The bottom line: The cutting knife may have slowed, but its still sharp. Keep on your toes to stay ahead of its still-thirsty edge.

Whats going on with your salary, your job hunt, your training of your offshore replacement? Let me know at

Database Center Editor Lisa Vaas has written about enterprise applications and the IT workforce since 1997.