IT unemployment hits 'unprecedented' level

DALLAS (09/19/2003) - Unemployment in the IT profession reached 6 percent this year, an "unprecedented" level for a career path that until recently was a sure way to a well-paying job.

That's the finding of a new study that also determined that foreign-born workers now account for a fifth of all IT employees in the U.S.

The results of the study, conducted by the Washington-based nonprofit group Commission on Professionals in Science and Technology (CPST), mesh with what IT managers have seen in response to help-wanted ads they have placed.

"I'm sure the number is 6 percent or higher," said Michael Russo, a data center manager at Wyeth, a Madison, N.J.-based drug company.

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 lower-level jobs that IT managers once had trouble filling.

"That tells me that 6 percent has hit the IT area pretty hard," Rosenthal said.

Two years ago, Salt River Project had an open position for an operations analyst and received about 15 applications. Last year, the Tempe, Ariz.-based water and electric company 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 report among some IT managers at a conference held here this week by AFCOM, an Orange, Calif.-based data center managers' user group.

Several IT managers, some requesting that their names not be used, told of offshore outsourcing plans or data center consolidations that led to layoffs.

In the future, automation improvements and the development of "self-healing" applications will also hurt some IT career paths, they said. The career advice from one IT manager was to avoid the technical aspects of the profession and focus more on IT management.

Growth Spurt

IT unemployment rates were as low as 1.2 percent in 1997, shooting up to 4.3 percent 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, which under CPST's definition includes computer scientists, systems analysts, software engineers and programmers, grew from 719,000 jobs in 1983 to 2.5 million at its peak in 2000. It has since declined by 150,000, with about two-thirds of those lost jobs in programming, according to the organization.

The CPST report was sponsored by the Alfred P. Sloan Foundation and the United Engineering Foundation, an umbrella organization of engineering groups.


Experience Counts in Downturn

The high IT unemployment rate means managers have the luxury of hiring people with a lot of experience and at wage rates below what they may have had to pay several years ago.

"You are able to attract or look for better experience, or more diversity of experience," said Bill Ginty, production support manager at CVS Corp. in Woonsocket, R.I.

Nate Viall, a Des Moines-based recruiter who specializes in finding candidates for IBM iSeries application development, has been tracking the trend. Based on information he has collected, iSeries developers who were being offered jobs in 1998 had an average of about eight years of experience; by mid-2000, the average was up to 10 years. Now it's 14 years, he said.

The data shows that "companies are hiring (to fill) fewer entry-level jobs and hiring more people with substantial experience," Viall said.

Older workers account for a growing percentage of the workforce in all professions, according to recent Federal Bureau of Labor Statistics (BLS) data. From August 2002 through August of this year, the number of workers age 55 and older rose from 19.9 million to 21.2 million. In the 45-to-54 age range, the rise was from 31.3 million to 32 million.

But the data doesn't necessarily mean that employment prospects are improving for older IT workers. A BLS study conducted last year found that workers age 55 and older had a much harder time finding new jobs than their younger counterparts.

Still, there are typically large percentages of older workers in organizations that don't have high turnover rates. The U.S. government says up to half of federal IT workers will be eligible for retirement at the end of 2004. The same holds true for the Canadian government.

"I turn 50 my next birthday, and in five years I'll probably be gone," said Dale Haug, a planning manager for Canadian Customs and Revenue in Ottawa. "Probably a lot will be retiring. . . . The numbers are kind of scary for the government."

Russ Tessman, a manager at Vermillion Group, an IT recruiting company in Des Moines, said the older workers who have difficulty in the job market are those who aren't willing to change and learn new technologies.

Employers do find older workers attractive for their maturity, trustworthiness and work ethic, as well as their experience, said Tessman. But those workers "have to be willing to take a salary a 28-year-old would be willing to take," he said.

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