High Tech Ready to Rebound?

A new report released Thursday by the AEA (formerly the American Electronics Association) offers good news and bad news about the job market for high-tech workers. The good news: Job losses have slowed dramatically, and the market could be ready to rebound. The bad news: The rebound is far from certain.

The report studied U.S. Bureau of Labor Statistics data for the 18-month period from January 2001 to June 2002, the most recent data available. During that time, 437,000 jobs--8 percent of all tech jobs in the United States--were lost. In January 2001, 5.7 million Americans were employed in high-tech jobs. By June 2002, the number had dropped to 5.2 million.

Though the tech job market dropped during this 18-month period, the study found that employment in other fields increased, despite the unsettled U.S. economy. Private-sector employment in the United States, which includes all fields other than government work, increased by 1 percent from January 2001 to June 2002.

Positive Signs

Since January of this year, job losses in high-tech have slowed to 2 percent; that's 113,000 jobs lost. Examined month-by-month, the data is even more encouraging: From May 2002 to June 2002, only 700 high-tech jobs were eliminated. From April 2002 to May 2002, the corresponding number stood at 15,800. And at its worst, from December 2001 to January 2002, the number hit 63,800.

Still, a rebound is far from certain, experts say.

"I wish I could say that a recovery was definitely occurring," says Matthew Kazmierczak, senior manager of research at the AEA. "But the job numbers are still mixed. I'm optimistically hopeful, but I'm still holding my breath."

Kazmierczak says that he would need to see statistics for the months since June to better gauge the probability of a recovery, but those numbers aren't yet available from the government. And he's not the only person who hesitates to claim that a major recovery is underway. Earlier this week, Craig Barrett, Intel's chief executive officer, tried to downplay optimistic comments he made at a conference over the weekend.

Barrett was quoted as saying that the IT industry would recover by early 2003. On Tuesday, however, he said some people had misinterpreted those comments as asserting that a full-blown economic recovery was imminent. Though he's optimistic about the future of the IT industry, Barrett said, he's not willing to predict when the economy in general will rebound.

Specific Segments

When the economy will recover is the million-dollar question. The AEA's Kazmierczak says he is as curious as anyone else to find out--and to see the next set of statistics from the Department of Labor. In the meantime, the statistics up to June 2002 allow him to elaborate on which segments of the high-tech industry are doing better than others.

In defining the high-tech job market, the AEA uses government codes for different industries. For its purposes, the AEA divides the entire high-tech market into three specific fields: high-tech manufacturing, communications services, and software and computer-related services.

High-tech manufacturing includes companies that manufacture computers (Dell, IBM, Sun, and HP, for example) and companies that manufacture consumer electronics, cell phones, and electronic components such as semiconductors.

The communications services category includes companies that offer cellular telephone service (such as Cingular and Verizon), the Baby Bells, and related companies that do such things as install cell phone towers.

The software and computer-related services field includes companies that produce prepackaged software (like Microsoft, Oracle, and McAfee), along with companies that offer data processing (such as Lexis Nexis) and companies involved in renting or maintaining computer equipment and networks.

"One of the biggest surprises in this study has been how well software and computer-related services has done. That segment is down only 7000 jobs in the 18 months. And what's an even bigger surprise is that, between May and June 2002, 5000 jobs have been added [in that category]," Kazmierczak says.

Past Patterns

According to the AEA study, the worst period for high-tech job losses was the final six months of 2001.

"Most people seem to think that 2001 was such a bad year; but that's not the case. The first quarter was great. The second quarter was okay, and then in the third and fourth quarters, things started to drop off," Kazmierczak says. The peak of the high-tech industry occurred in March 2001, when 5.7 million high-tech jobs existed.

Though the job market has been on a downward slide since then, Kazmierczak believes that the number of high-tech jobs can--and will--surpass the 5.7 million zenith. As more people purchase cell phones and newer electronic gadgets, and as companies begin spending and investing in new technology again, the jobs will return, he says.

"There's so much more that you can do with technology that hasn't been done. They haven't yet put microchips in all the places they can. Look at marathons, now they're putting microchips in runners' shoes. They could put them in pallets to track shipments, or use them to help speed people through customs," Kazmierczak says.

All the new and yet-to-be-discovered uses of technology will help the high-tech sector regain the jobs it has lost--and create more, he believes. But when that will happen is anybody's guess.

Juan Carlos Perez of the IDG News Service contributed to this report.