YOU ARE HERE: LAT HomeCollections

Tech Industry's Job Loss Expected to Get Even Worse


After years of unabated growth, employment at high-technology companies has peaked and now is shrinking by tens of thousands of workers in what some experts fear could cause long-term damage to the entire U.S. economy.

The spate of job cuts that began last year at now-disintegrating dot-com firms has widened considerably to include some of the tech sector's most prominent firms, including chip giant Intel Corp. and networker Cisco Systems Inc.

The scope of the layoffs appeared for the first time in numbers released by the Labor Department on Friday. Since cresting in December, the tech industry has shed more than 38,000 jobs in the first three months of this year, according to the government.

That's just a sliver of the 10.7 million people employed at U.S. tech companies, but thousands more layoffs are expected. Of the more than 400,000 job cuts announced by U.S. corporations this year, more than one-third were from tech companies, according to Challenger, Gray & Christmas, a Chicago firm that tracks such data.

Many of those jobs won't be eliminated for months, and the tech industry continues to create positions to offset some of those being lost. Though the hiring pace has fallen sharply from a year ago, some small and mid-size companies are absorbing workers dislodged by larger firms.

In regions such as Silicon Valley, companies that once had trouble luring qualified employees now are taking advantage of the new worker availability.

Still, the danger is that tech companies have not yet fully come to terms with the sudden slowdown in demand for their products, some experts say.

"The expectation in technology was that the boom times would continue, so the average tech worker is taken off-guard by this shift in the market," said China Gorman, chief operating officer of Lee Hecht Harrison, a large job-counseling firm based in Woodcliff Lake, N.J. "They're feeling emotionally unprepared to deal with this because it's happened so quickly."

The tech industry has been slammed in recent months as U.S. businesses have drastically reined in their purchases of tech equipment amid the economic slowdown.

Some experts fear the tech-spending downturn could last several years. If it does, companies are likely to keep disgorging workers as they scramble to maintain profit margins.

Future "layoffs are going to be pretty severe," said Ross DeVol, an economist at the Milken Institute in Santa Monica, an economic research firm. "This will be the most severe tech-employment retrenchment that we've seen."

The most immediate effect has been felt by recently laid-off workers, who are finding today's tech job market to be far less friendly than any they've experienced.

Accustomed to multiple job offers and lavish perks, some tech workers have never even drafted resumes because would-be employers offered jobs over the phone.

Many are finding new jobs, but their searches are longer and harder, and the jobs themselves often can be less attractive and lower paying than the ones they had.

Gabriele Lawrence knows all about the changed climate.

Last fall, the Culver City woman was a new-economy darling whose career had been driven by headhunters offering a succession of jobs, each with more responsibility, greater prestige and higher pay.

She didn't worry when she lost her job at a Century City-based software application firm, but it has taken far longer than she ever imagined to find a new job.

"I thought, if it takes me four to six weeks, that's fine. I didn't think I was going to walk into something the following week," she said. "But it's been longer than [that]. It's completely different. And it gets worse every week" as new layoffs occur and the pool of jobless workers expands.

Lawrence has had two offers, but one was for a low salary and the other required too much travel.

Not everyone is worried.

Jason A. Gallo lost his part-time job at Brivo Systems Inc. in Arlington, Va., in January. "I was a little shocked when I got laid off, but now being laid off by a tech company is sort of a badge of honor."

He's expecting to graduate from Georgetown University in May but hasn't been looking for a job. "They were really generous with the severance package," he said, adding that he's not concerned about finding a new job. "My skills weren't necessarily in the technology sector. I was doing graphic design and marketing things. I'd probably feel worse if I were a programmer or somebody whose skills were limited to that sector of the economy."

Employment in the so-called information technology field, which includes such core tech industries as chip makers and networkers, represents 4.8% of the total U.S. employment, up from 4.1% in 1994, according to the Milken Institute. That job base has expanded by one-third to about 6.3 million workers at year-end, up from 4.6 million in 1994.

Los Angeles Times Articles