Monday, May 4, 2009

IT Ghost Town: Where Have All Our IT Jobs Gone?

I have a friend named Mark, who is a software Engineer in his early fifties. Despite having outstanding technical skills, Mark has no job prospects. He’s had two jobs, only lasting three months in the past year. An offer was presented to him six weeks ago: a three month job in Denver, which is two thousand miles from his home in Boston, MA. The job didn’t offer transportation, housing or health insurance, so consequently he turned it down. He has since extended his job search internationally, but with the global recession his prospects aren’t any better than in the US.

Mark is not alone. Thousands of IT professionals face a similar fate. In the 1980’s and 1990’s IT jobs rated among the top in future growth potential. IT and CS curriculum became among the most popular and lucrative majors in US higher education; up to the bachelor’s level. CEO’s at technology companies like Bill Gates, Steve Jobs and Larry Ellison became national icons. With all that incredible buzz where and why have all our IT jobs gone? Why is our IT industry starting to resemble a ghost town of the Old West?

With the nearly trillion dollars spent on the dubious Y2K scare, coupled with the hundreds of billions lost on the dot com bomb, the answer to the job loss query appears clearer. One major causal factor can be related to the up to 30% increase in IT salaries from 1996 to 2000 peaking in a recently globalized economy. The cost of US, IT labor rose too high to remain competitive; once the IT, and related jobs bubble burst. Moreover, with the growth of the internet and global call centers the floodgates were opened to outsource IT jobs. Jobs gushed to India first, and then to almost any politically, stable low cost of living area in the world with IT talent.

As a consequence, in the nearly four year information technology recession from 2001 to 2005 the US lost nearly 5% of its IT jobs. Larger losses occurred in the more portable software development and call center support jobs, with only strong growth in the defense sector. If you factor in the earlier predicted annual growth of IT jobs in the area of 5%, then the declines based on projected growth in IT jobs in 2000 was in actuality, around 30%.

In addition, the “in-sourcing” of a huge number of moderately lower cost, highly skilled H1-b workers from 2000 on led to the loss of up to 50% of the estimated jobs to American born IT workers, based on government data. In-sourcing, a form of temporary and permanent immigration employment has always been an intermittent socio-economic part of the American Experience (e. g. the nineteenth century Chinese railroad workers). But, such a large increase of highly paid foreign workers in a specific sector like IT is unprecedented.

What are some of the other negative results of this massive downsizing of IT jobs? IT became a less desirable career for US college students, therefore causing a precipitous decline in the number CS and IT graduates. Also, the previously predicted 5% plus annual growth in salaries declined from 2001 to the present levels of a 1 to 2% increase; less than the rate of inflation. For older workers like Mark, there is was no increase or a lower salary, if unemployed in their next position. A recent study conducted by researchers from Wharton Business School concluded that the impact of the H1-b’s led to an average 6% lower salary for US IT workers. Posted on the internet, five days later this controversial study mysteriously disappeared.

All may not be gloomy on the IT job horizon. The US Bureau of Labor Statistics estimated that there would be a 30% increase in the number of IT jobs from 2006 to 2016. However, this was before the deep global recession that began in 2008 and engulfed us, leading to IT job losses that may not abate until 2011. Based on recent experience, job growth may only reach 15 to 20%, and the majority of those increases will be the result of in-sourcing. Even more ominous is the possibility that the average IT workers older than forty may never be able to work in IT again, particularly with the exponential rise in health insurance costs.

What can be done to reinvigorate the ailing American IT industry? Can we rise above the ugly xenophobia and ageism resulting from globalization, which has plagued IT for a decade? Unfortunately, in our post union and protectionism era, IT workers have little or no collective leverage to improve their situation on a large scale; and corporations have relinquished their loyalty to local workers to survive globally.

However, on an individual and team level there is a glimmer of hope. Creative solutions may spawn new jobs in areas such as green energy technology, health care, as well as new, unforeseen employment opportunities just over the horizon. Moreover, the new Administration, unlike their predecessors who were adverse to technological innovation does have a vision of IT, which will lead to additional funds funneled into large-scale projects. At the core, American ingenuity and tenacity may, and must prevail to avert a “ghost town scenario.”

This revitalization of the IT industry will not be easy. In the near term, salaries may remain stagnant and globalization will continue to accelerate. But, with focus, fortitude and the inventiveness that characterized its golden age, the United States IT industry must restore its enthusiasm to reverse its decline.

However, for people like Mark who built the American IT industry into a global powerhouse, the future may pass them by; unless they can maintain a commitment to quality, reclaim their vision and acquire the latest IT skills.

Regaining the "American Dream" for the IT industry will be no easy task. But, this is America, where an abandoned "ghost town" can be resurrected and flourish. Any endeavor thought impossible here by many, is still possible for the dedicated and committed few; even those over fifty.

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