Study: US Tech Job Growth Ground to a Halt in 2001

by Ursula Seymour

July 1, 2002 —

The AeA (formerly the American Electronics Association) released its
annual Cyberstates report offering the latest peek at the state of the
high-tech industry in the U.S. Among its findings, it said companies in
the high-tech sector added 80,000 technology jobs in 2001, compared with
440,000 new jobs in 2000.

It was the smallest rate of job growth in the U.S. high-tech sector
since the Cyberstates report was initiated six years ago. Twenty states
saw a decline in industry employment, the AeA reported.

"Job growth has definitely slowed, not surprisingly," said Michaele
Platzer, vice president of research with AeA.

The total number of employees in the U.S. high-tech sector totaled 5.6
million in 2001, up just 1 percent from 5.5 million in 2000, the report
said.

The job data used by the AeA for its Cyberstates is from the U.S. Bureau
of Labor Statistics (BLS), and is the most recent data from the agency.
It encompasses 45 market segments related to the technology industry
based on categories defined by the BLS, such as manufacturing,
communications services, software and computer related services.

In a state-by-state rundown, California topped the list for high-tech
job growth in 2001. Home to major technology companies such as Intel
Corp. and Sun Microsystems Inc., the state added 12,400 new high-tech
jobs, showing a gain of about 1.3 percent over 2000. Comparatively, in
2000 California's high-tech employment grew by 13 percent over the prior
year, with 113,000 jobs added.

Trailing California, Kansas added 6,800 high-tech jobs in 2001, Virginia
saw its high-tech work force increase by 4,300 and Oregon saw a gain of
4,200 high-tech employees.

At the other end of the spectrum, South Dakota saw its high-tech job
roster fall by 2,100, or 14 percent, from 2000 to 2001, accounting for
the greatest percentage drop among all of the U.S. states.

Texas scored worst in terms of the absolute number of jobs lost -- its
high-tech job roster fell by 3,000 from 2000 to 2001. The industry
sectors most affected in Texas included defense electronics,
semiconductor manufacturing and manufacturing of computers and
peripherals, Platzer said.

Some of the job losses in Texas are reflected in layoffs announced in
2001 by some of the state's biggest tech employers. In February, Dell
Computer Corp. announced that it would lay off 1,700 full-time employees
at its headquarters in Round Rock, Texas.

"Overall in Texas the manufacturing industry was hit really hard,"
Platzer said.

Manufacturing jobs were hard hit throughout the U.S., as well. About
65,000 jobs were eliminated in the sector in 2001, down 3 percent from
2000.

Jobs related to software and computer-related services, meanwhile,
offered one bright spot to the year's figures, as 100,000 jobs were
added in 2001, accounting for a 5 percent gain over the prior year.

The report didn't only look at employment figures. The value of U.S.
high-tech exports also felt the squeeze in 2001, falling to US$189
billion in 2001 compared to $223 billion in 2000, the study reported.
Meanwhile, venture capital investments in high-tech fell 62 percent in
2001 to $41 billion, from $108 billion in 2000, the AeA said.

In the throes of the high-tech boom, many U.S. states including Colorado
and Georgia invested heavily to bring high-tech businesses within their
borders. States also began offering tax incentives for new businesses
and to encourage research and development. Some of that investment has
paid off, Platzer said. Colorado, for instance, led the nation in
concentration of high-tech workers in 2001, with 98 high-tech workers
for every 1,000 private-sector workers. However, while many of the
smaller states continue to experience some high-tech job growth, their
early hopes for rapid growth have not been realized, Platzer said.

"Those states that thought technology was going to be their answer, I
think they've determined that it's not going to be the panacea they
expected," Platzer said.

ITworld