Worker Shortages Persist, Despite Economic Downturn and Layoffs

Worker Shortages Persist, Despite Economic Downturn and Layoffs<@VM>Dot-Com Failures Make Old Tech Firms Look Good

By Gail Repsher Emery, Staff WriterDespite the rash of dot-com bombs and economic downturn that has resulted in massive layoffs of technology employees in recent months, surviving companies still face huge shortages of skilled workers."There's a lot of publicity as these dot-com companies go under, but what's striking is that people losing their jobs are having very little trouble getting jobs elsewhere," said Michael Bernick, director of the California Employment Development Department. The state's unemployment rate was 4.8 percent in November 2000.More than 41,000 Internet-company employees have lost their jobs since December 1999, according to Chicago outplacement firm Challenger, Gray & Christmas Inc.Although workers already on board may be less likely to leave established companies, competition for the best and the brightest will still be intense, industry officials said. The top five fastest-growing occupations are all high-tech, according to the Labor Department: computer engineers, computer support specialists, systems analysts, database administrators and desktop publishers."Certainly, the shortage will continue. It's only lessening," said John Engman, director of work-force development for the Computing Technology Industry Association in Lombard, Ill. "The layoffs have been because of an artificial bubble of companies driven by venture capital. I don't think that's going to have a major effect on the job climate."The shortage of IT workers will be particularly acute in firms that require experience in network development, server maintenance and applications development, Engman said. Employees skilled in specialties such as bioinformatics, natural language processing and computational linguistics will be especially needed, said Kerri Koss Morehart, director of recruiting for SRA International Inc. in Fairfax, Va.The Information Technology Association of America in April 2000 estimated nearly half of 1.6 million open technology jobs would go unfilled. Marjorie Bynum, vice president of work-force development for the trade association based in Arlington, Va., said the estimate is still accurate, although ITAA will release a new projection at its work-force conference this April in San Diego."The demand and need [for workers] is going to be there," Bynum said, "but you may see companies being a little more cautious. When you have an economic slowdown, you see companies looking at the entire organization and where they can cut back."Signs of an economic slowdown include the smallest increase in private payrolls in four months. Private payrolls rose by 49,000 in December, the smallest jump since August 2000, while the unemployment rate held steady at 4 percent, the Labor Department reported Jan. 5. Job cuts at Internet companies rose 19 percent to 10,459 in December, according to Challenger, Gray & Christmas. The technology-laden Nasdaq Stock Market has dropped more than 50 percent since its high in March 2000.To reduce the chance of a recession, the Federal Reserve Board cut short-term interest rates by half a percentage point Jan. 3. The Federal Reserve action "will probably ward off any chance of a recession," said William Metzger, a chief economist with the Virginia Employment Commission. "In the IT industry, you may see a little bit more churning. But as some of the less well-financed companies go out, there will be others to take their place," Metzger said. Metzger has been tracking unemployment claims in Northern Virginia, and he hasn't seen a jump in claims that corresponds to recent dot-com layoffs at companies such as, and Etensity Inc.Presumably, that means laid-off workers aren't having difficulty finding new jobs. Unemployment in Northern Virginia fell to 1.1 percent in November 2000. The state's unemployment rate was 2 percent in November, the Virginia Employment Commission reported Jan. Gail Repsher EmeryThe myriad dot-com failures ? although putting little dent in the high-tech worker shortage ? have made it easier for established, old-line companies to recruit and retain employees, largely due to employees' changing job expectations.The days of huge signing bonuses and BMWs are over, said Barry Lawrence, spokesman for career Web site of Reston, Va."I don't think we're going to see as much on the table," he said.As a result, time-tested firms may be in the best position to find and keep tech workers. Government systems integrators such as SRA International Inc. of Fairfax, Va., and Computer Sciences Corp. of El Segundo, Calif., for example, are already welcoming back employees who took the dot-com plunge. The returning employees "obviously had some sort of experience at SRA that makes them want to come back. That makes you feel good," said Kerri Koss Morehart, director of recruiting for SRA."I think we are beginning to see some benefit" from the dot-com fallout, said Judy McFarland, director of employment, diversity and group staff for TRW Inc.'s systems and information technology group in Reston, Va."While there's not complete security [at TRW], there is a lot more security [than at a dot com]," she said. "We can't provide a BMW, and we can't give excessive sign-on bonuses, but we do things that are attractive: creating flexibility, enabling [workers] to get involved and feel gratified at the end of the day."Jimmy Jacobs, corporate director for employment relations at CSC, agreed."The pendulum seems to be swinging back," he said. "Employees are getting to be a little bit more savvy in what they're looking for. They want stability, some type of culture you would like to be a part of, and a program of internal growth. That will be good for all of us."Still, Jacobs said, "recruiting will be just as difficult," for CSC, which employs 61,000 workers at 700 locations and regularly has 1,000 to 1,300 job openings.While William Metzger, a chief economist with the Virginia Employment Commission, predicted some churn in the work force, others said they expect less employee turnover in an industry where annual turnover rates have approached 25 percent."Employees may see that job-hopping may not be in their best interest because companies are being more cautious [in hiring]," said Marjorie Bynum, vice president of work-force development for the Information Technology Association of America.The recent downturn, Morehart said, is "going to cause people to reassess what they like about the companies they are already with, what they're willing to live with and how they can work to make changes to improve where they are.""Let's face it, how many first days does anyone have in them?" she asked.

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