Effects of the Current Economic Downturn on the U.S. Science and Technology Workforce: Long Term Implications

Information Technology Association of America (ITAA).

Publication Details

Harris N. Miller, President, Information Technology Association of America (ITAA)


The current slowdown in the information technology (IT) industry due to the overall American economic downturn has resulted in decreased demand for IT workers this year. IT and non-IT companies have slowed hiring and increased dismissals in 2001 and 2002. Despite this downturn, a skills gap persists for IT workers in the U.S. Over the last five years, employers of IT workers from both IT and non-IT organizations have consistently told ITAA that there is a lack of properly skilled technology workers. ITAA original research suggests that even as demand falls for IT workers, the skills gap remains largely unchanged, presenting employers with limited pools of qualified applicants. Of deep concern is the long-term ability to maintain and train an adequate supply of technology workers with requisite math and science skills.


The U.S. information technology workforce has grown less than 1 percent since the start of 2002, while the future demand forecast by IT hiring managers for new workers has dropped sharply. Data from ITAA original research show that demand for IT workers fluctuates with the strength of the economy, but that no matter how high or low the demand, hiring managers consistently identify a lack of workers with the right skills suitable for IT jobs. Table 1 illustrates this reported demand and gap over time.

TABLE 1. Demand for IT Workers.


Demand for IT Workers.

In May 2002, ITAA released Bouncing Back: Jobs, Skills, and the Continuing Demand for IT Workers. The report indicated a 5 percent drop in the size of the U.S. IT workforce between January 2001 and January 2002, with hiring managers in IT and non-IT companies indicating that, although they hired nearly 2.1 million IT workers in 2001, they dismissed over 2.6 million in the same period. Table 2 indicates the 2001 hirings and firings by IT position.

TABLE 2. IT Position Turnover by Field.


IT Position Turnover by Field.

In September, 2002, ITAA released an update to the Bouncing Back report, finding that the overall size of the IT workforce grew by a net 85,437 positions between January and July 2002 from 9,895,916 to 9,981,353 workers. Employers added 782,466 IT workers and dismissed 697,029 IT workers during the period. While growth is low, we believe that the update indicates that the IT workforce is back on a slight growth track after the reductions of 2001.

The update also found that hiring managers have adjusted their 12-month hiring outlook considerably since earlier in 2002. Where in January 2002 these individuals indicated their intent to fill 1,148,639 IT positions over the subsequent 12 months, by July 2002, the volume of demand had dropped by 27 percent, to 834,727.

The following are among the most notable findings of the September 2002 ITAA quarterly update:

  • Despite the uncertain economic outlook, the worst may be over for currently employed IT workers. The number of IT worker dismissals has dropped substantially in the last 12 months. Between January and December 2001, companies released 2.6 million IT workers or over 218,000 per month. Between July 2001 and June 2002, the monthly total dropped to 116,000. This suggests that companies may have made the cuts necessary to their IT worker rolls, and current employment levels are in tune with current economic realities;
  • IT jobs are harder to get. Companies hired far fewer IT workers in the last 12 months. Between January and December 2001, companies hired 2,090,492 IT workers, compared to 1,564,931 workers between July 2001 and June 2002. Hiring dipped 25 percent during this tracking period;
  • IT companies are hiring fewer workers. At the start of the year, IT companies (as opposed to companies not primarily in the IT business) accounted for almost 20 percent of all IT worker hiring. By July, that percentage had dropped to less than 5 percent. Hiring by large IT companies is off 85 percent and hiring by small IT companies is off by 79 percent. This suggests that IT companies continue to be buffeted by unfavorable economic conditions, and that IT job prospects are more favorable outside of the IT industry;
  • IT workforce growth will remain relatively flat through 2002. If current hiring trends hold, the total U.S. IT workforce will reach just over 10 million workers by year's end, 10 percent below expectations earlier in 2002.
  • Tech support specialists remain the most often hired workers. Of 440,282 IT workers hired in the last three months, almost one third (147,649) were in the tech support category. Web developers were the next most popular hiring category, with 93,410 added to work rosters, followed by network design/administrators with 47,463.
  • Top skills holding steady. Top in-demand skills haven't changed much since the release of the Dice Tech Skills Profile, compiled for the ITAA from dice.com job listings data. Hard tech skills including C++, Oracle, SQL, and Java remain at the top of the list, and demand for these skills has held steady or increased slightly.

ITAA contracted with Market Decisions Corporation of Portland, Oregon, to collect the workforce statistics in Bouncing Back. The survey is based on telephone interviews with 300 hiring managers, selected at random at IT and non-IT companies. Results have sampling variability of ±6 percent at the 90 percent confidence level.


Since 1997, ITAA's studies have provided the nation's most comprehensive analysis of IT workforce trends. Although demand is lower for IT workers today than in the boom years of the late 1990s, there is a growing concern that this temporary dip in demand will result in fewer college enrollments in computer science courses, and fewer graduates with technical skills. Down the road, this could make our skills shortages even more acute, reminiscent of the mid to late 1990s in America. One recent report showed declines in enrollment in computer science courses and degrees by as much as 50 percent at some universities in the fall of 2002.1

Reduced enrollments today could result in severe shortages once enterprises start spending on IT products and services again. The gap between demand for IT workers and suitably skilled employees could quickly exceed the high of 2000, when hiring managers estimated a gap of nearly 850,000 high-tech workers.

ITAA recommends a reexamination and strengthening of the U.S. public education system through a focus on higher academic standards, more emphasis on community colleges and for-profit training institutions as viable training venues for the current and future workforce, and continued government support of lifelong learning to overcome the skills gap. ITAA also supports strong industry and government efforts to recruit and train women and minorities to arm them with the skills employers require for today's and tomorrow's IT positions. Additionally, there is an ongoing need to foster and promote partnerships among industry, education, government, and community organizations to develop initiatives that will train, recruit, and retain individuals for technology careers. All of these measures are necessary to maintain the United States' position as a global leader in IT.



Tech's Major Decline: College Students Turning Away from Bits and Bytes, The Washington Post, August 27, 2002.