Tech Layoffs on Big Q1 Upswing, Far Outpacing Average
When outsourcing consultancy Challenger, Gray & Christmas released its figures on job cuts in January and February, the numbers were depressing, with the two months figure almost double the same period in 2008 and close to the number of job cuts in the first six months of last year. But the picture is much worse for high tech, with layoffs in January and February almost quadruple those in the full first quarter of 2008 and far in excess of the portion of the economy that the sector represents.
As I’ve mentioned before, according to numbers from Challenger, tech layoffs in 2008 were hardly a high water mark. From 2001 through 2008, last year was only the fifth highest number of job losses in the industry. But the numbers are rapidly starting to look progressively worse. The table below, put together for us by Challenger for an apples-to-apples comparison, shows the layoff patterns in electronics, computers, and telecom:
| Q1 | Q2 | Q3 | Q4 | Sector Total | |
|---|---|---|---|---|---|
| Electronics | 5,928 | 4,073 | 6,884 | 25,177 | 42,062 |
| Computer | 4,840 | 10,429 | 28,733 | 20,858 | 64,860 |
| Telecom | 6,577 | 19,142 | 2,652 | 20,277 | 48,648 |
| Q Total | 17,345 | 36,644 | 38,269 | 66,312 | 155,570 |
The job outlook has been deteriorating even faster this year. For January and February alone in 2009, the company has tracked 67,127 technology job losses. That is behind only retail with 72,272 job cuts and automotive, with 70,058.
Even without March in place, the quarterly job losses are already at 387 percent of last year’s first quarter, or double the average. As the total number of job cuts for January and February was 428,009, high tech represented 15.7 percent of all downsizing.
I checked data from the federal government to see how many people were employed in high tech at the end of 2007. There isn’t such a single category, so I added numbers from the following individual ones:
| Sector | 2007 Figure (thousands) |
|---|---|
| Computer and electronic products | 1,273 |
| Electrical equipment, appliances, and components | 430 |
| Broadcasting and telecommunications | 1,371 |
| Information and data processing services | 331 |
| Computer systems design and related services | 1,369 |
The total was 4,764,000. If all the job cuts on the Challenger report were in the U.S. (not entirely fair as some are international, but you look at the data you can get), they would represent about 4.7 percent of sector employment at the end of 2007. It’s also interesting to examine federal data on how big a part of the economy this industry is.
| Sector | % of 2007 US GDP |
|---|---|
| Computer and electronic products | 1.1 |
| Electrical equipment, appliances, and components | 0.4 |
| Broadcasting and telecommunications | 2.5 |
| Information and data processing services | 0.4 |
| Computer systems design and related services | 1.2 |
That comes to 5.6 percent of GDP at the end of 2007. Again, the data isn’t a completely clean match, but you could argue that layoffs in high tech as a percentage of all layoffs are running almost triple the size of the industry compared to the nation’s economy. That would suggest one of three conclusions:
- High tech companies are over-reacting.
- The industry is being hit particularly hard by the slowdown.
- Tech companies had over-hired and are using the recession as an excuse to purge.
So, on one hand, if things seem unduly bad on the high tech job front, they are. On the other hand, they could be a lot worse. Unfortunately, it seems as though there’s a good chance that they will be.
[UPDATE: Check the full Q1 picture with March's numbers. There's a little news for encouragement, but things remain largely grim.]
Axe image via Stock.xchng user Marzie, standard site license.
Erik Sherman is a freelance journalist whose work has appeared in Newsweek, the New York Times Magazine, Technology Review, the Financial Times, Chief Executive, and other publications. Follow him on Twitter.
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