Where have all the IT jobs gone?

For 24 months or more, employment growth as reported in the U.S. Bureau of Labor Statisticsd monthly "Employment Situation Summary" report has featured growth figures in the 100,000 to 200,000 range. That's large enough to soak up new entrants to the workforce, but not large enough to whittle away at the backlog of long-term unemployed (which the Labor Department defines as individuals out of work for 26 weeks or more) and under-employed (understood to mean those working in lower-paying or part-time positions who'd gladly take up offers of better-paying full-time jobs).

This month, the overall news in the Employment Situation Summary for April 2014 is much better than that: It indicates an employment gain of 288,000 jobs for that month (the highest figure since the recession kicked in back in 2008), with an attendant drop of 0.4 percentage points for overall unemployment, resulting in a figure of 6.3 percent (also a benchmark value in its own right). Better yet, figures for February and March were also revised upward, providing another unexpected boost to the upward trend in employment growth of late.

Furthermore a look at Table A-14 from that report ("Unemployed persons by industry and class of worker, not seasonally adjusted") shows improvement for nearly every industry sector included therein. Here's a snapshot of that table, so you can see what I mean:

Figure 1: The vast majority of industries here show improvements when compared to last year's figures.

In looking over the table, I nearly fell out of my chair when I saw that the Information sector (where most IT workers are counted, along with some of their peers who also show up in Professional and business services, or under the heading that begins "Self-employed workers ... ") shows an uptick in unemployment of 23,000 with an attendant jump in unemployment from 5.4 to 5.7 percent. This flies in the face of numerous surveys and reports I've been reading (and writing about) lately, such as the recent CompTIA IT Industry Confidence Index, reported on April 28, 2014. And indeed, most IT companies, hiring managers and industry watchers are all feeling bullish about IT's prospects for growth, spending and hiring for the rest of 2014 and beyond. In addition, labor force participation (the ratio of individuals in the workforce as compared to the overall population) also declined by 0.4 percentage points for April, to a historic low of 62.8 percent for that month. So what gives?

In listening to NPR yesterday, I heard a story from veteran reported John Ydstie ("Jobless Report May Confirm Economy Is Heating Up") that I believe may offer an explanation for this simultaneous up-and-down situation for IT (and also provide an explanation for the drop in labor force participation, as well). The number of long-term unemployed and under-employed is quite high at the moment – Ydstie puts the latter at about 1 in 3 for the whole workforce! – and as discouraged workers stop seeking employment, the U.S. Bureau of Labor Statistics stops counting them as part of the workforce. I'm pretty sure this accounts for the reported drop in overall labor force participation.

On the other hand, I believe overall economic improvements and a more bullish outlook in the IT sector can help to explain why numbers are dropping there, even as things are looking up. That's because when discouraged IT workers (who aren't being counted in that category) take heart from improving prospects, and actually start seeking work once again, this results in a jump in the unemployment rate for the IT sector. Because as soon as they resume the hunt for a job, they are once again counted as part of the IT workforce (albeit in the unemployed part of that population).

My take is that with things looking up, and reports of planned increases in IT hiring abounding, enough previously discouraged IT workers have decided to act upon this news to prompt a downward swing in employment numbers for our sector. If you take the number of unemployed in April 2013 versus 2014, and divide it by the unemployment percentage for the same dates, the size of the Information sector comes out to 2.81 million for April 2013, and 3.07 million for April 2014. That's a difference of 260,000 jobs between the two dates. With an Information unemployed count of 175,000 for April 2014, that also means that 85,000 jobs have been added to the Information sector over the past year, as well as showing an increase in the number of unemployed information sector workers actively seeking employment.

So perhaps the apparent bad news in the seeming good news-bad news scenario presented in the latest Employment Situation Summary isn't such bad news after all! And indeed, I do believe that IT will see this percentage decline in the months ahead, as planned hiring turns into actual jobs to start whittling away at those numbers. Count on me to keep you posted.