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Government: IT industry on the mend

The Commerce Department says the information technology sector is bouncing back--but the IT job market still has a ways to go.

The U.S. information technology sector is bouncing back--but without the jobs.

A new study from the Commerce Department found that IT industries are growing more quickly and that increased use of IT throughout the economy is spurring improved productivity.

The "Digital Economy 2003" study, released Tuesday, "shows that IT-producing industries are once again at the forefront of national economic growth and that, on average, industries and firms that have invested most heavily in IT equipment achieve faster productivity growth than those that do not," Commerce Secretary Donald Evans said in a statement.

Output from IT industries, adjusted for inflation, grew an estimated 6.4 percent this year, to $1.24 trillion, according to the report. That pace of expansion compares with 1.6 percent growth last year and 0.9 percent growth in 2001. The overall U.S. economy this year is expected to grow an estimated 2.9 percent, according to the report.

But the labor picture in the tech sector isn't so rosy. From 2000 to 2002, the number of workers in IT industries declined by 11.2 percent to 4.8 million workers, compared with a decline of less than 2 percent in all private industries, the Commerce Department said. Workers in IT occupations employed by all industries totaled 5.9 million in 2002, 8 percent less than in 2000, the study said.

At first, IT job losses were concentrated in IT manufacturing industries and low-skilled IT occupations, according to the report. However, the recent job losses have been widespread across almost all IT goods- and services-producing industries and across all IT skill levels.

Meanwhile, workers in the tech sector have taken a hit in the pocketbook. In 2002, the average annual wage for workers in IT industries was $67,440, down 1.3 percent from the average of $68,330 the year before, the report said. In contrast, the average annual wage for all private workers increased 1 percent to $36,520.

U.S. tech labor woes have been blamed on factors including the transfer of IT work to lower-wage countries such as India. The Commerce Department report offered some support for this argument. It said estimated sales by U.S. IT companies and their overseas affiliates topped $1 trillion in 2002, but the United States experienced a record foreign trade deficit in IT.

"The side-by-side occurrence of world-class U.S. IT-producing companies and the nation's chronic deficit in IT goods trade appears to be largely a result of the globalization of production and distribution of IT goods and services--especially the tendency of U.S. IT companies to supply foreign and American markets from offshore production centers," the report stated.