A half-million tech jobs lost in 2002, study says

Some 540,000 high-tech jobs were lost in the United States last year, according to a study from the American Electronics Association. But the research points to improvements for 2003.

Richard Shim Staff Writer, CNET News.com
Richard Shim
writes about gadgets big and small.
Richard Shim
3 min read
New research indicates that some 540,000 high-tech jobs were lost in the United States during 2002. However, the American Electronics Association reported that the unemployment trend has slowed in 2003.

According to AEA's annual Cyberstates study, the number of people employed by the U.S. high-tech industry fell from more than 6.5 million to less than 6 million last year, a decrease of 8 percent. The high-tech manufacturing sector experienced the greatest worker reduction, accounting for the loss of more than 233,000 jobs. The hardest-hit industries were electronic components, down 76,000 jobs; communications equipment, down 47,000; and semiconductors, down 41,000.

Another hard-hit segment was the software industry, which recorded its largest jobs decrease since Washington-based AEA began conducting its report in 1995. Software companies lost some 150,000 individual positions in 2002. The communications sector lost 146,000 employees.

The only high-tech sector to add jobs was the research and development and testing industry, where employment increased by 7,000 jobs.

The AEA survey found that nearly every U.S. state felt the pinch of a slowed high-tech economy in 2002, with California accounting for some 123,000 lost workers, the most in the nation. Texas ranked second, losing 61,000 positions last year. Only the District of Columbia, Wyoming and Montana added technology jobs.

Despite all the sobering 2002 statistics, AEA officials said the outlook for 2003 is drastically improved, with the rate of job cuts slowing by an estimated 57 percent so far. The trade group's preliminary 2003 estimates indicate that high-tech industries will cut 234,000 jobs this year, for a 4 percent decline in total jobs compared with 2002. A slowdown in the loss of jobs in the software market is playing a significant role in the overall deceleration, with 30,000 positions eliminated thus far.

William T. Archey, the trade group's chief executive, said the improved employment outlook is based largely on stronger sales for high-tech companies and a brighter world economy.

"Many of the companies we talk to have gone from clinically depressed to rather optimistic, driven mainly by improved demand," Archey said. "One of the biggest factors to consider in last year's decline is that U.S. exports have decreased by $57 billion since 2000; a turnaround in the word economy will play a major role in improving employment rates."

Archey feels that many industry analysts place too much weight on high-tech exports to the Asia-Pacific region and overlook the importance of Europe on the U.S. economy. AEA estimates that demand in the European Union decreased by $15 billion over the last two years. Overall, U.S. high-tech exports fell 12 percent, to $166 billion in 2002, compared with $188 billion in 2001, and represented 24 percent of all U.S. exports in 2002.

The executive said the impact of high-tech manufacturing and services outsourcing to foreign countries remains extremely hard to gauge, as most companies refuse to detail how many positions they have shipped overseas. Until businesses are more forthcoming with those numbers or the U.S. federal government requires some form of reporting on employee outsourcing data it would be nearly impossible to estimate just how many jobs have been transferred offshore, Archey said.

The AEA report did not predict when the U.S. high-tech job market may again exhibit growth, but the trade group said that when it happens, companies will be better positioned to capitalize on demand increases because of productivity improvements made over the past few years.