The IT Sector Adds Jobs In April, But We Must Do Better

May 9, 2011 Timothy Prickett Morgan

Companies in the United States ended 2010 with $1.9 trillion in cash on their books, I just heard on the PBS Newshour as I sit here working overtime–as if a salaried employee or business owner, of which I am both, actually gets overtime in the 21st century–so I can get my work done. And guess what almost none of those companies are doing? Hiring people in sufficient quantifies to make a dent in the unemployment rate.

While I was initially happy about the fact that the private sector in America added 268,000 net new jobs in April, according to the latest jobs report from the Bureau of Labor Statistics, the more I thought about it on Friday, the more annoyed I got. The overall economy only added 244,000 net jobs last month because governments keep slashing budgets at the local, state, and Federal level, but let’s ignore that for the moment. The problem is that with 13.7 million people out of work and looking for it, and probably an equally large number who have stopped looking for a job because it is pointless, I don’t feel much like celebrating. Not when the U.S. economy needs to add over 200,000 jobs each month to keep pace with population growth. This is surely better than losing 400,000 jobs a month, as we did in the belly of the Great Recession, but we simply have to do better. We need to design, build, make, and sell things. And the top public and private companies in the country would rather do mergers and stock buybacks, and continue offshoring and outsourcing, rather than put people to work.

I said it before, and I will say it again: Those who can work, must work; but those who can employ, must employ. I don’t just say that, I do it. And it is difficult and contrary to some of our deepest reptilian instincts. But the thing to remember is this: that’s why you have a cerebral cortex and higher brain functions, people. Making jobs makes the world actually go ’round.

In April, the IT-related portions of the American economy did a little bit better in some parts than the rest of the economy at adding net new jobs. Computer and peripheral equipment makers were a little stingy with the new W-2s, up only 400 workers according to polls of companies done by the BLS, to 170,300. Communication equipment makers added 3,000 workers last month, to 120,000 employees. Semiconductor and electronic component makers only added 400 people, to 382,800. Telecommunications companies had 866,900 workers as April came to a close, down 5,900 people, and data processing and hosting firms had 240,400 workers, up 2,000 jobs.

The services business is recovering much more strongly, at least in April, and there is an IT component to this. Companies in the computer systems design and related services subsector tracked by the BLS hired 14,700 net new people in April and companies in the management and technical consulting area added 14,600 workers. Combined, these two areas have over 2.5 million workers.

The unemployment rate, which is based on surveys of households not the employer survey data discussed above, rose from 8.8 percent in March to 9 percent in April. We need to create somewhere around 7 million jobs to get unemployment down to the 4.5 percent rate of structural unemployment, and at the current rate, that would take about seven years.