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Tech Sector Slashed Jobs in 2009

For the first time in half a decade, the U.S. tech industry in 2009 slashed large numbers of skilled workers from its payrolls. The findings, disclosed in a technology trade group's annual analysis of employment and wage trends in the industry, could slow an overall improvement in the U.S. economy, the group concluded.

Technology companies eliminated 245,600 jobs in 2009, or 4% of the industry's 5.9 million U.S. workers, according to the latest Cyberstates report released Apr. 28 by TechAmerica, a industry group representing 1,500 companies in electronics, software, and telecommunications. It was the first time the technology industry eliminated jobs since 2004.

Technology manufacturing companies shed the most jobs—112,600—in 2009. Engineering and tech services and the communications field each shed a net 59,000 jobs. Software services firms eliminated 20,700 jobs.

Though the contraction was milder than overall job losses in the private sector, the layoffs are notable because the tech industry had weathered the global economic crisis better than other industries.In 2008, tech companies added 99,700 net jobs, TechAmerica said.The U.S.unemployment rate topped 10% last year as the entire private sector shed more than 800,000 jobs. "The [tech] industry as a whole was last one in for job cuts, and there are signs it could be the first out of the recession," says TechAmerica lead researcher Josh James.

Difficult Aftermath

Nearly 3 out of 5 Silicon Valley CEOs said they plan to hire this year, up from 1 out of 5 last year, according to a recent survey of 153 chief executives by the Silicon Valley Leadership Group.

Yet the report found that the loss of so many highly paid technology industry workers from the nation's payrolls in 2009 could hurt communities across the nation. The tech industry pays wages that are 86% higher than the average private-sector wage of $45,400, according to TechAmerica. Average tech-sector wages in 2008, the most recent period available, fell 2% to $84,400, from $86,000 in 2007.

The 13th annual Cyberstates analysis of figures from the U.S. Bureau of Labor Statistics should serve as a call to action for greater government emphasis on preventing high-paying jobs from migrating overseas, TechAmerica Chairman Philip J. Bond said in a statement. Tech-industry employment peaked in 2000, when 6.6 million people worked for tech giants including Intel (INTC), Microsoft (MSFT), Dell (DELL), and Hewlett-Packard (HPQ), plus thousands of startups, the group said.

Last year, TechAmerica predicted that as much as $100 billion in federal stimulus funding could flow to technology companies for projects involving energy efficiency, broadband Internet access, electronic health records, and education technology. Much of that money has been held up by red tape, the group now says.

Job Creation

For state-by-state trends in technology employment, the TechAmerica analysis relied on data from 2008, the most recent year from which specific figures were available. California, home of Intel, Apple (AAPL), HP, and Oracle (ORCL), led states in job creation by adding 15,800 net new jobs in 2008. Second was Texas, home of Dell and Texas Instruments (TXN), added 14,600 jobs.

TechAmerica did not review state-by-state data for 2009, when even large technology companies began trimming jobs and freezing wages. California's unemployment rate in April reached a record high of 12.6%. Texas' unemployment rate was 8.2%.

In a note accompanying the report, TechAmerica's Bond said the tech industry "could benefit from a comprehensive agenda that encourages competitive tax policy, broadband deployment, and the creation of well-paying tech jobs across the country to help put America's brightest minds to work."

Edwards is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.

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