Archive for October, 2004


    In 2003 a friend and I embarked on a software project together.  He didn’t have the money to pay me, but I was willing to do the work, just to have something to program while I was doing other work for money.  For the past 1-1/2 years I’ve worked on it off and on when I could find time.  People have since told me this was a healthy practice, to keep myself “in the game” so I wouldn’t get rusty.  The people I’ve talked to who have been some real die-hards in this business have considered it an asset that I’ve done this.  More than a year ago, as I read about the massive layoffs that occurred in our industry, the worry was expressed that some people had been out of work for so long they feared that they might never be able to get back into the business again.  Let me put some of that doubt to rest.

    As of October 18, I have finally found paid work as a software engineering contractor, after not having paid work in my field for 2-1/2 years.  I’m thankful to have it.  Hopefully this is the end of the long dry spell.

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     Since 2003 there’s been much talk about how the IT career for many programmers/software engineers in the U.S. is in peril; on its way to passing into oblivion.  The question on many people’s minds has been “Okay then.  What’s my next career?”  Some have felt betrayed, saying they were told in the 90s when their manufacturing jobs went away that IT was the way they should go.  “Retrain” was the motto then, which they did, but they did not anticipate that they would need to do it yet again so soon.  In any case it appeared to work for a while.  They had full-time jobs with plenty of work to do, and at good pay–damn good pay, in fact.  Since about 2001/2002, those people have been left wondering what happened to the promise that retraining would lead to their next long-term career, and they’ve been scared, because they’ve either seen or heard about some of the same things happening to IT jobs as has been happening to manufacturing jobs for 30 years–offshoring.  Sometimes the loss of these jobs has not resulted from foreign outsourcing, but from downsizing (people in manufacturing have been familiar with this trend as well), or from what some consider just as bad as foreign outsourcing: a young foreigner is brought in to take their job for much less pay.  The latter is a new option that some companies have chosen.  To the workers affected by it, it’s felt particularly cruel: “No, your job is not leaving the country, it’s not being outmoded.  It’s being done by somebody else who makes a lot less than you.  Train them to do your job.  Then get out.”

     As I have heard about all of this happening, I’ve felt the need to provide some perspective, because I’ve had this feeling that what’s really going on is not what people think it is.  Yes, the tactics are real, but I question the notion that this is the end, the twilight of careers in software technology in the U.S.

     This entry is intended for those who are dedicated to the technology field.  For everyone else, they probably won’t be interested in this opinion/analysis.  They are more interested in working in whatever field will pay the bills, and provide a good nest egg when they retire.  This article is not for them, because I think they’ve already made their decision that they need to go somewhere else.  Some of what I’ll say is based on current facts, though not much.  In large part this is based on my own life experience.  I went through a technology downturn many years ago.  I think some of you will see yourself in my story, and can draw some wisdom from what I experienced.


|        Something to think about:                |
| \>/|/| There are now more people working for the|
| |q q   government than there are working in     |
| | >    manufacturing (i.e. making things) in    |
| |___   this country.                            |
| |__U_/     “Will code for food”                 |

 — This was my .signature circa 1993

     I used to read about the personal computer industry as a teenager in the early 1980s.  I was a budding programming hobbyist, and I was very interested in who was doing what and why.  I still am.  I used to read about the occasional upheavals that would occur, and they were dramatic.  At the same time I saw ads on TV from technical schools suggesting that there was a promising future in computer technology.  Just from reading about the technology industry, I came to understand that it was very volatile, but there were indications I saw that prompted me to believe I could still make it.  I didn’t understand what the volatility felt like, but I got the impression that the industry went through dramatic swings where one moment business would be good, the next moment most of the business dried up.  I never heard much about what happened to the employees who worked in technology companies.  I remember seeing a brief segment on the nightly news back then talking about how the “boom had gone bust” in Silicon Valley.  I can’t remember when—sometime in the late 80s/early 90s.  I remember it ending with a former technology executive, who had been interviewed, getting into his nice car, and driving “off into the sunset” down one of The Valley’s streets.  Even with this information, I felt somehow disconnected from it.  I didn’t know what it all meant.

     I went into software development because I loved it.  I still do.  I didn’t get into it for the money, though the idea of getting paid to do what I love has always struck me as the best of both worlds.  From the messages I was getting from “out there” I thought it was a sure thing.  All I needed to do was get my college technical degree, and the jobs would be out there waiting for me when I graduated.  Never mind that this notion conflicted with the volatility I had read about, but then I was young and inexperienced.  I didn’t put two and two together and figure out that I could be affected by it one day.  Actually, I don’t know if having that knowledge would’ve scared me away from the field or not.  I’m a bit glad I didn’t get discouraged, because I would’ve missed out on some great life experiences.  I entered college at Colorado State University in 1988, and graduated with a Bachelor’s degree in Computer Science in 1993.

     In the intervening years I tried to find summer work in my planned career field, software development.  I noticed that as time passed this got harder and harder.  Each summer I sent out a few hundred resumes.  I wasn’t just responding to job ads.  I kind of did what career counselors tell you to do.  See what companies are out there, research them, and then try to get them interested in you.  Well, I did the part about seeing which companies were out there.  I tended not to research them unless I got a response from them saying they wanted to interview me.  Maybe that was putting the cart before the horse.  Each summer I got maybe 3-5 interviews using this method.  In no case did the interview result in a job.  I consoled myself by saying that at least I was getting job searching experience that would serve me later on.  I would later learn that a 1% response rate is about average for this approach of just sending out unsolicited applications.  I wish I had been told this earlier, but oh well.

     1992 was my worst year.  I got one interview the whole year!  This to me was a dramatic drop, and it was very discouraging.  I really began to wonder what was going on out there.  I started paying more attention to the news, and I kept hearing about how big business was laying off people by the tens of thousands.  This gave me an idea of what the big picture was.  Eventually I would hear a name for it: “recession”.  I never heard this term before, but I was learning a bit about it then, because it was happening right in front of me.  Still, I didn’t get the sense that a recession was a mere cycle in the economy.  I looked around me and it didn’t look like there was a light at the end of the tunnel.  It just seemed like this was the way things were going to be, for years.  No one I heard could predict an end to it.


     The more I came to understand what was happening (what little understanding I obtained), the more frustrated I got.  I was doing all the right things, I thought, but the opportunities just weren’t coming my way.  I didn’t have stellar grades in school, but my programming skills were very good.  Perhaps companies wanted graduates, not students.

     I remember seeing a particular Ad Council spot on television.  It gave voice to my frustrations perfectly.  It showed a man (a “swami” or “spiritual guru” is the best I could describe him) sitting alone on a hill, legs crossed, with a look of serenity on his face.  The man said something like, “Man has long pondered the age-old question: how to get a job without experience, and how to get experience without a job?”  “Yeah, that’s me!” I thought.  The ad ended with a brief informative message about student co-op programs.  I had looked into co-ops, but they were never just summer jobs.  They often started mid-semester, or ended in mid-semester.  This wouldn’t have worked out so well for my typical routine of living on-campus during the school year, and then living at my mom’s home during the summers.  Plus, she didn’t like the idea of me working during the school year, as I had my hands full just doing the schoolwork.  I looked at summer internships as well, but those were few and far between, and the competition for them was great.

     Out in the general public, people were getting scared and discontent was running high.  Almost everybody, no matter their field, had some fear they were going to lose their job.  Pundits made pronouncements that the Social Contract was dying.  I remember hearing that executives were getting laid off in numbers not seen in decades.  The “Social Contract” was the idea that had been around since WW II that if you stayed loyal to a company, the company stayed loyal to you.  There was a commitment to lifetime employment.  Books of doom and gloom were published and talked about on news shows, such as “America: What Went Wrong?”, and “Bankruptcy 1995” (published in 1993—predicting imminent economic collapse).  For a brief time in 1992, Ross Perot, an independent presidential candidate was actually beating both President George H.W. Bush and then-candidate Bill Clinton in the voter approval polls by double-digit margins on a message of bringing the jobs back, and making the economy more secure for Americans.

     I talked to my advisor in college about my prospects of starting a career in software development.  He told me that despite what I saw then, I should hang in there, because college enrollment in computer science had been falling for several years, and it looked like that trend was likely to continue.  He told me that in the long run, I shouldn’t worry about it.  There would be plenty of opportunity for me.

     By my last year, I began interviewing with major corporations, as every other computer science student I knew was doing.  Nothing came of them, but I appreciated the opportunity to talk to company representatives.

     I did hear from a few career counselors that “networking” was the way to get a good job.  They always said the best jobs were obtained this way.  They tried to explain how it worked.  The best I could understand it the method was to keep in touch with friends who were employed, and with family.  Let them know you’re looking, and get in the inside track.  Don’t just send in a resume or a job application form.  Human resources will just file it away.  I didn’t know anybody who was employed at the time, and the rest of my family knew I was looking, but they didn’t know of anything for me.  None of them worked in my field.  So this was a non-starter.

     It seemed futile when I heard the word among my colleagues that the job market was so competitive that the major companies were only taking the top 3% of the class graduates as new hires.  Except for that top 3% there was no hope of getting an entry-level programming position.  Many computer science students who were getting entry-level technical positions were hired as software testers.  Most of my fellow students advised me to take that route.  How depressing!  I hadn’t done it professionally, but I already had a sense that software testing as a full-time job was not something I would enjoy.  A couple years later I would be proved right on that prediction.  So I know I wasn’t just being stubborn.  Another thing a few friends told me was that from watching their friends, it seemed to take a year from the time someone graduated from our university to the time when they found a permanent, full-time position.  So the job market was daunting.

     I graduated in 1993, and I still didn’t have a job lined up.  I moved into my mother’s place in Boulder, Colorado, to stay until I found work.  As the summer progressed, I continued looking for that elusive entry-level programming position, despite the advice of my colleagues.  I looked at the classifieds every week (the classifieds were the main source of job ads at the time, since the Web was in its infancy) and it was depressing.  There were many listings for technical/programming jobs.  Every one I looked at either asked for multiple skills I didn’t have (much less heard of, sometimes), or asked for skills I had, but they wanted 3-5 years work experience in them just to qualify.  I had a few interviews, but each time I got the definite impression from talking to the company representatives that I would be in over my head.  They didn’t work out.

     I began to wonder if I had done something wrong, or if I was out of my depth.  Maybe I just wasn’t smart enough to get a programming job at all, ever.  I really wondered whether I had pursued the right course of action, getting a computer science degree.  Maybe I was good enough to get by through college, but I just wasn’t cut out for the technology business.  I pondered other alternatives.  I wanted to work, but I couldn’t find anything in my chosen field, that I liked, anyway.  I thought, “Well, maybe they’ll hire me to stock shelves at the local grocery or drug store.”  I pictured myself doing it.  All I could think was this was a kind of spiritual death, that I would be admitting utter defeat in my quest.  The other thought was, “Then what?  You don’t want to be doing that for the rest of your life, do you?”  I liked books though, and thought maybe I could do well as a worker in a bookstore.  I applied at a few places.  No response.  Not even an interview.  Perhaps that was a blessing.  In hindsight I was probably considered “overqualified” due to my college degree.  I didn’t understand that at the time though.  It felt kind of like a slap in the face, like I’m so unqualified I couldn’t even land a job like that.  But what did I know?  I was just a young guy, who was just beginning to experience the real world.  My first taste of the labor market was pretty bad.  Looking back on it now I can excuse myself for thinking that was all there was, and that the future looked bleak for me.

     In the meantime, I joined my mom in her housecleaning business.  It wasn’t great, but at least I was getting out there, accomplishing something, and making a little money and earning my keep.

     During this time I began to read about office jobs being outsourced, mostly to domestic outsourcers.  Some of those jobs went overseas.  From what I read, the people who used to have those jobs lost them.  They did not get absorbed into the outsourcing firm, even if it was domestic.

     Tech job outsourcing was not widely publicized in the media, as far as I could tell, though I mention below a book that was widely published, which talked about it at length.  It was probably so new, and involved so few people, that a lot of reporters and media types didn’t notice it.


     I finally landed my first full-time job in the spring of 1994 at a small software company in town.  I found the job in the place that career counselors had told me was the worst place to look for them: in the newspaper classifieds.  They discouraged people from looking there, because they said it was where everyone else was looking, and competition for those jobs would be fierce.  The prediction my fellow students told me seemed to hold.  It had been almost a year after I graduated.

     The company had about 10 employees.  I was so elated!  Finally all my hard work had been vindicated!  The pay wasn’t great–$9 an hour–but it was a technical job, and I couldn’t have been prouder of myself.  I ended up not doing much programming there.  I did some software testing, I babysat tape backup and restore jobs, and I did some customer service work.  It was more like an internship.  I got laid off after two months.  The company was downsizing a bit after a period of disappointing sales.  I’ve since heard from other technology workers that they had a similar experience during this time.

     It was a jolt.  I really appreciated the opportunity to get my first real on-the-job experience, but I dreaded going out into the labor market again.

     Four months later I found a guy who ran his own one-man business, who developed a software package for public libraries.  Again, I found him through the newspaper want-ads.  He was looking for a contractor to help him get some revisions out.  He took me for the job, mainly because I could program in C, and had written some of my own applications in the past.  I learned how to program against a relational database because of that project.  And it led to another opportunity down the road as he was also an employee of a small software firm in town.  When they needed to add a developer, he enthusiastically referred them to me.  This was the first time networking had worked for me, though it was different from what everyone else told me it would be.  It was more like what I would call in modern day terminology “’Apprentice’ networking” (after the hit reality TV show), because I actually worked for the guy.  That was my interview, in effect, even though the job was not set up just for that purpose.  From that point on my work life became more stable.  This was in early 1995.

     Apparently the technology industry was in recovery.  Software programmers like myself were more in demand.  I remember being rather shocked when at least once a year, from 1995 onward, I was getting calls at my office phone from headhunters looking to place programmers at other companies.

     I began to read stories about how companies were reconsidering outsourcing; that it hadn’t always turned out the way they liked.  They began to bring the outsourced operations back into the company, because they realized that the outsourcing operations actually cost them more than those same operations cost in-house.

     As time passed, I looked back over my experience and marveled at how the job market for someone of my skills had changed.  By the late 90s, I was hearing all the time that programmers could write their own ticket.  They could get whatever job they wanted, no matter how unskilled they were, and they could ask for whatever pay they wanted, too.  Something seemed too good to be true about all this, but I enjoyed it while it lasted.

     Certainly the Internet boom had something to do with all this, but it wasn’t the whole reason I had a secure job as a programmer.  For you see, all I had been doing this whole time was client/server work.  No http, no Cold Fusion, no ASP, no COM/MTS, no Apache, no CORBA, no IIS, no Javascript, though a little HTML, and a little Java.  In fact, I was working exclusively in C, C++, Embedded SQL, and PL/SQL.  That lasted until the summer of 2001, when I, and just about everyone else I knew, was laid off.  The layoff that I was in was not due to outsourcing.  It was simply due to a dramatic drop-off in demand, plus the company’s creditors told them they were getting no more financing.  And last I heard, in 2003, my old employer still had not outsourced any software development work.

     The ironic thing is that despite my work experience, I feel now that I’m back to where I was after I graduated from college in terms of my career.  Perhaps this is a common experience in our field.

The Bottom Line

     The point is that many years ago I was once where many former IT workers and wannabes are now.  They see that the IT job market is very bad, and many are willing to believe the worst about it, that this could be permanent.  They hear about all the high value jobs that used to be theirs going to places like India, and the phrase always comes to mind, “They aren’t coming back.”  It seems to me the only difference is now the predicament has become very public.  It’s gotten a lot of coverage in the industry publications, and more recently, it’s spilled over into even widely read publications that one can pick up at the supermarket, and occasionally onto TV news shows.

     I’ve recently looked back at the period of the early 90s, and it’s given me some perspective.  It’s the reason I’m writing this.  I’ve noticed patterns during this downturn that seem pretty familiar.

     The previous recession started in 1990.  Job losses began in the middle of the year.  The economic recovery began in 1991, as did the jobs recovery, though it was very slow going until the middle of 1992.  Barely any headway was made until then.  A complaint I remember being voiced in the media at the time was that high paying jobs were being replaced with low paying jobs.  From anecdotal evidence, from what I experienced, and have heard from others, the job market in technology didn’t begin to stabilize until 1994.  I later read that during this time of uncertainty, major figures in the technology industry wondered aloud whether the U.S. was losing its position of technological leadership.

     Ed Yourdon wrote a book in 1992, called “Decline And Fall of the American Programmer“.  He described how high value programming jobs were being taken out of this country and sent to India.  He described it as an inevitable force that threatened the very livelihoods of American programmers, since Indian programmers were much cheaper, and often better, than their American counterparts.  He said the fact that Indian programmers were using more up-to-date technologies and methodologies, such as the hot new trend of the time of using CASE (Computer Assisted Software Engineering) tools, plus the fact that they had a higher commitment to making their organizations CMM Level 3 or Level 5 than American software organizations, made them extremely competitive against American programmers, who tended to produce lower quality code for higher cost.  He published the book as a warning to American technology industry and American programmers that their days were numbered unless they shaped up and became more productive.  His logic seemed infallible.  Indian programmers represented a serious threat to American technologists, because they were just as capable, often more capable than American technologists, and worked for a fraction of the cost.  How could anyone beat this?

     Interestingly, while his description of the situation at the time was accurate–technology jobs were being outsourced to India–his analysis did not completely encompass the talents that would be needed to bring new technologies to market and integrate them into existing businesses.  His dire predictions did not come true.  The American programmer did not decline and die, but experienced a resurgence in the mid- to late 1990s.  Newer technologies were adopted in the U.S., which provided many opportunities for technologists here, as many of us now know.  In fact, Yourdon wrote another book in 1997 that I can only see as a contradiction to his earlier book’s thesis, called “Rise and Resurrection of the American Programmer”…

     This leads to my next point.  It’s difficult to predict what’s really going to happen with the technology business.  There were people, though they weren’t heard as widely as they are today, who were about ready to write the American programmer’s obituary in the early 90s, but things turned out differently.  I think the same will happen down the road.

     Technology is still a volatile business.  I don’t blame people who have left it due to the fact that it does not seem like a stable career.  For most people, it isn’t.  It’s a real challenge to stay in it, and is not for the faint of heart.  In addition, in hindsight, I’m rather surprised that career counselors advised people to move into IT as a stable career.  As I said earlier, I had seen from my own experience how volatile a technology career was.  Perhaps career counselors didn’t know this then, but a lot of people know it now.

     I think the technology field in the U.S. will go on for many years to come, and I think there will always be “gold diggers” who get into it for the money when it experiences its next boom.  Ultimately the people who will stay with it are the people like myself who love it, and also plan their finances and career options accordingly so that they can survive the down periods that will inevitably come.

     Several months ago my single mother told me a brief story about my biological father, who was an aeronautical engineer.  While she knew him, he told her that there were times in his career, as brief as it was at the time, when he was unemployed for several months.  And he knew that there were going to be times in the future when he was going to be unemployed, and work in his skill area was going to be hard to find.  He said there was a reason why he got paid so much to do his job, and it wasn’t because aeronautical engineers were so special.  He said they were paid that much because just about everyone in his field knew that there would be up times and down times in his industry, and that engineers saved up their pay, so that when they inevitably became unemployed they had something to live on for a while.  People in the IT field today should take a lesson from people such as him.  He knew what he was talking about.  I think that in addition to prudent financial management, technologists should get trained in a trade of some sort, because I’ve discovered that financial management alone will not necessarily get you through the down periods.

So what’s really going on?

     To start with, from all the data I’ve seen, foreign outsourcing is not the main cause of our woes.  The growth of foreign tech industries, and the growth in foreign jobs from American companies operating in India and other places should give us some pause.  The problem is people hear about these trends and tend to think that we’re being left behind for cheap labor.

     For the time being, let’s face it, we are, but no one should get the idea that the technology industry and manufacturing are the only areas that are going through hard times.  A year ago I heard from a neighbor of mine, who was also unemployed, though not originally a technology worker.  She attempted to get a single medical office receptionist position that was available.  This was a skilled position, and there were 200 other people applying for it.  She felt so hopeless about it, not unlike the hopelessness I have seen others in my field express after being faced with a similar challenge for the technical jobs they attempted to land.  Just about everybody, no matter their field, has been having it rough, though there have been exceptions.

     Globalization is a process, and it is not one designed to leave us behind.  Even though it seems like foreigners are gaining all of our benefits at our expense, there are some things that even foreign workers cannot match when it comes to what we are good at.  The answer may scare some, but it really comes down to culture.  I believe the people who are afraid of this phenomenon assume that just because foreign workers have the skills we have and can “do it better” than us (that kind of statement always makes us uncomfortable, right?) that they must share all of our qualities that make us great workers.  They don’t.  If you have traveled abroad as I have, you know that not all cultures are created equal when it comes to getting things done well and to the customer’s satisfaction.  The first time I did it, I was shocked at the very different attitudes that foreign workers had with regard to customer service, working things out to the customer’s satisfaction, and their lack of regard for productivity.  We know the adage that “the customer is always right”.  Elsewhere this attitude does not always prevail.  I’ve found, though I don’t know enough to say it’s universal around the world, that they believe that the person serving you is always right.  You defer to them.  That to an American is quite foreign, and we often don’t take kindly to it.  Americans value the traits that we have as workers.  We consider them a given.  It’s a part of our collective work ethic that’s just expected.

     Foreign workers also have different ideas about promptness and, as I was saying, productivity.  In America we generally expect that most businesses run at least 9-5, and retail outlets are open from 7am or 9am, to 9pm, or later at night.  It’s just an expectation.  I found that in the places I traveled to, to have a customer service representative scheduled to only be available from 11am to 3pm was not considered unusual or bad service.  What if I had a problem that needed to be solved with that service?  Was there someone else I could call?  It was very difficult to get that answer.  I found that some foreign workers also tended to show a lack of creativity in solving the customer’s problem.  There was a set procedure for doing everything, and if your problem didn’t fit into any of the procedures, they just picked the one that to them felt like the closest fit and put you into it.  If it didn’t work out to your satisfaction, tough.

     Even though it sounds like I’m only talking about customer service jobs, believe me, this attitude pervades in other types of jobs as well.

     In truth, outsourcing is really only good for some situations.  It’s not universally the best choice to make.  Some businesses are acting that way though, and I think in the long run they will find out this is a mistake.  Steve Ballmer, the CEO of Microsoft, was asked at a Gartner symposium this year what he thought of the current “standard practice” being promoted by venture capitalists, with startups that they fund, that all technology/IT work should be outsourced overseas.  Only the executive, management, and sales staff are to be based here.  He responded, with a bit of a laugh, “I think it’s crazy.”  He went on to say that the most creative people in technology in the world are only in Silicon Valley.  This strategy denies startups access to this creative talent, and it’s a detriment to their business.  I agree with him.

       Technology outsourcing has been going on for years.  It happened in the 1980s with hardware manufacturing.  It started happening in the early 1990s with software development, and has only grown since.  What one should be mindful of is that even with that going on, the American technology industry grew a lot during that time, providing lots of jobs to programmers who wanted them.  In fact in the late 90s there was concern that there were too many technology jobs, without enough workers to take them.  This was happening despite the fact that technology jobs were being outsourced all the time.  Some people see a sinister point to this, that the “worker shortage” rhetoric was just a ploy by greedy businesses who didn’t want to pay as much.  However, I saw it in my own experience.  A small company I worked for tried finding people to fill certain technical/technical management positions during this time, and failed on a few occasions.  Admittedly part of the reason was the pay level candidates were asking for, but we were a small business.  Small businesses can’t afford to pay the sky high salaries.

     In any case, the estimates are that around 400,000 jobs have been outsourced in the last few years, in total, overseas, or a bit more than 2% of all computer-related jobs in this country.  From those I’ve heard from, who know what’s going on in the outsourcing scene, they say that the whole outsourcing phenomenon in technology is being way overblown.  Consider as well that in the first quarter of 2004, we gained more than 300,000 jobs in one month (that’s all jobs, not just technology-related).  Given these facts, I think one has to get past the hype about outsourcing and wonder what’s really going on.  I can’t offer any definitive answers on this, but I can put forward some facts that might point you toward some factual analyses of the problem.

     The first thing we have to acknowledge is that the technology industry was the victim of a few bubbles that burst.  First there was the Y2K bubble, followed thereafter by the dot-com bubble, which both burst around the same time in 2000.  Why a Y2K bubble?  I mean this in the sense of project budgets, and technical jobs.  Once the Y2K projects were done, and the 2000 deadline passed, most Y2K projects shut down—basically at the same time.  They were done for the time being.  So these workers either were assigned to new tasks, or were laid off.  By 2001, IT software development in general was in a severe decline.  Just about everyone I knew was getting laid off, including myself.  In 2002, the telecom bubble burst.  The telecommunications industry hired many programmers before the bottom fell out.  Most of the activity was downsizing, due to a sudden drop in demand.  I did not start hearing reports of increased outsourcing until 2003.

     Why is this significant?  Just because a bubble has burst and jobs have been taken away does not mean that the work is gone forever.  Just because there’s news that technology jobs are being outsourced, does not mean that there won’t be future work in your field.  I cite my own experience from the 1990s as an example.

     Secondly, many of the programmers/software engineers I knew who had been laid off in 2001, or since then, have found new jobs.  All except for one found a job in their chosen technical field.  As of today, out of all the people I know, 2 or 3 are looking for work, as am I.

Some analysis

     Some of you may not be interested in this, as it gets technical.  Just fair warning. 🙂

     9/11 has had an effect on the way major companies have acted during this time.  During every recovery, companies have held off hiring as much as possible, trying to keep a lid on costs so they can build up reserves from their profits.  Companies now have really taken this to heart.  9/11 scared them, because when that happened, demand dropped off dramatically.  This was in addition to the drop off in demand that occurred at the start of the recession.  Customers of all sorts were scared.  People hoarded cash, put their money in stable assets, or put it into real estate, because no one knew what else was coming.  So likewise, companies have been hoarding their cash, as an insurance policy in case of another major terrorist attack, and another period of consumer fear ensues.

     Secondly, there was a direct correlation between the 9/11 attacks and the loss of more than a million jobs.  We had already lost about 1 million jobs between April and September in 2001, from the recession.  9/11 heaped on more losses, so that by February, 2002, we had lost a total of 2.1 million jobs.  Part of this was not just the attacks, but likely as well our military response in Afghanistan.  I’ve done some analysis on the correlation between attacks/military action, and major job losses in the economy.  They seem to match up pretty well.  Since 2001, however, the period from September, 2001 to February, 2002 was the period of the biggest job losses.

     A factor in what we’re experiencing in the job market is that the period of job loss has been longer than most of us are used to.  Perhaps the only period that would compare with what we’re seeing now is the recession/recovery period that lasted from 1980 to 1984.  Some experts have compared our current downturn to the recession of 1973-75.

     The recession ended, according to economists, in November, 2001, but the job losses continued.  Our economy consistently lost jobs, at varying levels, until September, 2003, when the trend of positive job growth began for the first time in 2-1/2 years.  The net loss at that point was 2.7 million payroll jobs.  Since September, 2003, the economy has gained about 1.7 million new payroll jobs, with consistently positive job growth every month.  I think it’s safe to say it’s a trend.  However we are still down 1 million jobs from the level we were at in March, 2001, which was the “high mark” of our economy to date.  Had 9/11 not happened we probably would’ve broken even by now.

     By comparison, the recession/recovery period from 1990 to 1994 was milder on workers.  Back then the economy lost about 1.5 million jobs, and the jobs recovery began, though very slowly, about a year after the recession started.  We gained back all of the jobs we lost (in raw numbers) by the first quarter of 1993, 2-1/2 years after the recession started.  So the job loss we experienced this time was much more severe, not only because of the raw number of jobs lost, but the period of job losses was more than twice as long, and we haven’t broken even yet with the number of jobs we had at the beginning of 2001.

     The reason this matters more than last time is over time the labor market grows.  The conventional wisdom is that it grows by about 130,000 to 150,000 new potential workers a month.  So even when you get to the point of “breaking even” on the number of jobs, there is more competition in the labor market at that point than there was at the beginning of the recession.  So it takes a while longer still for the economy to absorb all of the new entrants who haven’t found work yet.

     I think when the story is finally written in hindsight about this period, observers will say that demand fell off in 2000 and 2001, and stayed down for a few years.  I think they will also say that companies generally downsized as a solution for this.  They may have outsourced a relatively small number of jobs, but basically they kept their staffs static in this country.  Companies did the only thing they could do to stay alive, and try to grow: cut costs so that they could cut prices, and thereby find new buyers for their products or services.

     A case in point is a company I used to work for.  From 2001 to 2002 they laid off employees, mostly technical workers.  Since then, they’ve hired only two new people.  One was to replace the head of their division last year.  The other, just last month, was a software engineer.  The first one they’ve hired since 2000.  For the past 2-1/2 years, they had effectively not added people to their staff.  In contrast, they had hired about 3 new employees a year during the 90s.  Things have been busy for them, but for most of these last few years they had been able to keep up with the demand from their customers, and keep the staff level static.  This condition is gradually starting to change.  As time passes they will need to continue growing their staff, as the economy grows.  This will be happening to all sorts of companies eventually.

     The point is outsourcing had nothing to do with them not increasing their staff levels here in the U.S.  In fact, they considered the option of outsourcing work, and figured it was too much of a hassle, given that the Asian outsourcing companies are 8,000 miles away, and the time zone differences are significant.

Just my 2 cents…

     I think a significant factor that brought on the recession was the government’s pursuit during the 90s of a “strong dollar” policy.  This fought inflation, which I think was occurring in the technology industry, but it also caused a big problem, which in the last few years has been working itself out.  The strong dollar increased the prices of our products abroad, making them less and less accessible to foreign consumers at a time when foreign demand for our technology was growing.  In all likelihood this strategy required the government and the Fed to decrease the money supply, thereby leading to what eventually happened, which was a credit crunch.  Lenders told many companies at the start of the recession that they were not going to get any more money from them.  Demand had been dropping off both in the U.S., and abroad.  So with no new investment coming in, and a falloff in demand, something had to give.

     From everything I have heard from those who are watching the trends in our economy, technology is not becoming less important.  It is becoming more important for people’s careers.  People in IT who are struggling to keep their jobs, or have been laid off can be excused for not seeing this.

     I don’t mean to sound foreboding, but rather I want to illustrate that things are not always as they seem.  I’ve done some research on what happened in the Great Depression of the 1930s.  One of the reasons the hardship was so deep was that the economy was transitioning in a big way from an agricultural economy to an industrial economy.  It was a seismic shift.  Despite the fact that this transition was happening, a lot of people who had once worked in industrial jobs no doubt had a lot of trouble finding work during the Depression.  What actually exacerbated the economic conditions of the time had nothing to do with this (it had to do with the reliance of the Gold Standard, but that’s another topic altogether).  Nonetheless, what came after was a tremendous period of technological, industrial innovation and prosperity, following WW II.  Likewise, even though what we’re going through now is not deemed by any of the professional observers as a depression (for some perspective, unemployment was running between 17% and 25% during the Depression), a similar shift is happening, from an industrial economy to a technology/services based economy.  Observers are saying this despite the hard times the technology and services industry is now facing.  As the Depression showed, just because industrial jobs were hard to find, didn’t mean that the Industrial Age in the U.S. was dead.

So what’s real?

     Certainly current conditions should dictate what some do with the direction of their career, so that they can continue to make a good living.  Their families depend on that.  When predicting trends, however, one should not necessarily look solely at what one sees right in front of their face.  I’ve been seeing a lot of industry and economic watchers do this.  It’s the easy route.  Talk about the current numbers, get some quotes from some people inside the industry who will talk about what’s going on now, and what they predict they will do (which tends to change just months later), and then make a pronouncement about “this is what it means” and “this is where you should direct your career”.  My question to them would be is this news they’re putting out helping anybody?  It makes me wonder.  I think a better approach, for those who want to know what will be going on 2-5 years from now, is to look at what happened with past economic cycles, and research our economic history, and what’s tended to happen with the adoption of new technologies.  What you’ll find, in short, is what we’re going through now has happened in some sense before.  It’s temporary, and the future for the industry we’re in is bright, despite current conditions.  It’s difficult to hold this concept in your head especially when all of your “information sensors”, which seek out news on what’s going on, are telling you something completely different about your future.  The trick is to separate out the raw information about present conditions, which is usually accurate, from the conclusions that your information sources often draw from that data.  In reality, you have to be your own analyst, and provide yourself with your own discernment about what’s real and what isn’t.  Part of this discernment is understanding the motivations of your information sources, because they do have their motivations, and they’re not completely in your best interest.

     What I’ve found is that during times like these, news commentators, and industry analysts, while they are partly motivated to provide you with the news, they also want you to believe their analysis.  At times like these when lots of people have lost their jobs, readers/viewers don’t want to hear that the economy is getting back on its feet again.  They don’t want to hear that because it feels like a lie to them.  It doesn’t matter if it’s in fact the truth.  So these information providers are not necessarily going to tell you the whole truth because they also care about their ratings.  And they know they can get you to watch their show, or read their story, if they come out swinging, telling you that you’re right: you are in deep trouble.  In fact the whole country is in deep trouble.  They will provide you with all the evidence you need to back up your own notion of what reality is.  I understand why they do this, but I’m here to tell you that if you take what they say as gospel you are doing yourself a bit of a disservice.

In Conclusion

     My best advice is to do what’s necessary to take care of yourself for the time being, keep a watch out for what’s going on in the tech job market, and take advantage of the opportunities presented to you.  If you keep at it long enough eventually you will see things turn around to the point that you can get into the job you enjoy.

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