US IT industry looking up

The US IT sector is bouncing back - but minus a lot of jobs.

A new study from the US Commerce Department has found 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 on 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 per cent this year, to $1.24trillion, according to the report. That pace of expansion compares with 1.6 per cent growth last year and 0.9 per cent growth in 2001. The overall US economy this year is expected to grow an estimated 2.9 per cent, according to the report.

But the labour picture in the tech sector isn't so rosy. Since 2000, the number of workers in IT industries has declined by 11.2 per cent to 4.8 million workers, compared with a decline of less than 2 per cent in all private industries, the Commerce Department said. Workers in IT occupations employed by all industries totalled 5.9 million in last year, 8 per cent 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 per cent from the average of $68,330 the year before, the report said. In contrast, the average annual wage for all private workers increased 1 per cent to $36,520.

US tech labour 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 US IT companies and their overseas affiliates topped $1trillion in 2002 but the United States experienced a record foreign trade deficit in IT.

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

Ed Frauenheim writes for CNET News.com.