COVID-related U.S. IT job losses tick up as spike in cases creates uncertainty
The wave of IT layoffs caused by the COVID-19 pandemic did not end in May 2020 as expected, with June seeing 6,000 more layoffs as business uncertainties rose because of the increase in coronavirus infections in the U.S., according to new data from management consulting firm Janco Associates. The pandemic's economic fallout had already led to about 117,000 job losses in U.S. IT positions in April and early May 2020.
The increase in COVID-19 infections across most U.S. states in June prompted the additional layoffs, and Janco's June survey of U.S. IT organizations shows that further layoffs - though at the relatively small scale seen in June - are expected given business uncertainties. That survey also said that salary increases for IT staffers are "a thing of the past."
The job losses were exacerbated by the extensive protests over the police killings of George Floyd and others, Janco said. That led to additional economic uncertainty, particularly in the retail industry hit by looting, leading to additional closings, deferred reopenings, and unexpected costs.
In addition, a Trump Administration decision last month to pause the use of H-1B visas, which are commonly used to fill IT positions, will not help U.S. IT pros in the near term, Janco noted. Because it applies to new hires it does little to free up existing positions.
IT organizations don't expect to begin hiring again until late 2020 or early 2021, assuming that the infections are under control and the economic reopening interrupted in June can resume. Without a sustained reopening, companies won't see demand for goods and services that provides the money for new and replacement hires.
Janco CEO Victor Janulaitis now expects the net number of new U.S. IT jobs in 2020 will be about 30,000, versus the 94,500 it had expected before the epidemic struck. In 2019, the U.S. IT job market grew by 90,200.
The wave of IT layoffs caused by the COVID-19 pandemic has ended, according to new data from management consulting firm Janco Associates. The pandemic's economic fallout resulted in about 117,000 job losses in U.S. IT positions in April and early May 2020.
But Janco's May survey of U.S. IT organizations shows that further layoffs are largely not expected. But neither is much IT job growth. IT organizations don't expect to begin hiring again until late 2020, assuming that the gradual economic reopening now in progress continues and demand for goods and services resumes, providing the money for new and replacement hires.
Janco CEO Victor Janulaitis expects that the net number of new U.S. IT jobs in 2020 will be about 35,000, versus the 94,500 it had expected before the epidemic struck. In 2019, the U.S. IT job market grew by 90,200.
It's not yet at the level of "Brother, can you spare a dime?" for IT workers, as it is for many workers in retail, entertainment, and hospitality. But as it becomes apparent the road to recovery from the COVID-19 pandemic will be take several years, IT pros are seeing layoffs in the U.S. and diminished prospects for future work, both as staff and as contractors.
In April 2020, IT pros saw 102,300 layoffs in the U.S., according to management consulting firm Janco Associates. And Janco has now more than halved the expected IT job growth in 2020 that it predicted just a month ago - to 40,000 versus the earlier prediction of 95,400 IT jobs.
Janco's current projection for U.S. IT jobs this year is now 3.6 million, down from 2019's 3.7 million U.S. IT jobs.
Companies have essentially stopped filling IT positions and halted new contract work, Janco CEO Victor Janulaitis said, based on conversations with CIOs and CFOs. That means IT pros who lose their jobs will have little prospect of employment or contract work in 2020.
"Until the public begins to feel they can go back to a normal lifestyle and companies open their doors, IT hiring will be nonexistent," he said.
Janulaitis noted that there had been a surge in IT contract work at the beginning of the COVID-19 crisis to help set up work-at-home environments, from collabration tools to VPNs. "The demand for contractor help in this effort was high initially, but now is non-existent," Janulaitis said. The tech startup sector is also in crisis.
Janulaitis does expect IT hiring to begin picking up at the end of the year. That's in line with the current thinking for the economy as a whole; various U.S. Federal Reserve executives and economists have said they expect the current effective jobless rate of about 23% to fall back but still be about 10% in 2021. The official jobless rate stands at 14.7% - versus 3.5% in 2019 - but that count misses recent layoffs, laid-off people not looking for work during the crisis, and the self-employed.
Broadly, expectations of a V-shaped recovery have given way to expectations of a prolonged decline and then slow recovery, since there is no vaccine for COVID-19, treatments and testing are not available at meaningful levels to determine who can work safely, it's not known whether infected people develop immunity, and the ramifications of the various efforts now under way to reopen parts of society and economy remains unknown.
The fate of IT positions is not immune from these general economic factors. "All of this has put IT professionals the same state as the rest of the labor market,"Janulaitis said.