Tech Layoffs Reach Seven-year High in First Quarter of 2009

The need for state and local support for tech-based economic development grows more critical in the current recession, based on recent unemployment reports for key technology sectors. Layoffs at high-tech companies during the first quarter of 2009 were at their highest point since 2002, according to outplacement firm Challenger, Gray and Christmas. Reported job losses at tech companies totaled 84,217, up 27 percent over the fourth quarter of 2008 and up 485 percent over the first quarter last year. The job loss figures for the first quarter of 2009 already exceed the first two quarters of 2008 combined.

Though the report does not take new hires into account, the news is discouraging for the high-tech sector, which has now endured its fifth consecutive quarter of increasing layoffs. Only the automotive sector and retail incurred more job losses in the first months of 2009.

The Challenger, Gray and Christmas report includes computer, electronics and telecommunications companies in its definition of the high-tech sector. Telecom companies actually had fewer layoffs compared to the previous quarter, but electronics and computer companies experienced large losses. The computer sector was hit particularly hard in January with 22,330 cuts, but the pace of losses slowed in February and March. January was also a difficult month for the telecommunications sector, with 13,056 cuts, though by March that number had shrunk to 250.

The report also indicates that tech layoffs now make up a larger share of overall layoffs than they did last year. In 2008, 12.7 percent of lost jobs were at high-tech companies. Last quarter that share was 14.6 percent. Monthly figures, however, indicate that losses in the tech sector were front-loaded and occurred primarily in the first two months of the year, returning to their previous share of overall losses in March.

Tech companies announced plans to create 3,829 positions in March, according to the group, up from zero announcements in February. That figure is encouraging, but BNET observes that 4.5 jobs in the sector are still being lost for each new position announced.