US Government Shutdown's Early Effect on IT Jobs Remains Hazy
Unknown factors surrounding the shutdown of the federal government starting Oct. 1 have cast a cloud of uncertainty around IT employment—which has largely been a pocket of strength in the overall U.S. jobs market.
Employment experts and analysts say the long-term effects of a shutdown and other political jockeying for position, including economic implications related to the U.S. debt ceiling, could be significant although it's difficult to pin specific numbers on the impact. They say it depends on how long the shutdown lasts and what happens afterward in the political negotiations.
"Any time there is a slowdown in the adoption of IT or the completion of contracts, there is bound to be an impact," Elizabeth Hyman, CompTIA vice president for public advocacy, told eWEEK. "It's not just [the effects on] furloughed federal employees but agencies planning to move on projects. It throws a wrench in planning. What happens today will affect what happens down the road."
Yet tech employment has grown steadily in recent years, and the jobless rate among IT professionals remains low. For some time, the unemployment rate for tech professionals—at 3.3 percent in August—has been consistently below this country's total jobless rate, which was 7.3 percent that month, Bureau of Labor Statistics data show.
Still, IT industry watchers have been monitoring the effects of reduced government spending for months. Although the U.S. economy did not fall off a fiscal cliff following the government sequestration—the combination of federal tax increases and spending cuts that took effect March 1—IT jobs have been affected as some government projects have been deferred, reduced or shortened.
The federal civilian IT work force was at 82,400 in June, down from close to 83,000 at the end of 2012, according to data from the U.S. Office of Personnel Management, as published in Computerworld just days before the shutdown.
Employment experts and analysts are concerned because of the federal government's long reach in IT. Office of Management and Budget data shows that the U.S. government buys more than $80 billion in technology a year.
While the federal government is the largest employer in the United States, and IT professionals represent a significant percentage of that, the impact goes beyond that to government contractors and their subcontractors, said Mike Durney, CEO of Dice Holdings, parent company of the Dice.com career site.
"The effects could be deep and wide long term," Durney told eWEEK. "Near term, the shutdown is likely to be haphazard in its effects, but the longer it goes, the impact could be felt in a lot of different places."
Much of the impact on jobs depends on how projects are funded and where they are in their budget cycles, Durney said, adding that agencies still operating in some capacity that may have funding in place or that have a budget surplus may not feel the real effects until later.
Specifics on jobs affected due to either sequestration or the shutdown are mostly anecdotal. Durney pointed to cuts in fighter jet projects that affected some IT jobs following sequestration.
Regarding the shutdown, Durney said: "If it lasts for weeks, we may start to see an impact on tech jobs in [surprising] places such as medical research or clinical research at universities or private enterprises that receive federal funds. It may take time, but these types of projects will be impaired."
The biggest software and hardware companies derive 20 percent of their revenue from the federal government, Steve O'Keeffe, founder of Meritalk, a public-private partnership focused on government IT, told eWEEK. Uncertainty is never good for the economy or jobs, and some tech companies already face a credit crunch that could worsen if the shutdown continues or political wrangling surrounding the debt ceiling continues, O'Keeffe said.
Some technology companies will face late payments and furloughed contractors, CompTIA's Hyman wrote in an Oct. 1 blog posting. "CompTIA has conducted research that indicates approximately one in five IT channel firms have a government practice, meaning they are engaged in ongoing government-related work. … In addition, outside of government procurement, many tech SMBs also rely on federal financing through the Small Business Administration. The processing of these loans will come to a standstill," Hyman wrote.
Yet being forced to cut spending can have some positive effects, industry watchers said.
"Pressure in D.C. will drive new models," O'Keeffe said. "More efficient models will be called for. As the budgets tighten, everything is scrutinized. More of the same won't do it. … It presents the federal government with a great opportunity to rationalize and innovate. It's a most exciting and terrible time."