A surge in technology-industry hiring is helping to spearhead a jobs-market revival as demand swells for computer-software applications and data.
Online help-wanted advertising for computer and mathematical occupations rose 2.1 percent in February from January to the second-highest since the Conference Board began compiling the data in 2005. Vacancies outnumbered job seekers by more than three to one, according to the New York-based research group. Postings on tech-career website Dice.com are 12 percent higher than a year ago, with openings for workers skilled in mobile applications up more than 100 percent.
“This feels like the beginning of another tech-driven jobs boom,” said Michael Mandel, chief economic strategist at the Progressive Policy Institute in Washington. “The broad communications sector resisted the downward pull” of the recession and “is going to be a leader in the expansion.”
Government figures to be released on March 9 will show that payrolls grew by 210,000 in February, according to the median forecast of economists surveyed by Bloomberg News. If that estimate proves correct, job growth in the past three months would total 656,000, compared with 471,000 in the previous three months. The unemployment rate is projected to hold steady at a three-year low of 8.3 percent.
Stocks will benefit from the expanding jobs market and growing consumer confidence, said James Paulsen, who helps oversee more than $330 billion as chief investment strategist in Minneapolis for Wells Capital Management. He predicted the Standard & Poor’s 500 Index will climb to 1,500 sometime this year, compared with 1,364.33 (SPX) at the close today in New York.
Technology shares are outperforming this year, with the Vanguard Information-Technology Exchange-Traded Fund, which includes Apple Inc. (AAPL) and Google Inc. (GOOG), up 15 percent compared with a 9 percent rise for the SPDR S&P 500 ETF as of the close in New York today.
President Barack Obama has seen his standing among voters improve as the employment picture brightens. His job-approval rating increased to 53 percent from 44 percent in November, according to a POLITICO-George Washington University Battleground Poll released Feb. 27.
Even as conditions get better, some big technology companies are cutting jobs. International Business Machines Corp. (IBM), the world’s largest computer-services provider, fired more than 1,000 workers in North America last week, according to an employee advocacy group. Doug Shelton, a spokesman for the Armonk, New York-based company, declined to confirm the size of the reductions.
Smaller businesses, though, are taking on workers as the so-called app economy blossoms, with more than 500,000 software programs now written for Apple’s iPhone alone, according to the Cupertino, California-based company’s website.
Bully! Commercial and Entertainment Media LLC, a Baltimore- based company that specializes in augmented-reality applications, has increased its workforce to 21 people from 11 in about the past six months and is looking to hire more, said Carlson Bull, executive director and founder.
“We’re in demand; I’d like to ride that,” said the 40- year-old Bull, who added that the company is considering opening up other offices, including overseas.
Tim Burks, of one-man software-development shop Radtastical Inc. in Palo Alto, California, said he gets two to three calls a day from recruiters trying to hire him for other businesses. And “it has gone up lately,” the 45-year-old added.
The app economy now is responsible for about 466,000 jobs in the U.S., up from zero in 2007 when the iPhone was introduced, according to a study released last month that Mandel did for TechNet, a Washington-based group of executives that promotes technology issues. The total includes app-related positions at companies including Amazon.com Inc. (AMZN) and employment spillovers to the rest of the economy.
Apple deserves some credit for the gains, according to Bret Swanson, president of Entropy Economics, a research firm in Zionsville, Indiana. Despite criticism that the tech company is building the guts of the iPhone in China, the product has led to jobs in the U.S. -- even if they aren’t all necessarily at Apple -- because “the iPhone launched a new software industry,” he said.
Apple said on its website that it has created or supported 514,000 U.S. jobs, including 210,000 tied to the app economy. The total, in a report for the corporation by Boston-based consultants Analysis Group, also counts employment at companies that provide Apple with processors and glass and businesses that ship its products.
A separate study released in January by economists Robert Shapiro and Kevin Hassett found that the shift from 2G to 3G Internet and wireless-network technologies led to the creation of more than 1.5 million positions from April 2007 to June 2011 in everything from construction to retail.
“This looks like an unusually powerful jobs driver,” said Shapiro, undersecretary of commerce under President Bill Clinton. “After all, it created 1.5 million jobs at a time when the economy was losing five million.
“And the transition from 3G to 4G in terms of jobs is more promising,” added Shapiro, who is now chairman of economic consultant Sonecon LLC in Washington.
Hassett, director of economic-policy studies at the American Enterprise Institute in Washington, sees two economic effects from these advances: “Angry Birds” and “Angry Boss.”
In Constant Touch
The first, named after the game application, refers to the growing number of developers creating similar software programs, said Hassett, an economic adviser to Republican Senator John McCain of Arizona during the 2008 presidential campaign. The second references the ability of bosses to stay in constant touch with their employees, increasing productivity, profits and ultimately jobs as money is plowed back into businesses.
Congressional authorization last month for sales of wireless spectrum “will support massive job creation” by freeing up airwaves for use by mobile devices, Representative Fred Upton, a Michigan Republican who heads the Energy and Commerce Committee, said in an e-mailed statement.
Spending on the wireless network may benefit antenna- building companies American Tower Corp. (AMT), Crown Castle International Corp. (CCI) and SBA Communications Corp. (SBAC), Paul Gallant, a Washington-based analyst with Guggenheim Partners, said in a Feb. 15 note.
Mandel said employment growth in the app economy may be topping out, albeit at a still “very fast” 45 percent year- over-year rate.
Tom Silver, senior vice president, North America, for New York-based Dice Holdings Inc. (DHX), agreed that the market for tech professionals is cooling off.
“The crackle and sizzle of the early recovery is behind us, but we continue to see strong demand” on the Dice.com job- posting website, he said.
“We hear a lot about poaching from our customers,” he added in an e-mail. “The number of calls from recruiters into certain skill sets, like software engineers, is staggering.”
Where growth seems to be taking off is in the area of so- called big data, where specialists mine and make sense of the constantly-expanding information available via the Internet for companies from Google to Wal-Mart Stores Inc. (WMT), Mandel said.
‘Deep Analytical’ Skills
By 2018, the U.S. will need as many as 490,000 workers with “deep analytical” skills and an additional 1.5 million data- savvy managers, whether retrained or hired, according to a report last year by McKinsey Global Institute, the research unit of consultants McKinsey & Co.
Supply might not be sufficient to fill all the positions, because “there is a great skills mismatch,” said James Manyika, director in San Francisco of the institute. Even so, big data will lead to “quite phenomenal” productivity gains as companies make more and better use of the information they have, he said.
An academic analysis last year of 179 publicly-traded companies found that those adopting data-driven decision making were about 5 percent more productive and profitable than their competitors. The study was carried out by Erik Brynjolfsson and Heekyung Hellen Kim of the Massachusetts Institute of Technology in Cambridge and Lorin M. Hitt of the University of Pennsylvania in Philadelphia.
The effects on productivity will be “as great or greater than what they were in the 1990s,” Brynjolfsson said. Labor- force productivity grew at an average annual rate of 2.1 percent during that decade, up from 1.5 percent in the 1980s.
Technology companies are taking notice and looking for ways to leverage their position through takeovers.
“This year’s technology-deal volume could be bigger than last year’s and 2007’s,” said Chet Bozdog, global head of technology investment banking at Charlotte, North Carolina-based Bank of America Corp.
Industry takeovers in 2007 reached $264.4 billion, the biggest year since 2000’s record high of $585.2 billion, data compiled by Bloomberg show. Announced mergers and acquisitions last year totaled almost $200 billion.
Dell Inc. (DELL), the third-largest maker of personal computers, last month introduced a new line of servers designed to help business customers beef up data centers for information storage and the delivery of software and computing via the Internet.
Brynjolfsson likened the explosion of data -- and the means to store and evaluate it -- to the discovery of the microscope. The microscope allowed scientists to look at a whole new world, leading to numerous medical breakthroughs. Big data is doing the same for statisticians and information analysts.
The MIT Center for Digital Business has used Google search data “to accurately predict housing sales up to three months in the future for each of the 50 states in the U.S.,” Brynjolfsson wrote on the university’s website.
“Google searchers have even allowed researchers to accurately predict flu-season trends well before the Center for Disease Control issued its own reports,” he added.
While big data won’t be “the sponge” that absorbs all untrained or moderately trained workers without a job, Robert Litan, vice president for Research and Policy at the Ewing Marion Kauffman Foundation in Kansas City, said he’s “convinced” that eventually new industries will be born from it. And they will require workers.
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