IT job creation headed lower for second straight year

Weak IT hiring over the last couple of months confirms that 2016 will see a significant slump. The big question remains why

IT job hires headed lower for second straight year
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If this keeps up, 2016 is going to be a notable year for IT hires -- though not in a good way.

After the release of soft September IT job creation numbers by the Bureau of Labor Statistics (BLS), analyst film Janco Associates is predicting only an estimated 74,200 jobs will be created for the whole year. This will be the second straight year of decline, down from 129,400 new IT jobs created in 2014 and 112,500 in 2015.

The last few months have been particularly bad. In August only 700 IT jobs were created, and in September 4,400 were created. The year-to-date totals for those months were slightly more than half what they were in 2015.

janco jobs 2016 Janco Associates

IT hiring estimates for 2016 have been revised down to 74,200 -- around half of what it was in 2014. This year hiring has been consistently off, month over month, from the previous year.

Janco's survey of CIOs' future hiring plans shows little sign the slump will lift until well into next year. Hiring for all five classes of IT personnel -- executives, senior management, middle management, staff, and contractors -- are all predicted to be flat or down for at least the next six months.

All of this squares with the larger picture of the economy reported by the BLS. There's no question the economy is growing: 156,000 jobs were added overall last month and unemployment has remained at around 5 percent for almost 12 straight months. But growth has slowed, and even the IT market -- normally a more robust source of jobs and wages than the economy overall -- is feeling the pinch.

Janco Associates cited several possible macroeconomic factors for the continued slowdown. An obvious one is the uncertainty around the U.S. election, although a recent survey found that other factors -- like borrowing costs -- are more of an influence on hiring.

Another influence has been Brexit, which Gartner estimates will depress global IT spending by 2 to 5 percent worldwide. At the very least, IT spending could go flat, which Janco already saw reflected in its CIO hiring survey data.

One wider explanation that's been floated for the IT hiring slump is the misclassification of jobs. This argument says there are in fact plenty of new IT-related hires, but they're filed in BLS categories that aren't traditionally defined as IT jobs.

A hint of that can be seen in Janco's tabulations of which BLS categories saw the biggest increases in jobs. The catch-all category "Other information services" jumped by 8 percent -- the largest positive change of all the job categories surveyed -- over the last 12 months. But there's little specific evidence this misclassification is happening industrywide. More likely, it's happening in localized cases where newly emergent IT positions -- for instance, in big data settings -- don't fall into a convenient BLS classification.

One small upside to a tightening IT job market may be better pay for those already employed. A recent survey by IT staffing firm Modis showed one-third of employers are willing to negotiate higher salaries to attract potential employees who already have jobs elsewhere.

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