With all the news about dot-com layoffs, you'd think there was no one left to run the Web. Internet Economy firms, from the tiniest startups to giants such as Yahoo and Cisco, have announced layoffs of almost 90,000 workers since January 2000. That's a lot of pink slips. But how significant are the cuts compared with the overall economy?
The University of Texas estimates that 3.1 million people worked in the Internet Economy as of last June, which means that layoffs to date account for only 2.5 percent of the Net workforce. Meanwhile, the overall economy has seen 2.2 million layoffs since January, representing approximately 1.6 percent of a total workforce of 135.8 million people.
During this year's first quarter - the toughest yet for dot-coms - Internet job cuts amounted to nearly 26,000; that's about 7 percent of all layoffs tracked by outplacement firm Challenger, Gray & Christmas. Automobile manufacturers eliminated almost 35,000 jobs, and retailers let go more than 15,000 people.
Silicon Valley and the San Francisco Bay Area felt the brunt of Net economy layoffs, accounting for nearly 30 percent of all positions eliminated. Still, the unemployment rate in these areas is far below the national level.
"[Internet] layoffs are showing up in the papers, but they aren't showing in the numbers for national unemployment," says Andrew Whinston of the University of Texas Center for Research in Electronic Commerce. "Dot-coms represent only 10 percent of the Internet Economy workforce, and we believe employment in the Internet Economy, outside of dot-coms, is still growing."
Almost 40 percent of Net-related job cuts came from tech companies, but barely any sector has gone unscathed. Layoffs in consulting and services firms account for 20 percent of total Net layoffs, and e-commerce firms make up another 17 percent of the cuts.
No doubt the job market is getting tough, and economists predict it could get tougher. But an analysis of new job postings at 50,000 companies shows that the cities with the highest number of Net layoffs are in states with the best employment prospects. There are still jobs out there - and a lot more people looking for them.
