Labor participation rates and the US tech economy
- Colin Swindells
- Oct 10, 2024
- 2 min read
This post summarizes the tech economy and labor participation rates in the US, comparing the current situation with past trends. It's meant to provide framing to tech industry folks, both employed or unemployed, who have not been through a major economic downturn before. It’s not you, the tech labor situation is very challenging to transition to a new role and/or organization. More persistence and creativity will be needed to succeed while the tech economy recovers. #techindustry, #techjob, #techlayoffs, #economicdownturn, #labormarket, #careeradvice, #jobsearch, #persistence, #creativity, #techtransition
Question: Does anyone know of data sources for labor participation rates that are segmented by industry and region – particularly the software tech industry segmented by state?
The frequent mentions throughout the mainstream media of a strong US economy and low unemployment rates seem misleading, at least in the tech sector.
According to the US Bureau of Labor Statistics [1], labor participation rates have been gradually decreasing over the past 50 years (see Figure 1). Participation rates appear to have slowly declined from 83.7% in 1974 to 77.3% in 2023 (dipping to 77.1% at the height of the COVID-19 pandemic). Zooming into the participation rates since the COVID-19 pandemic, labor participation rates still appear to be considerably lower than pre-pandemic levels (see Figure 2).
Figure 1: US Labor Participation rate over the past 50 years
Figure 2: US Labor Participation rate since COVID-19
The closest estimates of the tech labor economy that I could find were by looking into layoffs.fyi [2] data and previous reports of the last major economic downturn (the dot-com meltdown from 2000 - 2004) [3]. Both sites seem to focus on the California tech economy and the similarities in data types, collection methods, etc. are difficult to validate. A more apples-to-apples comparison, especially compared to the US Bureau of Labor Statistics, would be helpful. Plotting the average dot-com meltdown loss of 48,300 jobs a year [3] with post-COVID data [2] suggests that the current tech economic downturn may be even worse than the dot-com meltdown. Peak tech industry losses appear to have occurred early in 2023. However, we seem to have several more quarters of significant tech industry challenges where hundreds of thousands of tech folks will need help transitioning to new roles and/or organizations.
Figure 3: Comparing tech layoff estimates since COVID-19 with a dot-com meltdown estimate reference
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