The latest Bureau of Labor Statistics data shows an increase in the rate of IT job creation, with 88,900 IT jobs added in the last 12 months, but analysis of a mid-year IT salary survey by an consulting firm that tracks issues for CIOs and CFOs, shows that hiring is not really robust, and IT salaries remain flat.
“Based on our interviews with over 96 CIOs in the last 30 days, we concluded that CIOs are not in a great hurry to hire new staff except to meet short term needs until they see a clear trend as to what is happening with the economy. Sixty-seven percent of the CIOs we interviewed do not see any real push to expand staffing over the next 12 months,” says Victor Janulaitis, CEO of the consulting firm, Janco Associates, offering a preview of a report to be released the week of July 15.
The take away from this for architecture, engineering and construction, says Janulaitis, is that when the economy is not investing in IT infrastructure, such as hiring and expanding staff and purchasing the computers and peripherals to equip them, it is not investing in growth. And an economy that is not growing will have a weak demand for construction.
Another tech indicator Janulaitis cited was Intel Corp’s weak second quarter earnings report, and that Intel’s share price at market close July 8 had fallen 88 cents, or 3.6%, to 23.18 after a Citigroup analyst wrote that weak PC sales and waning demand for smartphones would stunt the company's growth. “If you hire someone for the back office you have to get them a work station, if you aren’t hiring you are not buying the computer and the peripherals that go with it. Companies are not investing,” he says.
Janulaitis attributes the hesitation of employers to three issues:
-- Uncertainty about what the Federal Reserve will do about interest rates, and whether it will keep on buying bonds. “The economy had been picking up in construction over the last 6 to 9 months because interest rates were so low. But people are not investing in infrastructure now if they don’t know what’s happening.
-- Under a provision of The Health Care for America plan, or, ObamaCare, companies with more than 50 full-time employees will be required to purchase health insurance for their workers, or pay a penalty. The construction industry has a great many small firms with under 50 employees. Janulaitis says his research shows some smaller construction companies, in fact, are holding back on expanding to more than 50 employees.
-- And related to that, the Obama Administration’s recent decision to delay implementation of that employer health care insurance mandate for one year reinforces the uncertainty. “Delaying ObamaCare is worse than implementing it,” Janulaitis says. “Construction, engineering and architecture--that will all be dampened because the economy is not blooming.”