Technology upgrade

On a sunny April morning, three dozen people drift into a sterile white conference room at the University of Phoenix job-training center in Westborough and collect in small groups, making idle conversation. Most are male, and most are white. Virtually all are age 45 or older. To a person, they have experience in electronics or technology. They are mechanical engineers, software programmers, support technicians, operations managers. As they go around the room introducing themselves, the places they say they’ve worked make up a who’s who of high tech—EMC Corp., Electronic Data Services, Digital Equipment Corp., Hewlett-Packard.

A biotech lab at Transkaryotic Therapies, in Cambridge.

It is 9:45 a.m. on a Wednesday. Everyone should be at work. But these people are not. Instead, they are attending a meeting of the 495 Networking Support Group, a nonprofit organization established three years ago to help unemployed professionals from the state’s high-tech belt help each other find jobs.

You could call these jobless techies the new face of unemployment in Massachusetts, except that “new” wouldn’t be entirely accurate. Many have been unemployed for a year or more. They are highly skilled, well educated veterans of the state’s formerly burgeoning technology sector. But they find themselves and their qualifications out of sync with today’s labor market. They are, in the latest lingo, “out of alignment.”

Take Michael Gallagher. At age 46, Gallagher is coming off of eight years as a quality-assurance engineer, checking software to make sure it operates properly. His last full-time job, which paid $65,000 a year, was with a company that managed billing for Internet service providers. Like many others, it failed after the telecommunications sector collapsed in 2001. Now the bespectacled father of three has been out of work for more than a year, and he’s well aware that the work he used to do could now be done anywhere in the world.

“My job definitely can go,” he says. “They can send it overseas easily. I don’t blame them. I would, too, if I had my own company.”

In theory, Gallagher could get his skills back into alignment by retraining. The question is, for what? Drug-making giant Novartis needs hundreds of people in its new Cambridge research center, and it is only one of several pharmaceutical companies coming here to reap the harvest of Massachusetts’s biotech incubator. Dozens of Bay State companies are doing pioneering work in microelectronics and nanotechnology (the science of building devices only a few billionths of a meter in size), industries that barely existed five years ago. Demand for wireless networking equipment has breathed new life into the previously dead telecommunications sector.

But such a career leap is easier said than done, especially for out-of-work workers who are middle-aged and have mortgages, families, and expenses coming from all sides. The know-how they trained for, and in, the high-tech world of the 1990s does not necessarily equip them for the new technologies of the 21st century. It’s not so easy to make the leap from IT to DNA, or from building modems to building nano-electronics. For those looking to revive a career at the leading edge of technology, the process of retraining—indeed, re-education—could be complicated, uncertain, and expensive.

“It’s the big issue of our time,” says economist Michael Best, director of the Center for Industrial Competitiveness at the University of Massachusetts­Lowell. He sees a “tectonic shift” in the state’s industrial structure, away from a few large companies that developed new research and turned them into new industries—and toward many small companies that mostly develop new research.

But in a discordant symphony of small companies, it’s harder to know how to fill the chairs. A host of startups are looking for workers who can play many tunes, some of them in the key of hard science. In contrast to the days when Wang Computers and DEC defined the industry for job seekers, “nobody knows how to characterize demand in this new system,” says Best. And nobody knows how, exactly, to help displaced workers get into it.

Tech booms and busts

It should surprise no one that Massachusetts has experienced painful contortions in its employment picture in the past three years. It is part of our fate as an epicenter of innovation: We develop new industries, reap economic benefits as they grow, and then endure the inevitable slump as the industries mature and their jobs are shipped elsewhere. Agriculture gave way to manufacturing, which gave way to mini-computers, which gave way to the Internet. That much we know. The question is what comes next—and how to get the dislocated workers of today to fill the jobs of tomorrow.

“It is a very complex problem that faces the Commonwealth,” says Jane Edmonds, director of the Department of Workforce Development. “When you have unemployed skilled workers, when you think about the time that might be required to retrain a person in that category for a significantly different career, that becomes a considerable challenge.”

In truth, the state’s unemployment problem is not so much epidemic as it is chronic. The state lost 6.2 percent of its jobs from January 2001 to January 2004—a painfully high proportion, but still far less than the 10 percent that disappeared in the last recession. Unemployment in March stood at 5.1 percent, well below the 9.7 percent mark we hit at the end of 1990. And the joblessness rate dropped to 4.8 percent in April, with the state gaining jobs for the second month in a row.

The troubling statistic is long-term unemployment. According to the US Bureau of Labor Statistics, in 2002 the percentage of Massachusetts’s jobless who had been out of work six months or longer stood at 21.6 percent, up from 8.1 percent two years earlier. In other words, as the total number of unemployed in Massachusetts more than doubled (from 86,000 in 2000 to 185,000 in 2002), an ever-growing portion of that group found itself jobless for longer and longer.

Paul Harrington, associate director of the Center for Labor Market Studies at Northeastern University, has coined a phrase for this new pool of long-term unemployed: permanent job-losers. “It’s a pretty serious problem,” says Harrington. “Nobody knows how to handle this.”

A lot of people never should have gone into IT jobs in the first place.

While the government does not track duration of unemployment for particular fields, anecdotal evidence and job-loss numbers tracked by occupation support the assertion that the new permanent job-losers include large numbers of white-collar workers. The New England Economic Partnership lists a dizzying number of industries where employment levels are down: computer design, telecommunications sales, software publishing, financial services. Which are holding up? Food service, leisure and hospitality, auto repair, health care, and teaching.

Harrington says one unfortunate byproduct of the Internet bubble of the 1990s is a lot of people who never should have gone into information-technology jobs in the first place, and are unlikely to find their way back to them now. “We have a huge gap” between an abundant labor supply in these fields and modest future demand, Harrington says. “It’s gigantic.”

That is not the sort of news that Lou Frissore wants to hear. Frissore, 55, has spent most of his career in IT services; the Ashland native worked for 13 years at EDS Corp. running data centers until he was laid off in June 2002—after training foreign workers to do his job back at their overseas offices, he claims. He has not found full-time employment since, instead working part-time as a photographer. And Frissore considers himself one of the luckier ones: His salary peaked at $100,000 a year, so he had healthy savings to carry him through the past 18 months.

Lou Frissore, laid off after 13 years at
EDS, is looking for a new career.

Still, “it’s frustrating,” Frissore says. He paid $2,200 to take a project management course, “but that hasn’t done much for me yet,” he says. He figures he’s got another 10 years of work in him, but doing what, he doesn’t know.

“Somebody tell me what those new jobs are,” Frissore says. “Nobody has any clue.”

Shock of the new

Actually, economic development officials do have some idea what industries will be big in the Bay State’s future: genomics, nanotechnology, wireless networks. Those industries have percolated in local universities for years and are just now starting to approach commercial payoff.

But as those sectors pivot from science project to science business, a new dynamic is emerging. Aside from creating a new type of industry, they are also creating a new type of job: research. Research jobs have fared well even during the recession, rising from 32,100 positions three years ago to 34,000 today.

Consider Novartis, one of the biggest players in Massachusetts’s burgeoning biotech industry. Two years ago, the company announced that it would locate its research headquarters in Cambridge, bringing 1,000 jobs to the area. The pharmaceutical giant is fast approaching its goal. The company had 543 employees in Kendall Square as of April; it expects to have the full complement of 1,000 on the payroll by January. Lynne Cannon, head of human resources for the Novartis research operation, says she could not be more pleased with hiring so far.

But IT castoffs are not likely to be among those hired. Of those 1,000 new jobs, nearly 800 will be researchers. Of the 800 researchers, about one-third will have doctoral degrees; the standard ratio is two associates for every one PhD. The associates generally have at least an undergraduate degree in one of the life sciences, and most have master’s degrees, plus experience in the lab setting.

“We look for people who can carry the ball,” says Cannon. “They are scientific experts” who know the rigors of managing an experiment, publishing papers, and developing new science. Only about 20 percent of Novartis’s hiring will be support staff without a strong scientific background. “It’s very few non-researchers,” she says.

Novartis is one example, but it is not alone:

  • Nantero, in Woburn, one of the state’s pioneering nanotech companies, is trying to design powerful new computer chips that use ultra-small strands of carbon rather than silicon. The three-year-old business has 21 employees; 10 hold doctorates in chemical engineering or similar fields, another five have master’s degrees.

  • SurfaceLogix, in Boston, is another nanotech startup, developing ways to manipulate drug molecules so they work more effectively. Of its 50 employees, 37 are scientists.

  • Eikos, in Franklin, makes coatings for aircraft, computer screens, and other industries. In the past two years the company has gained a reputation, as well as contracts, with Japanese manufacturers. It has 15 employees, five of them with advanced degrees and another five with bachelor’s degrees in scientific fields.

As these businesses grow and develop, they will certainly create some jobs outside of the lab. Millennium Pharmaceuticals, for example, has hired 300 sales employees in the past six months to sell its first two commercial drug products. Even nanotech and wireless networking companies need IT staff and administrative support.

But sales and support jobs in these brave new industries are unlikely to pick up the slack from the 2001­03 recession. The software industry alone, for example, lost more jobs than the entire biotech industry here employs. Nanotech is so new that nobody really knows how many jobs it has created here, let alone how many it will create.

Martin Silverstein, a senior vice president at the Boston Consulting Group, co-authored a detailed study of the state’s biotech industry two years ago. He predicted that the sector could generate 95,000 jobs by 2010, about 30,000 specifically in biotech companies and the remainder in service industries such as law, accounting, or printing. Of the 30,000 jobs in biotech proper, about half would be research scientists peering into test tubes; the rest would be split between bio-manufacturing and sales, administration, IT, and similar non-research functions.

Whether that happens depends in large part on biotech firms deciding to locate manufacturing operations here. “It depends on the type of company that will continue to thrive in Massachusetts,” Silverstein says. Manufacturing plants “don’t have to be in Cambridge. Massachusetts is a big state.” Genzyme, he notes, has a plant in Fall River.

The question is, are these jobs that dislocated white-collar workers want—and will be able to get? Salaries for bio-manufacturing jobs can start as low as $30,000, although many escalate to $50,000 or $60,000. For all these jobs, biotech know-how is essential.

Cannon, who has hired personnel for pharmaceutical companies for 25 years, admits that biotech can be a difficult field to penetrate mid-career. Particularly, farther back “in the pipeline”—that is, closer to research than to product—companies like Novartis mostly need scientists, not technicians. “We really need highly skilled people,” Cannon says. Can someone without advanced science degrees crack the biotech workforce? “It’s possible,” she says. “Not easy, but possible.”

Re-education camp

In February, the Division of Employment and Training split into two new agencies: the Division of Unemployment Assistance and the Division of Career Services. Recasting unemployment as a time for upgrading skills and redirecting careers is a cornerstone of the Romney administration’s approach to the problem of economic adjustment. Unemployment benefits help out in the short term, but training for new skills is the solution to remain employable in the long term.

Edmonds admits that the state is still trying to catch up with the emerging problem of dislocated white-collar workers. Most state (and federal) assistance is targeted to low-income or low-skilled workers. For example, the state offers Access Grants to reduce the cost of attending community colleges, but only to households with annual incomes below $36,000; federally funded Hope Scholarships apply only to undergraduate education, not to those who suddenly find they need an advanced degree to switch occupational gears. For an IT worker with a college degree and a spouse making white-collar wages, many subsidized financing avenues are unavailable.

“The system isn’t appropriately geared to meet the needs of high-skilled workers now in the position of permanent job-losers,” says Edmonds. “We must do something about that aggressively and quickly.”

The state has made some moves in that direction. The unemployed can apply for a so-called Section 30 waiver, which extends benefits for up to 18 additional weeks and waives the usual requirement of searching for work if the applicant enrolls in an approved, full-time job-training class. The number of such waivers is up sharply, from 4,300 in 2000 to nearly 6,950 in 2002, with 3,120 so far in the first nine months of fiscal 2004.

Another effort was launched in April by the Massachusetts Educational Financing Authority. Anyone can apply for up to $10,000 in Education Rewards loans, regardless of household income, for any part-time course at a community college or other approved training center. MEFA also allows a 10-year repayment period with low interest rates, 6.1 percent as of this spring.

POST-RECESSION, A CHANGING JOB MIX

Occupation

January 2001

January 2002

January 2003

January 2004

Computer systems design

66,900

52,000

48,800

41,820

Telecommunications manufacturing

16,600

11,800

8,400

7,470

Telecommunications sales

29,400

27,600

24,900

23,520

Software publishing

26,100

22,500

20,300

18,830

Financial services

229,900

231,600

226,000

223,200

Professional scientific & technical

250,100

233,300

221,900

212,120

Scientific R&D

32,100

34,500

34,500

33,960

Higher education

100,200

102,800

103,500

105,850

Health care

404,000

415,000

424,500

426,880

Leisure & hospitality

279,600

279,100

288,000

288,900

Manufacturing (total)

409,100

361,400

335,600

321,300

Professional services (total)

505,700

460,000

444,900

429,500

TOTAL

3,371,800

3,271,000

3,212,000

3,162,000

Source: Bureau of Labor Statistics and New England Economic Partnership

Displaced workers could use the help. Project management, for example, is a skill much touted as a way to boost employability (so you can manage all those offshore workers from a central location). Many colleges and universities offer such programs, but they don’t come cheap.

Susan Baust, an unemployed software developer in Southborough, enrolled in a project-management class last fall at Boston University. Baust, 56, had been making more than $100,000 annually at Hewlett-Packard before she lost her job in June 2002. But she took the retraining course only because she could get her $6,000 tuition bill covered by a federal grant program to help former HP workers. Otherwise, “I would’ve needed more assurance that it was worth it,” she says. “I had $6,000, but I need to pay the bills.”

Susan Baust is trying to move into project management,
but the training doesn’t come cheap.

Larry Elle, a career counselor and director of WIND East, an unemployment support group in Cambridge, says Baust is not alone. His group is trying to create a professional development cooperative, in which unemployed people train other unemployed people in low-cost job-training sessions underwritten by state or corporate sponsors. The idea came from WIND members who cannot afford the sometimes eye-popping price of continuing education, he says.

“The impetus is coming from the bottom up,” he says. Elle notes that corporations often pay for full-time employees to enroll in training sessions offered through continuing education departments at universities, so the prices for these sessions tend to be high. “The average professional would be hard pressed to afford that on his own.”

One crucial question, however, is how much the business community will embrace the idea of workers dislocated from one industry remaking themselves for another. Historically, the state’s workforce development programs have taken workers already employed in an industry and helped them get more skills to move up the job ladder. A shift to training people outside the existing workforce is a conceptual leap.

Career counselor Larry Elle says it’s
tough to let go of longtime skills.

“Those programs [that boost the skills of an industry’s current workers] are more successful, in our mind, than training people in a classroom outside the workforce, giving people a certificate, and telling employers those people are ready to come in,” says Alan Macdonald, executive director of the Massachusetts Business Roundtable, who nonetheless supports Edmonds’s retraining efforts. “I’m much more interested in training people who already have some related skills than people who have not been in the mainstream yet.”

Attitude adjustment

As a group, skilled workers believe in training. After all, the professional success they achieved previously was the result of their earlier investments in job skills. Yet, when layoffs bring their careers to a sudden halt, their instinct is to tread water, finding a way to get by until the demand for their professions revives. To launch into another career requires a mental commitment most people would rather not make.

Their instinct is to tread water until the demand for their professions revives.

“The most difficult kind of job switch is changing your function and your industry,” Elle says. He gives the example of one woman he knows, a lawyer who has been unemployed for months. “Does she want to train to be a nurse? No. She wants to use her lawyering skills.”

Yet the very definition of a displaced worker is someone whose job will not return. Thanks to the rise of skilled overseas labor and automated technology, many of the jobs in Massachusetts that seemed most promising five years ago are gone, and likely never to return. The workforce that bet its future on the last new thing is going to have to look for the next new thing.

For her part, unemployed software developer Baust is perfectly willing to try her hand in biotech, helping to streamline clinical trials or managing software development projects for drug development. But she’s not kidding herself. “I think it will be hard for me,” says Baust. “I don’t have a biology degree.”

Almost everyone believes that Massachusetts’s employment scene will revive in the long term, as universities, venture capitalists, and entrepreneurs take their best shots at creating new industries. One glimmer of hope: In April, the state created 5,500 professional and scientific jobs. Of course, Massachusetts leaked an additional 800 IT jobs in the same month, but even that’s an improvement over the preceding five months, when the Bay State lost 8,300 professional and scientific jobs. For the casualties of the IT meltdown, an attitude adjustment may be in order.

“I don’t think they will get the same type of jobs, but there will be jobs,” says Joyce Plotkin, president of the Massachusetts Software Council. Plotkin knows today’s job market is grim; a close friend of hers who made a six-figure salary in software has been jobless for two years. Still, she says, the fundamental structure of this recession is no different than the one that gripped the state in 1990. It just happens to be the first recession these technology workers have ever seen.

Meet the Author
But it could also be that the transition to the next generation of technology will be rougher than the last one, as today’s surplus labor struggles to align itself, and its skills, with the kind of jobs that will emerge in coming years. “It’s really a lot different than anything we’ve faced,” says Macdonald, of the business roundtable. “I don’t think the companies know how to deal with it, either.”

Matt Kelly is a technology writer in Somerville.