Decline In ISP Workers: Don't Believe ItDecline In ISP Workers: Don't Believe It

Numbers never tell the whole story. Take, for instance, Friday's Labor Department's payroll report, which lumps together companies offering ISPs, search portals, and data processing hosting services. That segment experienced its second consecutive monthly decline in November. That's strange, considering increased Internet use and the popularity of Google and other portals.The payroll dip in ISPs, search portals, and data processing is countered by gains in other IT sectors: IT services firms, officially labeled by the Bureau of Labor Statistics as computer systems design and related services, employed 1,342,800 people in November, up 6,100 for the month, and nearly 58,000 for the year, a 4.5% annual gain. Computer and peripheral equipment makers added 7,200 workers to their payrolls in the past 12 months, and employed 216,500 people in November, a 3.4% year rise. These numbers--preliminary for last month and seasonally adjusted--reflect an increasing demand by businesses and consumers for IT products and services.

But why then in this strong IT and Internet economy would employment among ISPs, search portals, and data processing firms dip to 386,400 month, down from 389,000 in October and 387,200 in November 2004? Simply, it's the way the government counts numbers. In reality, the number of people performing jobs providing Internet services, creating and maintaining search portals, and managing hosted computers are higher--probably significantly higher--than the government statistics suggest.

In determining payrolls, the government samples some 160,000 businesses and government agencies covering about 400,000 individual worksites. If the worksite primarily supports a service such as an Internet gateway--say an office of American Online--it would be counted as an ISP even though the company provides other services such as Web content. Americans are migrating away from old-style ISPs to broadband Internet services, mostly provided by cable TV and telecommunications companies. Though these communications providers have increased staffing to support their ISP services, their payroll increases are reflected in the broadcast, not Internet [ironic, isn't it?] category for cable TV companies and telecommunications for the telecom. That's the story behind the numbers.