Unemployment rises to 6.3 percent, inching toward dot-com bust era

Washington State Employment Security Department

The state's unemployment rate rose to 6.3 percent during October, a sharp increase from last year, but still below the levels of 2001, 2002 and 2003 when the dot com bust took out more than 20,000 tech jobs in the region.

The software publishing sector --  the "workhorse" of the information category  -- continued to add jobs albeit at a slower pace than earlier this year. Software employment reached 52,900 jobs in October, an increase of 4,700 jobs, or 9.75 percent, over the past 12 months. In October, the state said 200 software jobs were added for month-to-month growth of 0.4 percent.

"(Software) is slowing, but I still think it is the workhorse that has really helped Washington this past year," said Mary Ayala, chief economist with the state's Employment Security Department.

Large technology companies in the region such as Microsoft and Google are cooling their hiring plans as are venture-backed startup companies, a trend that really only started to occur in the past 30 days.

The seasonally-adjusted unemployment rate of 6.3 percent during October compares to 5.8 percent during the previous month, which is well above the 4.6 percent rate for the same period last year. By comparison, the unemployment rate stood at 7.1 percent in October 2002 when the dot com meltdown was in full swing in the state. It peaked at 7.6 percent in June 2003 with 236,820 people looking for work at that time.

Are we headed back to those levels or higher?

That's anyone guess, though some of the venture capitalists I've spoken to recently have predicted more fallout in the months to come.

The technology industry led the nation into the last meltdown after years of jubilant excess around Internet stocks. This time -- while the crisis is far different and had its genesis on Wall Street -- the tech industry is certainly not immune. Segments of the tech economy-- namely online services and ad-supported Internet startups -- are retrenching. In the past week, we have reported on job cuts at CarDomain, Jobster, PayScale and others. (See our Pink Slip Watch for all the reports.) But big IT companies such as Nortel, Dell and Sun Microsystems also are making significant cuts.

Since late August, TechCrunch has tracked just over 76,000 layoffs in the tech sector.

Here's the full report (PDF) on the economic picture from the state's Employment Security Department.