Internet boosting the U.S. economy, study finds

June 6, 2000
Web posted at: 10:39 p.m. EDT (0239 GMT)

ATLANTA (CNN) -- There were nearly 2.5 million Internet jobs at the end of 1999, up 36 percent during the year, according to research released by the University of Texas-Austin.

The research, funded by Cisco Systems Inc. of San Jose, California, is in line with other government and industry surveys that show the Internet has boosted productivity and been one of the key factors in sustaining growth.

The report attempts to measure a very hard-to-measure industry. The study found that nearly 2 percent of workers in the United States now owe their jobs to the Internet, including jobs in dot-com companies, making computers used to surf the Web and jobs laying cable that carry online data.

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The rapid growth in the Internet economy has led to a shortage of qualified workers, according to one of the business professors who wrote the report.

"There's a huge bottleneck, they cannot hire enough people," said Anitesh Barua of the University of Texas-Austin.

Internet companies now aggressively scour college campuses for qualified workers, and complaints of a labor shortage in the industry are familiar in Washington.

"Anybody in this country who has an -- even just an undergraduate degree in computer science -- will get 10 or 12 job offers, you know, fantastic job offers," Microsoft founder Bill Gates said Tuesday in Washington, D.C.

But despite such challenges, the report found that the Internet economy is bringing in money even faster than it is hiring.

Total revenue was $523.9 billion last year, an increase of 62 percent from 1998.

But revenues are one thing -- profits are another.

APBNews.com fired all 140 workers Monday and is looking for a new investor. Surfbuzz.com sent word it was going out of existence on Tuesday, the same day CBS announced that last week it had laid off 24 employees in its Internet division.

Meanwhile, a Wall Street firm issued a report saying "the bottom line remains bleak, as a vast majority of Internet companies are still bleeding red ink."

The report -- titled "Reality_Check.com" -- said a study of 25 Internet companies found average revenue growth last year was 190 percent.

The same companies are projected to increase revenue 102 percent this year.

But despite the reality check, researchers predicted the Internet economy could top $1 trillion by early next year.

"This economy is not only growing rapidly, it is becoming more and more productive," Barua said.

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