http://www.ddj.com/articles/2000/0004/0004k/0004k.htm


The IT Labor Shortage: Fact or Fiction?

Dr. Dobb's Journal April 2000

A hard look at the factors contributing to the so-called high-tech labor
shortage


By Richard Ellis
_________________________________________________________________

Ellis designed and directed the IT Workforce Data Project, sponsored
by the United Engineering and Alfred P. Sloan Foundations. He has been
analyzing high-tech careers for 15 years. He can be reached at
ellis@cvns.net.
_________________________________________________________________

Do you have an opinion about what you've read here? Sound off in the
discussion forum for this article.
_________________________________________________________________


Current reports in the media and
debates in the U.S. Congress present conflicting views of the job
market for information technology people. Industry representatives say
there is a shortage of qualified workers. (For example, see the
Information Technology Association of America's "Help Wanted 1998: A
Call for Collaborative Action for the New Millennium,"
http://www.itaa.org/ workforce/ studies/hw98.htm.) Others say that is
there no shortage and that the industry creates its own problems by
using overly specific criteria for employment and by failing to make
good use of older workers (see "Debunking the Myth of a Desperate
Software Labor Shortage," by Norman Matloff, testimony to the U.S.
House Judiciary Subcommittee on Immigration, April 21, 1998,
http://heather.cs.ucdavis.edu/itaa.html).

Neither of these conflicting views is new. For at least 50 years,
high-tech employers have claimed that labor shortages restrict U.S.
economic growth, and engineers and other technical professionals have
worried about the consequences of rapid obsolescence of their
technical skills. Despite the employer claims, there is no evidence
that general shortages of technical people have occurred. This has not
kept employers from lobbying Congress for increased access to foreign
workers and taking other steps to beef up the size of the pool of IT
specialists. A large supply of workers is advantageous for industry,
helping to contain the costs and bargaining power of labor and
supplying a large pool of talent.

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These debates sometimes make dubious uses of statistical information.
With this problem in mind, in 1998, the United Engineering and Alfred
P. Sloan Foundations arranged for a small project to provide better
guidance to the statistical facts about IT careers. The goal of the IT
Workforce Data Project was to identify and disseminate authoritative
facts about information technology job markets. The project has
produced four brief reports:

* The overall size and makeup of the IT workforce.
* The production of degrees in IT specialties.
* The role of foreign workers in U.S. IT jobs.
* An assessment of supply and demand (the "shortage" question).

This article summarizes the findings of these reports and examines
some of their implications for people in the profession. The full text
of the reports is available online at http://www.uefoundation.org/
itworkfp.html.

Conclusions of the IT Workforce Data Project

Reliable data from the Bureau of Labor Statistics, Bureau of the
Census, National Center for Educational Statistics, and National
Science Foundation provide a consistent picture of professional
employment in information technology, centered on a group of core
occupational specialties -- computer scientists, computer engineers,
and systems analysts. Programmers were added to this group; federal
databases treat programming as a technician's field, not a
professional specialty, but the industry's practice of using terms
like "programmer" and "software engineer" interchangeably means that
programmers should be included. In some cases (for example, in
assessments of degree production), electrical engineers with specific
computer hardware or software specialties were also included in counts
of people with core IT skills.

Federal statistics on these occupations support the following broad
conclusions (many more details are in the original reports of the IT
Workforce project):

* IT specialties are already the fastest growing occupations in the
United States; see Figure 1. They are also among the largest
professional specialties. If programmers are included in the
count, by 1999 there were more than 2.2 million people in the core
IT occupations, compared to less than 750,000 just 15 years
earlier. This makes IT as large as nursing, elementary and
secondary teaching, and engineering. The Bureau of Labor
Statistics expects that rapid growth of the IT specialties will
continue; its most recent forecast, released in November 1999,
predicts that by 2008 there will be 3.2 million people in these
fields.
IT workers are found in every employment sector in the economy; see
Figure 2. Service industries predominate, especially computer and
data processing services, a single group that includes the
packaged software industry, applications and systems consulting,
information management, and other services. Like the occupations
in it, this employment sector is the fastest growing industry in
the nation. But many other employment sectors are also important
centers of IT work, including finance, wholesale and retail trade,
and government.
Less than half of those in the core IT occupations have bachelor
degree or higher with completed major or minor concentrations of
study in an IT-related discipline. Overall, about 1 million U.S.
college graduates can be identified whose education has included
formal preparation for IT work at either the undergraduate or the
graduate level, but even that number is well short of half of the
current workforce; and well over a third of those who do have such
academic backgrounds are not working in the core IT occupations
(some are undoubtedly employed in closely related jobs, such as
information systems management). At least a third of the IT
workers without formal credentials in the core areas do have
training in closely related fields, such as math, physics, or
other kinds of engineering. In addition, academic backgrounds in
business or social science are common for IT workers. The project
also looked into data on industry certification programs such as
those supported by Novell and Microsoft. The number of
certifications issued to date is approaching at least half a
million, but at this time there is no way to estimate the overlap
among either those with certificates (many persons may have more
than one of these credentials) or those with both certificates and
more traditional academic degrees.
Persons with academic IT credentials who are not employed in the
core occupations are significantly older than those who do hold
such jobs. Some of these persons may have moved up to management.
In general, the age distribution of core IT workers is distinctly
more youthful than that of the rest of the U.S. scientific and
engineering workforce; see Figure 3. Such a distribution is to be
expected in a field that has grown as rapidly in recent years as
has IT, so this fact alone is not enough to establish age
discrimination, although it certainly would be consistent with
that accusation. If there is age discrimination and if those
practices continue, then the industry's recruitment problems will
certainly get worse, because the generation of "Baby Bust" people
is now entering the workforce, and during the next 10 years the
number of people in the labor force who are in the 25-to-34 age
group is going to decline.
Five of every six U.S. IT workers are native-born citizens. Of the
foreign-born, well over half are naturalized citizens and most of
the rest are permanent residents of the United States. The
foreign-born workers tend to be better trained than native
workers, at every level of the industry. The number of IT
specialists who are in the U.S. on temporary workers' visas is
still relatively small, but the Congress has greatly expanded the
number of these visas that can be issued each year, and further
expansions are now being proposed. The path to permanent residency
often begins with graduate study; companies recruit foreign
students and then arrange for temporary work visas so that they
can remain in the United States.
A review of five different kinds of indicators of demand yields no
compelling evidence that there is a current shortage of IT workers
or that such a shortage threatens to damage the industry in the
near future. The indicators show that levels of employment have
increased; levels of unemployment have also increased,
consistently, since 1997; earning levels have increased, but not
significantly more than those for other kinds of professionals,
and only marginally more than the increases obtained in the same
time periods by the entire U.S. civilian labor force; industry
estimates of the number of vacant positions are precisely matched
by the record of annual growth in employment, indicating that
supply is meeting demand; and the supply of labor has increased
significantly, especially if alternative sources of talent are
considered.
This last factor is of particular interest. First, participation
in academic IT degree programs has increased sharply. Second,
there is a substantial reserve of trained people who are not
working in core IT jobs. Third, Congress has expanded access to
temporary foreign workers and is considering expanding it even
more. The U.S. accounts for less than 10 percent of the world's
annual production of high-tech degrees; globally, more than 1
million bachelor's degrees in engineering and related fields like
math and computer science are awarded every year. This enormous
offshore pool of talent is increasingly available to U.S.
employers, who have an understandable interest in "creaming" it.
And fourth, immigration is not the only way that U.S. employers
can use foreign talent. Data from the Department of Commerce's
import/export statistics show that the dollar value of foreign
outsourcing of computer, data processing, and other IT services
rose nearly eightfold between 1986 and 1997, to $434 million per
year; see Figure 4. The services of people with doctoral degrees
in electrical engineering can be purchased in India for about a
tenth of what they cost in the U.S., suggesting that this level of
outsourcing may displace as much as $4 billion a year in domestic
employment.

Implications for Career Planning
So what does all this mean for individual IT specialists? A
healthy degree of skepticism is appropriate when the industry
asserts that there are shortages of qualified people. More
objective evidence says that this is not the case. As the final
report of the IT Workforce Project put it, "...several indicators
-- rising numbers of experienced unemployed workers, the flat
compensation results reported by Computerworld, increasing
enrollments in computer science -- suggest that if anything,
pressures of demand on the available supply may have eased
somewhat during the past year... It may seem contradictory, but we
suggest that there is no general shortage of workers; many
employers still can't find the people they seek; and some persons
with IT training and experience have difficulty finding work. How
can this be? One answer may be that there are signs of a strong
preference for recent graduates in the IT job market."
In other words, if employers are experiencing shortages, they are
not shortages of qualified people in general but rather shortages
of particular kinds of qualified people. Much of the IT literature
addresses this matter of idealized expectations on the part of
some IT employers. As Reginald Charney indicated in his article on
hiring practices in the Fall 1999 issue of the "Software Careers"
supplement to DDJ, "The ideal candidate is a self-motivated,
self-starting, team player who has just done exactly the desired
job successfully in a closely related business -- preferably at
the competition..." When searches for such ideal candidates fail
-- and as Charney suggests, usually they will -- then many
employers may fall back on the next best alternative, newly
trained graduates who may make up in energy and a willingness to
do whatever is asked of them for what they lack in previous
experience. Similar motivations may explain the appeal of foreign
labor. If an employee's presence in the United States depends on
keeping his bosses happy, that gives management an edge that it
does not have over other workers.
This raises an aspect of the IT job market that is underscored by
the IT Workforce Data Project's findings: It is a hot field, the
fastest growing employment sector in the nation. Hot fields
promise lots of openings, which is why career guidance writers
love them. But this is a poor way to make career decisions. People
are much better off choosing to do what they enjoy and what
they're good at, preferably both. In any case, the general level
of supply and demand for a profession has little to do with the
success of particular individuals; indeed, the greatest successes
come to people who are astute or lucky enough to get into a field
early, long before it is hot.
Hot fields have other pitfalls for the unwary. They tend to be
linked to business sectors that attract investors who are looking
for quick returns and who do not care much about the longer-run
fate of employees; they may offer enormous rewards, but they also
may entail serious risks. This does not mean that you should get
out of IT; it just says that people in the profession need to be
canny players and to learn that technical skills will not be all
that it takes to survive and prosper, especially in the more risky
high-wire ventures.
Another neglected characteristic of IT job markets is that because
they are very large and present to at least some degree in
virtually all employment sectors, they are also quite diverse. The
frantic pace of Internet startups or prestigious software houses
such as Microsoft and Oracle has a tendency to capture public
attention and to define what the entire IT marketplace looks like,
but this is illusory. Many large employers of IT talent represent
more mature market sectors such as consulting, banking,
manufacturing, government, and insurance. These types of employers
are willing to look at a wide range of job candidates and may pay
more attention to building long-term careers for their employees.
A larger point is that the IT job market cannot be accurately
described by any single set of characteristics. Instead, there are
enormous variations by region, types of employers, and types of
job candidates.
The findings of the IT Workforce project raise other issues. One
is the fate of people as they age. Career tracks into management
are one option, but they will not appeal to all, nor can
management fill all of the needs for employment that an aging IT
workforce has. Other technical career tracks may be blocked by age
discrimination, which probably exists in many IT shops, and at the
moment it does not appear that anyone is prepared to do much about
it. As noted earlier, the supply of youthful talent will shrink
during the next 10 years as the "Baby Bust" generation continues
to move out of school and into the workforce. To the extent that
employers depend on young talent, their recruitment problems are
going to escalate. This might lead some organizations to rethink
their hiring guidelines. To judge by anecdotal reports of
discriminatory practices in the industry, some IT employers are
going to need to make drastic changes in the habits of their
employees. For example, it has been reported that youthful
managers, who are common in IT, are uncomfortable supervising
people who are older and more experienced than they are. This kind
of attitude may become a luxury, if not a weakness, in the future,
when the choice may be to supervise some older people or supervise
no one at all.
In general, all IT specialists need to deal with the problem of
the short life of particular skill sets, and with the fact that at
least some employers assume that when people move on to more
middle-aged life styles that include families and other interests
beyond the job, then it is time for those people to work somewhere
else. The rapid turnover of IT technology does give youth an edge;
they have the most recent training. This raises the question of
what to do when you are over the hill (which may occur as early as
age 30, certainly by age 40). Many people may need to think about
retraining or starting second careers. It may be possible to
combine IT skills with substantive experience in other areas and
then spin off in those directions.
Finally, the rising involvement of workers from all over the world
in U.S. information technology reminds us once again that for
employers, the job market is global. Nativists -- those who would
restrict if not eliminate foreign access to U.S. jobs -- may try
to oppose this trend, but the record of economic history suggests
that they will fail. The U.S. workforce is going to have to
compete with the top performers of the rest of the world. Our
advice is to get used to it.

Further Reading
R.A. Ellis and B. Lindsay Lowell, IT Workforce Data Project
Reports I-IV (New York: United Engineering Foundation, 1999). Web
link to full text and Acrobat PDF files for all four documents:
http://www .uefoundation.org/itworkfp.html.
Burt Barnow, John Trutko, and Robert Lerman, Skill Mismatches and
Worker Shortages: The Problem and Appropriate Responses, the final
report to the Office of the Assistant Secretary for Policy, U.S.
Department of Labor (Washington: The Urban Institute, 1998. This
important and highly useful document includes a case study of the
labor market for IT workers. Unfortunately, it is not available on
the Web. Interested readers may be able to obtain a copy by
contacting Dr. Barnow at the Institute for Policy Studies, Johns
Hopkins University).
Do you have an opinion about what you've read here? Sound off in
the discussion forum for this article. Also see Carolyn M. Veneri,
"Can Occupational Labor Shortages be Identified Using Available
Data?" Monthly Labor Review [Washington: Department of Labor,
March 1999 (http://stats.bls.gov/opub/mlr/ 1999/03/art2exc.htm)];
Carol Ann Meares and John F. Sargent, Jr., The Digital Workforce:
Building Infotech Skills at the Speed of Innovation [Washington:
Office of Technology Policy, U.S. Department of Commerce, 1999;
(http://www.ta.doc .gov/ Reports/itsw/digital.pdf)]; and Peter
Freeman and William Aspray, The Supply of Information Technology
Workers in the United States [Washington: Computing Research
Association, 1999; (http://www.cra
.org/reports/wits/cra.wits.html)].
DDJ
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