No, The Tech Skills Shortage Doesn't Exist

Employers game the system and misrepresent the key market indicators.
Every major HR department benchmarks the labor market with objective data, such as offer acceptance rates (the likelihood a candidate who's offered a job accepts), signing bonuses, days jobs go unfilled, and wage increases. The Seattle Post-Intelligencer reported in 2005 that Microsoft's offer acceptance rates were an astoundingly high 90%-plus. A rate greater than 50% is considered a sign that employers are facing little competition for talent.

Duke University's Vivek Wadhwa took my advice to ask for this kind of hard data when he designed a study to determine whether there was a shortage of engineers. He found no such shortage in the United States. Another recent study, by Hal Salzman of the Urban Institute and Lindsay Lowell of Georgetown University, drew a similar conclusion.

Many of the indicators cited above are at the macro level, but there isn't a single IT labor market. Instead, diverse labor markets vary by geography, skill set, experience, and other factors. And this is where we need a much more nuanced discussion of what is really in demand and what is available.

Based on the indicators I've cited, my judgment is that the U.S. IT labor market overall is doing OK, for now. We're seeing modest wage growth and indications that college enrollments in tech-related programs have bottomed out. There's no shortage of supply, but there are many looming threats to the domestic workforce as firms build huge labor capacity overseas. Accenture passed a milestone in August, with more employees in India (35,000) than in any other country. IBM will have 100,000 workers in India by 2010, rivaling its U.S. head count. During the next tech recession, those companies will downsize in Boston before Bangalore.

chart: Jobless rates in IT vs. other occupations.
What drove us out of the tech labor recession of the early 1990s was the mass move to client-server computing, the widespread corporate adoption of ERP software, the move to object-oriented programming, and, of course, the Internet. How much of future tech breakthroughs will be filled by low-cost foreign labor versus U.S. labor remains to be seen.

We must move beyond the "he said, she said" op-ed analyses to a cooperative dialogue among the various interest groups: employers, university administrators, and worker groups. Employers have a strong interest in claiming there are worker shortages because it provides them with public relations cover for outsourcing, it induces more people to enter the field, it justifies flooding the market with lower-cost foreign workers, and it gets additional government dollars thrown at the so-called problem. Universities overhired computer science, IT, and MIS faculty during the boom times and thus have a strong incentive to present the rosiest picture possible to attract new students. And, of course, incumbent workers have an interest in keeping supply low.

It's time to break this logjam with some cold, hard facts and sound judgment.

Dr. Ron Hira is an assistant professor of public policy at Rochester Institute of Technology, where he specializes in engineering workforce issues and high-skill immigration. He's a past chairman of IEEE-USA's Career & Workforce Policy Committee, a research fellow at the Economic Policy Institute, and co-author of the book Outsourcing America (AMACOM, 2005)..

Illustration by Brian Stauffer

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Yes, The Tech Skills Shortage Is Real

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