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The Supply of Information Technology Workers in the United States Peter Freeman and William Aspray This study was supported by Grant No. EIA-9812240 of the National Science Foundation. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the organizations or agencies that provided support for this project. Coordinated by the Computing Research Association (CRA), 1100 Seventeenth Street NW, Suite 507, Washington, DC 20036, Tel. 202-234-2111. Additional copies of this report are available from CRA. Single copies are available at no cost. To request pricing information for multiple copies or to place an order contact: Computing Research Association 1100 Seventeenth Street NW Suite 507 Washington, DC 20036 Tel. 202-234-2111 E-mail: info@cra.org Copyright 1999 by the Computing Research Association (CRA). Executive Summary 9 Chapter 1. Political Context 15 ◆ What Is This Report’s Evaluation of Earlier Studies? 15 ◆ How Does Recent Legislation on H-1B Visas Affect Any Shortage? 19 Chapter 2. Information Technology Workers 25 ◆ What Is Information Technology? 25 ◆ Who Is an IT Worker? 29 ◆ How Many IT Jobs Are There, and Where Are They Located? 34 ◆ What Skills Does an IT Worker Need in Order to Be Effective? 37 ◆ Why Is Information Technology Becoming So Prevalent in Our Society? 39 ◆ What Are the Characteristics of Information Technology That Affect IT Labor? 41 Chapter 3. Demand, Constraints, and Consequences 45 ◆ What Are the Dynamics of the Marketplace and the Dangers of Government Intervention in the IT Labor Market? 45 Table of Contents i ◆ What Factors Limit the Ability of the Government, Industry, University System, and Professional Community to Improve the Match between Supply and Demand? 46 ◆ What Are the Costs of an IT Worker Shortage? 48 ◆ What Are the International Considerations in Dealing with a National Worker Shortage? 49 Chapter 4. Worker Shortage 53 ◆ How Does One Determine Whether There Is a Labor Shortage? 53 ◆ Is There a Shortage of IT Workers? 54 ◆ Where Are IT Worker Shortages Occurring? 68 Chapter 5. Supply—The Degree Programs 71 ◆ What Are the Sources of IT Workers? 71 ◆ How Have Career Paths for IT Workers Changed Over Time? 73 ◆ What Is the Role of High Schools in the Supply System? 75 ◆ What Is the Role of Two-Year College Programs in the Supply System? 78 ◆ What Is the Role of Four-Year College Programs in the Supply System? 81 ◆ What Is the Role of Graduate Programs in the Supply System? 88 Chapter 6. Supply—The Non-Degree Programs 99 ◆ What Non-Degree Programs Do Traditional Colleges and Universities Offer? 101 ◆ What Other Groups Supply Non-Degree Programs? 102 ◆ What Is the Role of Corporate Universities in Training and Educating IT Workers? 103 ◆ What Is the Role of Distance Learning in Educating the IT Workforce? 106 ◆ Is Retraining Occurring, and if so, How Long Does it Take to Retrain for an IT Job? 109 ii Chapter 7. Women, Minorities, and Older Workers 111 ◆ How Do Women Relate to the Worker Shortage? 111 ◆ How Do Minorities Relate to the Worker Shortage? 114 ◆ How Do Older Workers Relate to the Worker Shortage? 115 Chapter 8. Seed-Corn Issues 117 ◆ Is the Strong Industrial Demand for IT Workers Harming the Educational System? 117 Chapter 9. Data Issues 121 ◆ What Are the Sources of Data on IT Workers? 121 ◆ What Are the Limitation of Existing Data on the IT Workforce? 124 Chapter 10. Recommendations 127 1. Federal and State Governments 127 2. Higher Education 132 3. Industry 136 4. Professional Societies 138 5. Individuals 140 Appendices: A. Methodology 147 B. Related Studies 149 C. About the Authors and the Sponsoring Organization 151 D. Study Group Members 153 E. Computing Research Association Board of Directors 155 F. External Reviewers 157 G. Acknowledgments 159 iii 9 The purpose of this study is to improve understanding of the supply of and demand for infor- mation technology (IT) workers in the United States, and the surround- ing contextual issues. In conducting this study, the authors received support from the National Science Foundation, collaboration from five other professional societies, and guidance from the Computing Research Association Board of Directors. There are four major contributions in this study: 1. Evaluation of data. The report identifies and evaluates all the major sources of statistical informa- tion relevant to this subject. The study group found that federal data are by far the most important and reliable, but that they have some serious shortcomings related to untimely reporting, occupational descriptions that are out of date and based on ambiguous job titles, and incompatibilities between supply and demand data collected by different agencies. There are other data sources. However, it is questionable whether results drawn from geographically restricted and occupationally restricted data studies of IT work- ers can be generalized to the national IT labor force; and many of the national studies of IT workers done by private organiza- tions have methodological weak- nesses (see chapter 9). 2. Definition of ‘IT Worker.’ This report outlines a way of distinguishing IT workers from a much larger class of workers whose jobs are enabled by information technology. It then classifies IT workers into four categories (conceptualizers, developers, modifiers/extenders, and support- ers/tenders) based not on their job titles, but on skills and knowledge required to do the job. An initial test of this categorization scheme in the State of Georgia has illustrated its value (see chapter 2). 3. Description of the Supply System. Some of the participants in the national debate identified bachelor’s degree training in com- puter science as the principal supply source of IT workers. This report presents a detailed description of a much more extensive supply system, E x e c u t i v e S u m m a r y 10 including not only majors in twenty different IT-related disciplines at the associate, bachelor’s, master’s, and doctoral levels, but also many people majoring in science, engi- neering, business, and even non- technical disciplines who often take some course work in IT subjects (see chapter 5). The supply system also includes an increasingly important and rapidly growing continuing- education element. This continuing education is supplied not only by the traditional higher education system through short courses and certificate programs, but also by for-profit educators and by companies that are employing the IT workers. New modes of delivering instruction, such as asynchronous learning over the Internet, are rapidly being deployed (see chapter 6). 4. Analysis of shortage claims. The report evaluates the question of whether there is a shortage of IT workers in the United States. The study group determined that the data are inadequate to ascertain what mismatch there is, if any, between national supply and demand. Therefore the report makes use of a variety of other quantitative and qualitative kinds of evidence. These include: secondary indicators, such as wage growth and labor certificates awarded, based on federal data; quantitative studies restricted to specific geo- graphical regions or specific IT occupations; private studies of the national IT labor market whose methodologies have come under question; anecdotal evidence about how employers have acted in their search to recruit or retain workers, or take alternative solutions such as refusing work or replacing workers by machines; and other kinds of qualitative evidence. The preponderance of evidence suggests that there is a shortage of IT workers, or at least a tight labor market. None of this evidence has the certainty of a direct count of supply and demand, and without this kind of direct count it is impossible to distinguish an actual shortage from a mere tightness in the labor market. Moreover, there are credible reasons for questioning the evidentiary value of virtually any piece of evidence that is available (see chapter 4). One of the problems with the national debate is that IT workers have been treated as a single, undifferentiated group. However, the phrase ‘information technology worker’ encompasses many differ- ent occupations that require a wide array of skills and knowledge. It would be helpful in future discus- sions to segment the class of IT workers into classes of occupations that have similar levels of knowl- edge and skill. It would be surpris- ing, given the dynamism and demand in the IT labor market, if there were not some spot shortages (and some spot surpluses). Unfor- tunately, existing data do not allow this kind of segmented analysis. Of the many contextual issues that need to be considered to gain a full understanding of the supply and demand of IT workers, this report examines four: 5. Political context. The study group evaluated the reports by the Information Technology Associa- tion of America (ITAA) and the Department of Commerce, as well as the criticism of these reports by the U.S. General Accounting Office 11 (GAO). We agree with GAO that the low response rates in the surveys of industrial demand are a serious weakness in the ITAA and Com- merce reports; but this speaks against the quality of the evidence, not necessarily against the conclusion that there is a shortage. The ITAA and Commerce reports can also be faulted for their narrow focus on recipients of computer science bachelor’s degrees when discussing the supply of IT workers (see chapter 1). The legislation providing a temporary increase in the number of temporary visas permitted annually under the H-1B visa program was also reviewed. CRA and the other professional societies participating in this study did not take a position on the H-1B increase when it was being debated in 1998, and it is not our intention to second-guess the program now. We believe that the legislation probably will increase the total supply of workers during a period of epi- sodic higher demand created by the Y2K problem, while limiting the risk to the indigenous supply system through a sunset clause on the increase in visas awarded (see chapter 1). 6. Types of demand. This report differentiates two kinds of demand. There is episodic demand, such as this country is experiencing currently as it struggles with the Y2K problem and the sudden spurt in Internet activities. There is also a long-term demand, created by fundamental changes in technology and society. The long-term demand for IT workers is driven by the relentless decrease in the size of information technology, as well as its relentless increase in performance, reliability, flexibility, and price-for-perfor- mance. Because of these changes, information technology is rapidly being adopted by every sector of American society and made a fundamental part of organizational operations and personal activity. Perhaps the greatest weakness in the H-1B legislation is that it focuses on a short-term problem created by an episodic demand. It does not address the long-term problem of providing an adequate supply to meet the demand for IT workers that is likely to continue to grow unabated well into the new millen- nium (see chapter 3). 7. Limitations on action. Even when organizations recognize a mismatch between supply and demand that they would like to overcome, there are almost always limitations on their ability to act. A government organization cannot regulate supply and demand; it can only provide incentives, such as fellowships, to encourage students to choose an area of expertise that appears to be in short supply. But it is difficult for a government to stimulate labor supply by just the right amount since the market is constantly changing, knowledge about supply and demand is imperfect and difficult to obtain in a timely fashion, and there are often unforeseen consequences of any government action. Industry has its own con- straints. For example, companies are forced by short product life and short product development cycles to hire new employees or reassign existing workers in ways that do not require a lot of break-in training before they can be productive. 12 The traditional higher educa- tion system is constrained by its inability to change directions quickly. This results from its limited re- sources to allocate to new or growing disciplines, the long-term commitment colleges and universi- ties make in buildings and capital equipment or in tenured faculty appointments, and its deliberative style of decision-making (see chapter 3). 8. International considerations. There is a rising international demand for information technol- ogy. Companies throughout the world are taking advantage of the changes in information technology that allow them to use it to improve their operations. There is increasing global competition to supply IT products and services. International and foreign firms are thus compet- ing with U.S. firms for the skilled workforce to develop IT products and services and place them into operation. Only a few countries (e.g., India and Ireland) have a surplus of IT workers; and there is strong competition from many countries, including their home countries, for these workers. The United States will have to assure an adequate supply of IT workers if it wants either to retain its world lead in the IT sector, or remain competi- tive in other industry sectors that rely on information technology. Foreign workers can play an important role in the United States, but they are unlikely to help meet our growing demand for IT workers in this manner (see chapter 3). Other topics. This study could only touch on a number of other topics that are important to ad- equately understand IT workforce issues. A number of groups are underrepresented in the IT workforce and in the educational programs that prepare people for careers as IT workers. These include women, Hispanics, African Americans, and Native Americans. If these groups were represented in the IT workforce in proportion to their representation in the U.S. population, this country would have more than an adequate supply of workers to fill even the most dire estimates of a shortage. Because other studies have investigated the underrepresentation of women or minorities in professional work, scientific and engineering fields, including the computing profession, this study chose to focus its efforts on other issues that have been less thoroughly investigated. However, some basic information and statistics about the issues concerning the participation of women and minorities in the IT field have been collected here. Some of the issues concerning women mentioned here are the lack of adequate exposure to computers during the K-12 years, the scarcity of role models, and perceptions about what it is like to be an IT worker (e.g., competitive work environment, focus on machines rather than people, and so on). This study found many of the issues for minorities to be similar to those for women; but there is the added problem that minorities are not as likely as white males or women to attend college or gradu- ate school. It is clear that these issues of underrepresentation need more attention than they could be given in this study (see chapter 7). It may also be true that older workers are underrepresented in the IT workforce. There is certainly a widespread perception that pro- gramming is an activity for the young, and that IT workers tend to 13 get “burned out” and leave the field by the age of 40. The absence of almost any data precluded this from being a major topic of study in this report. The study group looks forward to the examination of this important issue in a forthcoming study by the National Research Council (see chapter 7). Some people are concerned about a seed-corn problem: that the high industrial demand for IT workers is siphoning off too many graduate students and faculty from the universities, leaving an insuffi- cient number to educate the next generation of IT workers. This study detected preliminary signs of a seed-corn problem. The coordi- nated efforts by government, industry, and academia to solve a seed-corn problem in computer science that occurred around 1980 are recounted. Some of the problems today are the same as in 1980, such as the rapid increase in undergraduate enrollments placing heavy loads on faculty. However there are also some differences: universities today have better research equipment, compared with that in industry; than they did then; however, research support now emphasizes short-term research too much, and it is harder for industry to coordinate volun- tary restraint on faculty and student raiding today because the industrial employers of research computer scientists are today much more widely spread across many differ- ent industries (see chapter 8). The authors struggled with the decision whether to include recommendations in the report. The mandate for this study was to provide an understanding of the issues surrounding the supply of and demand for IT workers, not to provide a call for action. In most policy reports, the recom- mendations have primacy and the analysis is included merely in a supporting capacity. The study group did not want the presence of recommendations to under- mine the attention paid to the analysis. Also, as a study group, we do not have any particular standing within the government, industrial, or academic sectors from which to recommend actions. On the other hand, a number of important issues were raised and actions suggested by the study group during the course of the study. Given the wide range of knowledge and experience repre- sented by the study group, we decided it would be useful to put these suggestions forward in the hope that they will stimulate further discussion and action. Mostly, the recommendations identify a problem and a general course of action without trying to be specific about implementation mechanisms. The thirty-seven recommenda- tions are grouped around a small number of issues: data-collection practices, industry-academic coop- eration, industry hiring and training practices, certification of educa- tional and training programs, broadening the supply pipeline, improving the research and teaching environment to retain and recruit faculty, and curriculum develop- ment. The recommendations are organized according to intended audience: government, higher education, industry, professional societies, and individuals (a summa- ry of the recommendations can be found at the end of chapter 10 as box 10-1). 14 15 What Is This Report’s Evalu- ation of Earlier Studies? Human resource issues related to information technology have frequently been on the national agenda since the early 1960s, when the National Academy of Sciences (NAS) and the National Science Foundation (NSF) began preparing studies and collecting data on this subject. These efforts supple- mented data that have long been collected by the Bureau of Labor Statistics (BLS). The most recent national debate began in 1997 with a report prepared by the Information Technology Association of America (ITAA), a trade association repre- senting 11,000 companies. ITAA reported a large shortage of IT workers in large and mid-size U.S. companies. In 1998, ITAA pub- lished a second report based on a larger sample of companies, which indicated an even more serious shortage of workers. The Depart- ment of Commerce’s Office of Technology Policy then issued a report that largely mirrored the conclusions in the original ITAA report. The General Accounting Office (GAO) criticized the meth- odology used to gather the data put forward by both ITAA and Commerce, and questioned their conclusions about a shortage. Individuals and private organiza- tions weighed in on the debate, which quickly crystallized around proposed legislation to increase the number of temporary H-1B visas that could be awarded annually. Compromise legislation was passed by Congress in October 1998 and subsequently signed into law. However, it is clear that this legislation does not end the national discussion of IT workers. The legislation is temporary, lasting only three years, and it addresses only one aspect of this complex labor issue. Questions about the treat- ment of older IT workers, for example, were largely ignored in the H-1B debate. The importance of IT workers to national competitive- ness and national wealth, and the dynamic nature of information technology, which is rapidly being incorporated into every sector of C h a p t e r 1 . P o l i t i c a l C o n t e x t 16 the U.S. economy, strongly suggest that issues surrounding the IT workforce will be part of national policy discussions for years to come. Although this report primarily addresses current and future issues about IT workers, this chapter is devoted to an examination of some aspects of the political context concerning IT workforce issues in the United States. This analysis begins with a review of some of the arguments presented in the ITAA and Commerce reports. The discussion will focus primarily on vacancy rates, which are used as a principal kind of evidence in the two ITAA studies.1 The first study, undertaken by the Cato Institute, a libertarian think- tank, involved telephone interviews with randomly chosen companies (in various sectors, not just IT companies) that employed 500 or more workers (counting all their workers, not just IT workers). Only 271 of 2,000 companies responded, giving a response rate of 14 percent. The second study, under- taken by the Continuing Education Division of Virginia Tech, was also a telephone survey, but this time the targets were companies with 100 or more employees. From a sample size of 1,500 companies, 532 interviews were completed, giving a somewhat better but still low response rate of 36 percent. The first study argued that 190,000 IT jobs were unfilled in the United States in 1996. The second study claimed 346,000 IT vacancies— representing a 10-percent vacancy rate. GAO argued that the low response rates and small sample sizes made the results of these surveys highly questionable.2 It is true that the results might be skewed because companies that were experiencing more serious shortages may have been more likely to respond. However, there is no hard evidence from any statisti- cally valid study that refutes either the ITAA results or the presence of an IT worker shortage. While the ITAA results may not have the weight of scientific evidence, they do suggest that many U.S. compa- nies are having difficulties filling their IT positions. This evidence is consonant with many other anec- dotal reports heard while research- ing this study. This finding is bolstered by a GAO observation that the unem- ployment rate for IT workers was only 1.3 percent in 1997, which is 1 “Help Wanted: The IT Workforce Gap at the Dawn of a New Century,” Information Technology Association of America, Arlington, VA, 1997; “Help Wanted 1998: A Call for Collaborative Action for the New Millennium,” Information Technology Association of America and Virginia Polytechnic Institute and State University, March 1998. For a more detailed critique of the first ITAA report, see Burt S. Barnow, John Trutko, and Robert Lerman, “Skill Mismatches and Worker Shortages: The Problem and Appropriate Responses,” Draft Final Report, The Urban Institute, February 25, 1998. It persuasively argues that there are methodological problems with one after another of the kinds of evidence of shortage given in the ITAA report. 2 See, for example, U.S. General Accounting Office, “Information Technology: Assessment of the Department of Commerce’s Report on Workforce Demand and Supply,” GAO/ HEHS-98-106, March 1998; GAO, “Information Technology Workers: Employment and Starting Salaries,” GAO/HEHS-98-159R, May 1998. 17 much lower than the 4 percent often considered by economists to represent “full employment.” In fact, even when the IT unemploy- ment rate hit its historical high for recent times—3 percent in 1991—it was below the 4 percent threshold indicating full employment. This is perhaps to be expected, given that most professional occupations that are filled primarily by highly edu- cated workers have low unemploy- ment rates.3 Since 1987 the IT unemployment rates have tracked up and down in parallel with the national general unemployment rate, although the IT rates are consistently lower by a factor of 2 to 3. Given that the general unemployment rate is currently at a 25-year low, it is not at all surprising that the IT labor market is experiencing some tightness. The Department of Com- merce report,4 like the first ITAA report, compares the projected number of IT jobs to the supply as an indicator of a shortage. For demand, Commerce used a Bureau of Labor Statistics (BLS) projection that between 1994 and 2005 the number of IT jobs in the United States would increase annually by 95,000. Commerce contrasted the projected annual increase in demand with data from the National Center for Education Statistics (NCES). The NCES data indicated that only 25,000 bachelor’s degrees in com- puter science are produced annually in the United States—and that these numbers have been steadily decreas- ing from a high of 42,000 in 1986 (a 40-percent decline). GAO rightly criticized Commerce’s argument—by noting that there are additional kinds of formal computing training besides bachelor’s degrees, such as associate degrees and certificate programs, that prepare people for IT careers; and also that most IT workers receive their formal education in fields other than computer science. In consonance with GAO’s line of reasoning, this study group believes that to understand whether there is an IT worker shortage, one must consider both the multiple sources of supply and the various occupa- tions for which each of these sources prepares an IT worker. There are many IT jobs, such as help desk attendant or Web de- signer, for which an undergraduate computer science degree is neither common nor appropriate training.5 Another problem with the ITAA 3 According to a data brief from R. Keith Wilkinson, Science and Resource Studies, NSF, the unemployment rate for science and engineering degree-holders was less than half the overall national average: 2.2 percent for those working in science and engineering, and 2.8 percent for science and engineering degree-holders in other than science and engineering occupations, versus 5.6 percent for the U.S. labor force as a whole in 1995. See http://www.nsf.gov/sbe/srs/databrf/sdb/98325.htm for details. 4 U.S. Department of Commerce, Office of Technology Policy, “America’s New Deficit: The Shortage of Information Technology Workers,” Fall 1997. 5 Brian Hawkins, the president of EDUCAUSE, has noted that there are reasons why IT jobs that do not require a computer science degree are advertised with this degree requirement: “Often HR personnel do not fully understand such issues all that well, when job specifications and job descriptions are written. Sometimes this is done in an attempt to artificially elevate the position deliberately, in an effort to get the position graded at a level that the salary could attract reasonable candidates, who may or may not have such qualifications.” Personal communication, March 8, 1999. 18 line of reasoning is that the decline in the production of bachelor’s degrees in IT-related fields has ended. There was a very significant national upswing in the number of students entering bachelor’s degree programs in computer science in 1997 and 1998. The CRA Taulbee Survey of Ph.D.-Granting Depart- ments of Computer Science and Engineering indicates that new declarations of majors in computer science at the bachelor’s level have doubled over these two years, and much higher graduation numbers can be expected as these students complete their undergraduate degrees. Enrollments still are not as high as they were at their peak a decade earlier, however. As another indicator of a shortage, the Commerce report cited the fact that some U.S. compa- nies were outsourcing work to other countries. GAO correctly observed that the statistical data to support this claim are not compel- ling. The Commerce report dis- cussed the size of the IT workforce in other countries, such as India, and mentioned percentages of that country’s IT work being done for export. However, it was difficult to apply these statistics meaningfully as an indicator of a worker shortage in the United States. It would have been useful to have statistics about the percentage of IT work for U.S. companies being outsourced overseas and how that percentage has changed over time. The significance of even these statistics, however, would not be unambigu- ously clear. Outsourcing is a tried- and-true method used by compa- nies for financial and other reasons, and the presence of outsourcing does not, in itself, represent evi- dence of a worker shortage. Outsourcing outside of the United States may be an indicator of limited U.S. capacity to do this work, but it is hard to tell without further examination. For example, the lower cost of having program- ming done overseas or the desire of a company to establish a presence in a particular country might be reasons for foreign outsourcing that have nothing to do with a shortage of American workers. The final argument given by Commerce as evidence of a worker shortage is the increase in salaries of IT workers. The report cites three private studies of IT worker compensation that show annual salary increases in 1996 and 1997 averaging between 7.4 percent and 20 percent—much higher than the overall average increase in compen- sation for U.S. workers (4.1 per- cent). GAO gives two counter- arguments. The first is that this may be evidence of a tightening labor market rather than an actual short- age of workers. On this point, GAO’s argument may be focused too much on the near term. Re- gardless of whether there is a ‘shortage’ or merely a ‘tightness’ today, if the demand for IT workers continues to grow rapidly in the next decade—as the BLS itself predicts and our study group expects—any tightness would soon become a shortage, unless supply can find a way to keep up with demand.6 6 BLS has projected that between 1996 and 2006 the IT-related occupations (i.e., computer systems analysts, engineers, and scientists) will grow by 107.6 percent, compared with an overall job growth of only 14 percent in the United States. BLS, Monthly Labor Review, November 1997. 19 GAO’s second criticism was the use of BLS data to argue that IT occupations have, at best, merely kept pace with average salary increases in the professional and specialty occupations overall from 1983 to 1997 (although IT workers started from a considerably higher base salary). One problem with this argument is that BLS data are strongly at odds with private data, such as employer compensation surveys. One reason may be that the private studies take bonuses and stock options into consideration, whereas BLS considers only base salary. There is anecdotal evidence that spot shortages have driven up salaries. Two or three years ago, for example, new graduates with a bachelor’s degree in computer science were being offered starting salaries up to double the average of their peers if they were experienced in building local area networks—a new skill that was then in short supply. Some schools are reporting a similar increase today in salary offers for students graduating with experience in information security. Most people interested in this labor issue have focused on the differences between the positions taken by Commerce and GAO, but there are, in fact, many areas of agreement. GAO has publicly stated, for example, that it agrees with the Commerce report on past and expected growth in demand for IT workers, current low unemployment rates for IT work- ers, and the need for a better understanding of supply-demand dynamics and better categories and data in order to develop good policy. How Does Recent Legislation on H-1B Visas Affect Any Shortage? This study group did not take a position for or against the legisla- tion that temporarily increased the number of H-1B visas that may be awarded annually.7 Nevertheless, a number of points can be made about the likely effects of this legislation on the IT workforce.8 ◆ Given that there is a sunset clause in the legislation that increases the cap, this legislation will clearly not be a long-term factor unless it is renewed. ◆ The number of IT workers entering the United States under the H-1B program is and will continue to be a small percentage of the total IT workforce in this country. According to BLS, there are ap- proximately two million IT workers in the United States. The limit on the number of workers of all types entering this country on H-1B visas was 65,000 per year. This limit will increase to 115,000 for 1999 and 2000, before dropping back to the 7 For a discussion of the legislation that increased the annual cap on H-1B visas, plus a labor perspective on the legislation, see Greg Gillespie, “Congress Expands H-1B Visa Program,” IEEE, The Institute, December 1998, p. 1. 8 For another view on H-1B, Y2K, and the larger, long-term issues of IT workers, see Howard Rubin, “The United States IT Workforce Shortage,” Dr. Dobb’s Journal, Fall 1998, on the Dr. Dobb’s Web site at http://www.ddj.com/articles/1998/9814/9814b/9814b.htm 20 65,000 level. H-1B workers enter a number of occupations, such as baker and fashion model; not all of them are IT workers. The best estimate from unreliable data is that from 20,000 to 25,000 of these 65,000 visas have been going to IT workers, and it is difficult to predict how many will go to IT workers in the future. Since the visas are temporary, the workers can stay in the country on this visa for only six years. In fact, a number leave before their visas expire. For these reasons, H-1B workers are likely to represent a small portion (perhaps less than five percent) of the national IT workforce. ◆ Of H-1B workers who do IT work, there is no good evidence about where they are likely to be employed or what effect they will have on the domestic IT labor pool. The specific kinds of IT work they will do is unknown. The top ten users of these visas in the past have been companies providing contract labor and services. By far the largest user has been the Mastech Systems Corp. in Pittsburgh, which has received visas for 1,733 of its employees—80 percent of its workforce. These workers are virtually all programmers who hold a bachelor’s degree as their highest level of education. However, there is also some demand for H1-B workers in more highly skilled, higher paying positions. They include research scientists in indus- trial research laboratories or faculty members in research universities, where they serve the nation by creating new technologies that generate national wealth and by training the next generation of IT workers. For example, Intel Corp. says that, of its 67,000 employees, about 3 percent have been hired using H-1B visas, and nearly 80 percent of these hold a master’s or doctoral degree. There is no way to determine whether the larger number of temporary workers entering the United States under the expanded program will continue to be employed by companies like Mastech or by companies like Intel. ◆ The cost of the visa, which approaches $15,000 when legal fees are included, limits the extent to which H-1B visas will be used to fill lower-skill positions. ◆ The attention paid to the H-1B visa has obscured the exist- ence of another major source of skilled foreign labor, including IT workers. The TN visa (commonly known as the ‘NAFTA visa’) permits unlimited numbers of Canadian IT professionals to enter the United States for work, and it will offer similar opportunities to Mexicans beginning in the year 2003. There is some evidence that a brain drain of IT workers from Canada is hurting the Canadian IT industry.9 ◆ Making the increase in the number of visas awarded under the H-1B program a temporary measure is well justified. It is very difficult to accurately forecast national shortages. Witness the NSF 9 On the IT worker situation in Canada, see the Software Human Resource Council’s report, “Taking Action on Canada’s IT Skills Shortage” (http://www.shrc.ca/Taking%20Action/ front_page.htm); SHRC’s Occupation Skills Profiles Model (the Canadian Advanced Technology Association’s call to “double the pipeline” (http://www.cata.ca/cata/advocacy/ skillshortage.htm); and the British Columbia Technology Industries Association report, “Technology Industries in BC: A 1997 Report Card” (http://www.bctia.org/industry/report/). 21 forecast in 1990 of a “shortfall” of scientists and engineers in general, which did not materialize; in fact, many people now believe there is an oversupply. Generally speaking, legislation has never been a very effective tool for balancing supply and demand in any occupation. It is possible to harm the indigenous supply system by bringing in too many foreign workers. It is also possible that foreign workers are filling positions that might otherwise have been filled by American citizens, such as older electrical engineers who have lost their jobs in the downsizing of the defense industry, although the study group uncovered no hard evidence of this. A limited-term increase in the temporary visa program will provide an opportunity to study some of these issues before any additional immigration legislation is considered. ◆ The current legislation may serve well to ameliorate the current, but episodic, demand for IT workers caused by the Y2K problem by covering some of the total demand for IT workers (but not necessarily by doing Y2K work itself). For reasons that are ex- plained elsewhere in this report, the demand for IT workers will probably continue to grow steadily and rapidly over the coming decades. In fact, because informa- tion technology affects so many sectors of American industry, the growth in demand for IT workers is likely to continue unabated, even in times of general economic malaise or when IT companies themselves have a downturn. Thus, in the long term, the country will have a large capacity to absorb new workers from both domestic and foreign sources. Y2K is a special and important problem, but it is temporary. It represents a sharp, short-term peak on the long upward curve of continuing, long- term demand for IT workers. There will be other short-term peaks as well, such as the end-time date for Unix systems early in the next century. While eventually there will be a sufficient growth in demand for IT workers that the U.S. economy could possibly absorb all of the foreign workers hired to fix Y2K problems, it is unclear whether there will be some temporary displacement of IT workers after this short-term crisis is over. To lessen the risk of displacement of American workers, it appears to be sound policy to fill some of this short-term spike in demand for the Y2K problem with temporary foreign workers. To complete this discussion of the H-1B issue, it is useful to compare this visa program with legislation in 1989 dealing with labor shortages of nurses reported by some hospitals and other employer groups. The history of this legisla- tion and its effects on the shortage of nurses is an illustrative case study for understanding the IT worker shortage. In fact, this H-1A visa legislation for nurses provided the structure for the legislation in 1990 that created the H-1B visa program. The case study is recounted in box 1-1. 22 In response to labor shortages of nurses reported by hospitals and some other employer groups, the Congress passed the Immigration Nursing Relief Act of 1989 (INRA, Public Law 101-238). This law added a new provision allowing admission of nonimmigrant registered nurses (RNs) during a five-year pilot period to expire in September 1995. The history of this program was carefully reviewed in 1995 by the Immigration Nursing Relief Advisory Committee established under the above law, and its report provides an instructive model for discussion of the issues surrounding the debate about foreign IT workers. The rationales for the H-1A nursing visas were: a) reports of a nationwide shortage of nurses; b) increasing dependence on foreign temporary nurses admitted under other visas; c) pending expiration of work authorizations for many existing temporary foreign nurses admitted under other programs; d) concern that foreign nurses were detrimentally affecting the pay and working conditions of the domestic nursing workforce; and e) declining numbers and quality of applicants to basic nursing education programs. The new act, first, allowed foreign nurses previously admitted on temporary visas to convert their status to legal permanent resident, and waived numerical limits in existing law in order to allow this to happen. Second, it created a new temporary nursing visa (the H-1A visa) that included provisions intended to: 1) encourage employers to reduce their dependency on foreign nurses, 2) provide protection for the wages and working conditions of nurses who are citizens and legal permanent residents of the United States, and 3) foster the development of a stable pool of domestic RNs so that future shortages could be minimized. According to the Advisory Committee, the debate on this particular legislation embodied many of the issues that repeatedly arise in discussions regarding the admission of foreign workers to meet skill shortfalls and labor shortages in the United States. The Advisory Committee summa- rized these issues with a long quotation from a 1991 staff report:10 The debate about relying on immigration more significantly to meet “labor shortages,” and thereby contribute to America’s competitiveness in the global marketplace, inevitably included the need to provide realistic protection for U.S. workers. For immigration policy, this issue involved two interrelated points. First, how to evaluate independently an employer’s claim that a foreign worker is needed. And second, how to strike an 10 Gary B. Read and Demetrios G. Papademetriou, “U.S. Legal Immigration Reform: Recent Developments,” Immigration Nursing Relief Advisory Committee report, 1995, pp. 12-13. Box 1-1. H-1A Visas and the Nursing Shortage 23 intellectually and politically satisfactory balance between being responsive to employer needs while also being sensitive to concerns that greater access to foreign workers by U.S. employers might affect adversely the wages and job opportunities of U.S. workers. Such adverse effects could occur through direct displacement of U.S. workers or through significant interference with the market’s natural propensity to adjust to a tighter labor supply, thereby leading to an increasing dependence on foreign workers. This debate clearly raised the issue that over-reliance on immi- gration to meet labor shortages, as opposed to educating and training the domestic workforce, could turn temporary labor market shortages into structural deficiencies. The conclusions of the Advisory Committee were mixed. They noted that because only a tiny percentage of the U.S. nursing workforce ever came to be accounted for by H-1A nurses (about 13,800 in 1994, less than 1% of employed RNs), at the national level essentially all the effects of this program were negligible. However, because the H-1A nurses were heavily concentrated in only a few metropolitan areas (over one-third in the New York City area alone, and two-thirds in New York, Chicago, Houston, Los Angeles, and Dallas together), H-1As in these cities mitigated a tight nursing labor market with “no adverse impacts on patient care,” but also “may have lessened the pressure to find long-term solutions to nurse staffing problems.” 11 The Committee found the “attestation” procedures required of employers to be ineffectual, and reported that the “use of employer- specific vacancy rates as a justification for the need for H-1A nurses was problematic, as these rates could be calculated in several ways, making them difficult to verify.” It noted further that the prevailing wage deter- minations were often of doubtful validity and reliability, and that the act’s requirement that “employers take timely and significant steps to recruit and retain U.S. nurses was ineffective because it did not require any new steps” beyond those that most employers had long practiced. 12 Lastly, the Advisory Committee reported that the rate of increases in RN employment had slowed since passage of the 1989 Act; that press reports had begun to appear about nurse layoffs; and that “the future labor market for registered nurses is uncertain.”13 The H-1A nursing visa program was allowed to expire in September 1995. In its final year, FY1994, approximately 6,300 nonimmigrant nurses had been admitted under this visa program. Source: Computing Research Association, Intersociety Study Group on Information Technology workers, based on the “U.S. Legal Immigration Reform: Recent Develop- ments,” Immigration Nursing Relief Advisory Committee report, 1995. 11 Ibid., p. 5. 12 Ibid., p. 6. 13 Ibid., pp. 7, 31. 24 25 What Is Information Technology? This report uses the terms ‘information technology’ and ‘information technology worker’ because they are used in the national discussions about these labor issues. Unfortunately, these terms are somewhat imprecise and are used in different ways at different times. Figure 2-1, taken from a dated but still useful study by John McLaughlin and Anne Birinyi, gives a broad definition of the ‘informa- tion business.’ From this figure, one could infer a broad definition of information technologies that would include, among many others, computers, telephones, radios, televisions, books, and filing cabinets. This report does not use such a broad definition. In this discussion, information technology (IT) refers only to computer-based systems. It includes computer hardware and software, as well as the peripheral devices most closely associated with computer-based systems. We define ‘computer-based systems’ broadly to include the full gamut of techno- logical considerations, ranging from the design and production of chips (for example, Intel is widely re- garded as an IT company); through the design and creation of complex, computer-based systems for a particular application (the modern- ization of the U.S. Internal Revenue Service tax-processing system was certainly considered to be an IT problem); to the end-use of such systems (most of the electronic commerce startup companies are considered to be part of the ‘IT revolution,’ at least for the purpose of tracking and reporting). There is a certain amount of ambiguity to this definition. To clarify, it may be helpful to compare it with some other commonly used terminology and concepts. The term ‘information system’ is sometimes used to refer to com- puter-based systems that provide information for decisionmaking in organizations, which results in the use of ‘information technology’ and ‘information systems’ in closely related ways. This usage (e.g., “He heads up the corporation’s IT operations”) focuses on the purpose Chapter 2. Infor mation Technolog y Wo r ker s 26 PRODUCTSU.S. MAIL PARCEL SVCS COURIER SVCS TELEPHONE TELEGRAPH MAILGRAM IRC’S BR CA BR OTHER DELIVERY SVCS MULTIPOINT DIST. DVCS SATELLITE SVCS FM SUBCARRIERS PRINTING CO’S LIBRARIES PAGING SVCS INDUSTRY NETWORKS RETAILERS NEWSSTANDS DEFENSE TELECOM SYSTEMS SECURITY SVCS CO RADIOS TV SETS TELEPHONES TERMINALS PRINTERS FACSIMILE ATM’S POS EQUIP ANTENNAS FIBEROPTICS CALCULATORS WORD PROCESSORS PHONO’S, VTR’S, VIDEO DISC BUSINESS FORMS MICROFILM MICROFICHE PRINTING AND GRAPHICS EQUIP COPIERS CASH REGISTERS INSTRUMENTS TYPEWRITERS DICTATION EQUIP FILE CABINETS PAPER PABX’S TELEPHONE SWITCH MODEMS CONCENTRATOR MULTIPLEXERS TEXT EDITING E COMMUNICATIO MASS STORAGE SCC’S VAN’S CABLE OPERATORS SERVICESCONDUIT ATM - Automated Teller Machines IRC - International Record Carrier PABX - Private Automatic Branch Exchange POS - Point-of-Sale THE “INFORM Figure 2-1 Source: John McLaughlin and Anne Birinyi, "Information Business," Harvard College, 1980. 27 PROFESSIONAL SERVICES FINANCIAL SVCS ROADCAST NETWORKS BLE NETWORKS ROADCAST STATIONS NEWS SERVICE DATA BASES TELETEXT TIMESHARING SERVICE BUREAUS ADVERTISING SVCS ON-LINE DIRECTORIES SOFTWARE SVCS MPUTERS LOOSE-LEAF SVCS HING EQUIPMENT RS EQUIP ONS WP’S E SOFTWARE PACKAGES NEWSPAPERS SHOPPERS CONTENT SCC - Specializied Common Carrier VAN - Value Added Network VTR - Video Tape Recorder WP - Word Processor MATION BUSINESS” 28 of the system rather than its under- lying technology. In this report, the underlying technology of an information system (as used in the example above) is considered to be an example of information technol- ogy. The definition of information technology, however, is not re- stricted to any particular application area. Indeed, one of the attributes of information technology that makes it worthy of study is its pervasiveness in society. There may be as many as twenty academic specialties that study various aspects of informa- tion technology and its use and applications (see table 2-1). Box 2-1 and the accompanying text in chapter 5 lists and reviews defini- tions of nine of these disciplines compiled by a National Research Council (NRC) study panel in the early 1990s. Only the three most popular IT-related disciplines— computer science, computer engineering, and information systems—will be considered here. In a strict sense, computer science is focused on the study of algorithms, the software that implements them, the properties of computers, and the processes for creating these technologies. Computer engineering traditionally has focused on the engineering of the components and hardware systems that make up a computer. In this strict sense, it focuses on the underlying technol- ogy that implements computer hardware. Information systems, although less well defined as a discipline of study, has focused instead on the use of computer technology for end-purposes related to decisionmaking of some kind. All three of these disciplines capture some aspects of what we regard to be information technol- ogy, but none of them covers all aspects. In the past decade, and even more rapidly in the past five years with the spread of the Internet, the rapid merging of traditional communications and computer- 1. Computer Science 2. Information Science 3. Information Systems 4. Management Information Systems 5. Software Architecture 6. Software Engineering 7. Network Engineering 8. Knowledge Engineering 9. Database Engineering 10. System Security and Privacy Source: Peter Denning, “Information Technology: Developing the Profession,” Discussion Document, December 4, 1998. 11. Performance Analysis (Capacity Planning) 12. Scientific Computing 13. Computational Science 14. Artificial Intelligence 15. Graphics 16. HCI (Human Computer Interface) 17. Web Service Design 18. Multimedia Design 19. System Administration 20. Digital Library Science Table 2-1 IT-related Academic Disciplines Offered in the United States 29 based systems has added to the confusion. Although most telecom- munications technology has been computer-based for some years, the rapid miscegenation of the func- tionality of computers and of traditional communications systems has come to the forefront. The ability to make telephone calls over the Internet or make computations via a Web page devoted to a particular topic, or the provision of greatly increased content (such as bank account information) using a traditional telephone hookup, are examples. There is no precise boundary between information technology and telecommunications technology. Some cases, such as the provision of enhanced, computer- based information services as part of standard telephone service, probably should be considered information technology; others, such as installing telephone lines in homes or fiber cables under the ocean, may not be. Who Is an IT Worker? Defining an IT worker is complicated, not only because information technology itself is not clearly defined. A wide range of occupations might be considered IT Computer engineering - Graduates work primarily in computer hardware. Computer science and engineering - Graduates work primarily in hard- ware, firmware, and software, depending on program and choices made by the student. Computer science - Graduates work primarily in software design and implementation. Software engineering - Graduates work with the engineering of software, with special attention devoted to large and critical systems. Computer information science - Graduates work on the development of information systems, probably Source: Adapted from “U.S. Degree Programs in Computing” in Computing Profession- als - Changing Needs for the 1990s, National Academy Press, 1993. with more emphasis on information as an enterprise resource than is given in programs in computer science or software engineering. Information systems - Graduates design, develop, implement, and maintain business information systems. Management information systems - Graduates design, develop, implement, maintain, and manage information systems with a greater emphasis on the management of the systems than on the other aspects. Information science - Graduates usually work in libraries or develop other facilities to provide information to users. Undergraduate Degree Programs in Information Technology Box 2-1 30 work. They vary enormously in the technical and other skills required to do the job. These jobs are not located solely in the IT industry (the industry whose primary business is to make and sell IT devices, soft- ware, services, and systems), and they do not always involve the design and creation of information technology artifacts. Instead, they are distributed throughout virtually every sector of society, including government, all sectors of industry, and most nonprofit organizations; and they may involve many people who propose, implement, enhance, and maintain systems that rely upon information technology. Not every job in an IT company is necessarily IT work (Are the janitors at IBM IT workers? We think not). Many jobs involve some contact with informa- tion technology, but not all would be considered IT jobs; otherwise, this category would soon become so large as to be useless. It is not surprising that the different studies of the IT worker shortage have employed different definitions. As the Department of Commerce report noted:14 What is an IT worker? It depends on whom you ask. In a broad sense, the term ‘information worker’ can be applied to data entry personnel, auto mechanics who use computer diagnostic equipment, medical technicians who operate CAT scan equipment, and loan officers who use computers to assess creditworthiness, as well [as] computer programmers, systems analysts, and computer scientists and engineers. Commerce used the narrow definition of the Bureau of Labor Statistics classifications: computer scientists and engineers, systems analysts, and computer program- mers. The Information Technology Association of America (ITAA) used a broader definition: any skilled worker who performs any function related to information technology, which itself is defined as the “study, design, development, implementation, support or man- agement of computer-based information systems, particularly software applications and computer hardware.”15 The General Accounting Office (GAO) has noted how the lack of a good definition has caused problems in making good policy: 16 The GAO and Commerce Department research into the IT industry labor issue reveals that it is necessary to make a distinction between the IT industry as a whole and the various occupations within the industry. This distinction is often overlooked or is not clear in the data; there is often difficulty in identifying people who are working in IT occupations if they are not working for an IT business. If one asks what government or companies should do about the IT labor issue, 14 U.S. Department of Commerce, Office of Technology Policy, “America’s New Deficit: The Shortage of Information Technology Workers, Fall 1997, p. 3. 15 “Help Wanted: The IT Workforce Gap at the Dawn of a New Century,” Information Technology Association of America, Arlington, VA, 1997, p. 9. 16 Carlotta Cooke Joyner, “Is There a Shortage of Information Technology Workers?” Symposium Proceedings, The Jerome Levy Economics Institute of Bard College, June 12, 1998, p. 4. 31 the answers will be more apparent if the question is phrased more clearly. There is a substantial difference in salaries, employment opportunities, and labor supply by IT occupation. It is difficult to compare statistics that examine these issues because the studies use different definitions of occupations and therefore come up with widely different estimates of starting salaries, job vacancies, and labor supply. An NRC report on computer professionals written in the early 1990s called for a simple classifica- tion scheme, which has yet to be supplied.17 Jane Siegel from the Software Engineering Institute indicated:18 I would be thrilled if in the next major national surveys…they did nothing more than simply have a logical, simple structure that broke out people doing computer-related work…If I could get even very rough estimates of the degree field and some simple demographics about who these people are and a little bit about their turnover rate and what they do in life, I would have a whole body of knowledge that I think would help a large set of our users. Alan Fechter from the National Academy staff, following up Siegel’s suggestion, “cautioned that although a moderate level of detail may be valuable for corporate planning, a greater level of aggregation may be appropriate for purposes of national planning and estimation.”19 This report will not attempt to provide the ultimate definition of an IT worker. However, two categori- zations are presented that the study group believes can help with national planning and estimation. The first distinguishes IT workers from other kinds of workers who may some- times use information technology in their jobs (see figure 2-2). Each IT- related occupation is located at a single point on the graph. As one moves from left to right, the occupa- tions require increasing amounts of IT knowledge. As one moves from bottom to top, the occupations require increasing amounts of domain knowledge (knowledge of business practice, industry practice, technical practice, or other kinds of knowledge particular to an application domain). The diagonal line separates the IT- related occupations into two classes, depending on whether IT knowledge or domain knowledge is more important. If more than half the value provided by a worker involves his or her IT knowledge, then this person is considered to be an IT worker. If the person’s occupation involves the use of information technology but it adds less than half the added value to the work, then we regard the person as an IT-enabled worker. A few occupations are plotted on the exhibit, as examples. The second categorization focuses only on the IT workers. Table 2-2 differentiates four catego- ries of IT workers, depending on the principal functionality in their occupation. The table includes 17 The workers addressed in the NRC study—the “computing professionals”—probably constitute a slightly narrower class of occupations than are addressed in this study. National Research Council, Computing Professionals—Changing Needs for the 1990’s, National Academy Press, 1993. 18 Ibid., p. 18. 19 Ibid. 32 examples of particular IT occupa- tions that would fall under each of the four categories (conceptualizers, developers, modifiers/extenders, and supporters/tenders).20 This approach is somewhat different from the Standard Occupa- tional Classification (SOC) scheme used by the Bureau of Labor Statistics (BLS),21 in which the categories are essentially a distillation of job titles. This study found it difficult to classify workers on the basis of what they are called, at least in a way that is helpful to making policy. It decided instead to return to first principles and figure out what the workers do. The categorization is built from a developmental perspective of the world. It is based on an experience and familiarity with the IT industry, 20 Professor Daniel Papp of the Sam Nunn School of International Affairs at the Georgia Institute of Technology tested these categories in a survey of information technology education programs he conducted. He found that the respondents were able to use this categorization easily and that it seemed to have value for grouping the IT workforce issues occurring in Georgia. See Papp, “ICAPP Information Technology Strategic Response Educational Capabilities Inventory,” draft report, December 16, 1998. 21 The SOC categorization scheme was in the process of being updated in 1998, but it was not clear that the revisions would meet the criticisms lodged in this report. See Office of Management and Budget, 1998 Standard Occupational Classification Revision; Notice, Federal Register, August 5, 1998. Figure 2-2 Source: Computing Research Association, Intersociety Study Group on Information Technology Workers, April 1999. Distinquishing IT Workers from IT-Enabled Workers Business / Industry KnowledgeInformation Technology Knowledge IT-Enabled Workers IT Workers Bank Teller Call Consultant OS Developer CFO CIO CTO System Admin Application Developer SW Project Mgr Bus Project Mgr Marketing VP Product Developer 33 where the workers are responsible for creating IT artifacts. However, this categorization should also apply reasonably well to all kinds of IT workers in all sectors of the economy (i.e., to those who develop, use, and maintain systems driven by information technology), and it should provide insight into current policy issues regarding supply and demand. This belief is bolstered by the fact that there is a reasonably good match between level of formal education and category of worker. Table 2-3 maps formal education onto the four categories. There is not an exact one-to-one correspon- dence between educational degree and category of work. However, the exhibit clearly shows a correla- tion.22 Occupations that fall under the conceptualizer category are commonly populated with recipi- ents of master’s or doctoral degrees. Occupations that fall under the developer or modifier categories are usually filled by people with bachelor’s or master’s Table 2-2 Conceptualizers - those who conceive of and sketch out the basic nature of a computer system artifact: Entrepreneur Product designer Research engineer Systems analyst Computer science researcher Requirements analyst System architect Developers - those who work on specifying, designing, constructing, and testing an information technology artifact: System designer Programmer Software engineer Tester Computer engineer Microprocessor designer Chip designer Source: Computing Research Association, Intersociety Study Group on Information Technology Workers, April 1999. Modifiers/Extenders - those who modify or add on to an information technology artifact: Maintenance programmer Programmer Software engineer Computer engineer Database administrator Supporters/Tenders - those who deliver, install, operate, maintain, or repair an information technology artifact: System consultant Customer support specialist Help desk specialist Hardware maintenance Specialist Network installer Network administrator Categorization of IT Jobs 22 This correlation breaks down, however, in the case of the earliest stage of conceptualization of an IT system, where the initial functional idea often comes from people with little IT education, but great applications knowledge. 34 degrees—and in the case of the modifier category, sometimes by people with associate’s degrees. Supporter occupations tend to be filled most commonly with people holding an associate’s degree, or perhaps only a high school diploma. Chapter 6 discusses at length the fact that an increasing percentage of IT worker training is provided outside of formal degree programs. This kind of training provides valuable knowledge of specific technologies, company culture, and the practices within that industry. It also hones skills such as communi- cations, teamwork, and self-learning. However, there is some question whether it can adequately replace the foundational knowledge acquired in the formal degree programs, which is critical preparation for at least some IT occupations. In this report, the term ‘IT worker’ is used throughout and always in the general sense described above. However, many of the sources cited either use alternative terminology (‘computer profession- als,’ ‘computer scientists,’ ‘computer and information scientists,’ etc.) or they have a different meaning of ‘IT worker’ in mind. In these cases, the source’s terminology is generally used, and an effort is made to clarify the intended meaning in the contextual discussion. How Many IT Jobs Are There, and Where Are They Located? Table 2-4 shows the number of IT workers in the United States and the annual percentage change in employment, using data from BLS.23 Over the period 1988 to 1997, employment in the IT occupations (as they define them) grew from 1,259,000 to 2,063,000 Source: Computing Research Association, Intersociety Study Group on Information Technology Workers, April 1999. Occasionally= ✓ Frequent= 4 Common= ✔ Unlikely= (blank) s b o J T I r o f n o it a r a p e r P l a n o it a c u d E la c i p y T h g iH l o o h c S e t a i c o s s A s 'r o l e h c a B s 'r e t s a M e t a r o t c o D s r e z il a u t p e c n o C ✔ ✔ ✔ ✔ ✔ s r e p o le v e D ✔ ✔ ✔ s r e if i d o M ✔ ✔ ✔ ✔ s r e t r o p p u S ✔ ✔ ✔ Table 2-3 23 These statistics are taken and adapted from Exhibits 7 and 8 in Burt S. Barnow, John Trutko, and Robert Lerman, “Skill Mismatches and Worker Shortages: The Problem and Appropriate Response,” Draft Final Report, The Urban Institute, February 25, 1998. 35 jobs—a 64-percent increase. This can be compared with an increase of 29 percent in all professional jobs and an increase of only 13 percent in the total workforce during this time. Over this period, IT jobs increased from eight to eleven percent of all professional jobs in the United States, and from 1.1 percent to 1.6 percent of all jobs in the United States. As figure 2-3 shows, the vast majority of IT jobs as reported by BLS are in one occupational category (Computer Systems Analysts and Scientists). Over the period 1988 to 1996, this category has grown much faster (158 percent) than the category of Computer Programmers (9.8 percent), while the category of Operations and Systems Researchers has dropped by 4.3 percent. From 1988 to 1996, the number of Computer Programmers dropped from 570,000 to 561,000, but in 1997 the number jumped to 626,000 (an 11.6 percent increase in one year). This may be an artifact of the temporary demand created by the Y2K problem. The IT industry (that is, the collection of companies that pro- duce IT products, services, or systems as their principal business) is one of the largest and most dynamic industries in this country. The number of workers in the computer and software industries has almost tripled in the past decade. However, this sector is by no means the only industrial sector in which information technology is being produced or used, or the only place where IT workers are employed. Indeed, there are IT workers in virtually every sector of American society. Infor- mation technology is rapidly being infused into the financial, retail, manufacturing, service, entertain- ment, transportation, and other industries; and numerous IT workers are going to work for companies in those sectors (see table 2-5 for some examples of the use of information technology in American industry). IT work also occurs in every geographic region of this country, not just in high-tech centers such as Silicon Valley or Route 128 in Massachu- setts.24 Thus a shortage of IT workers affects not only the IT industry (hardware, software, 24 While there are IT jobs in every American community, there are also concentrations of IT companies in a number of locales. Silicon Valley is well known, but there are up-and- coming concentrations of IT companies and IT workers in a number of other places, such as Austin, Texas; Champaign-Urbana, Illinois; Salt Lake City, Utah; and the Washington, DC area. See Steven Levy, “The Hot New Tech Cities,” Newsweek, November 9, 1998, pp. 44-56. Source: Adapted from Burt S. Barnow, John Trutko, and Robert Lerman, “Skill Mismatches and Worker Shortages: The Problem and Appropriate Responses,” Draft Final Report, The Urban Institute, February 25, 1998, Exhibits 7 and 8. Based on the Bureau of Labor Statistics data. T I n i e g n a h C la u n n A d n a s r e b m u N ,s e t a t S d e t i n U e h t n i s r e k r o W 7 9 9 1 - 8 8 9 1 r a e Y fo r e b m u N s r e k r o W )s d n a s u o h t ( % la u n n A e g n a h C 8 8 9 1 9 5 2 ,1 -- 9 8 9 1 6 6 3 ,1 5 .8 0 9 9 1 1 1 4 ,1 3 .3 1 9 9 1 2 2 4 ,1 7 .0 2 9 9 1 5 3 4 ,1 9 .0 3 9 9 1 3 8 5 ,1 3 .0 1 4 9 9 1 7 8 6 ,1 6 .6 5 9 9 1 3 0 7 ,1 9 .0 6 9 9 1 3 6 8 ,1 4 .9 7 9 9 1 3 6 0 ,2 7 .0 1 Table 2-4 36 25 See, for example, One Digital Day, Intel, 1998, for a snapshot of the many applications of computing. computer systems, computer services firms), but virtually every sector of the American economy.25 The Y2K problem drives this point home. Computers are so firmly woven into the fabric of organiza- tions that Y2K is a problem for almost every corporation and every government organization, and every member of society is affected. Source: Adapted from Burt S. Barnow, John Trutko, and Robert Lerman, “Skill Mis- matches and Worker Shortages: The Problem and Appropriate Responses,” Draft Final Report, The Urban Institute, February 25, 1998, Exhibits 7 and 8. Based on the Bureau of Labor Statistics data. Comparison of IT Employment 1988 and 1997 Figure 2-3 Computer Systems Analysts and Scientists 479,000 38% Computer Systems Analysts and Scientists 1,236,000 60% Computer Programmers 570,000 45% Computer Programmers 626,000 30% Operations Researchers Systems Analysts 210,000 17% Operations Researchers Systems Analysts 201,000 10% 1988 Total IT Employment=1,259,000 1997 Total IT Employment=2,063,000 37 What Skills Does an IT Worker Need in Order To Be Effective? An effective IT worker needs a variety of skills, including technical knowledge about information technology, business knowledge and experience, and organizational and communications skills. The mix of skills needed varies greatly from one IT occupation to another. For example, a person doing IT work for a producer of household appliances will probably need to know more about production and accounting than an IT worker who is building general-purpose software utilities for a company in the IT or communications industry. It is impractical to present a complete set of skills needed for all IT occupations, or even for a single IT occupation. But it is possible to make a few observations, using examples from software-related occupations. In the technical area, there are skills as well as knowledge to be acquired. A programmer needs to know how to design, program, test, debug, and modify programs. Someone specializing in operating systems would need to know how to analyze basic hardware opera- tions and how to deal with complex communications situations. In the performance-testing area, a good knowledge of statistics is useful. A worker would need to know how to measure and analyze performance information and how to modify programs to improve performance. In the project management area, the worker would need to understand the project management model for code development and testing, be familiar with industry standards such as ISO 9000, and be able to establish requirements and functional specifications. In the project estima- tion area, a worker would need the ◆ Inventory management by large retailers ◆ Shipping scheduling and quality assurance by express courier services ◆ Financial controls in virtually every large business ◆ Frequent flyer programs by the airlines ◆ Credit card validation by merchants ◆ Production of movies and videos ◆ Distance education ◆ Control of manufacturing lines in the chemical and automobile industries ◆ Processing data for oil exploration companies ◆ Global positioning systems used in the trucking industry and in scientific agriculture ◆ Literature searching in biomedical research ◆ Computer-aided design by engineers ◆ Automated switching in the communications industry Source: Computing Research Association, Intersociety Study Group on Information Technology Workers, April 1999. Table 2-5 Use of Computer Systems in the Operation of American Industry 38 ability to determine how long a project will take, what resources will be needed, and what dependencies on others need to be satisfied. IT workers also need to have business skills and experience, which in many ways are similar to those needed by people in other service professions. Many workers need the ability to formulate project budgets, set tasks within those budgets, and complete work within time and budget. A worker may need to be familiar with specific application programs, such as corporate and industry databases, operation support programs, or manufacturing support programs. There is a need for knowledge about the specific application industry and its vocabulary, such as knowing who the leaders are and keeping up with industry standards. The worker needs to have knowl- edge of the customer’s concerns and how to meet them; for ex- ample, how the customers use the IT product, their need for future products, and how current projects meet these needs. Finally, the worker needs to know the business practices of the employer: how projects are started, led, and terminated; the steps in getting a product to customers; and how customer needs are collected, distilled, and spread through the company. IT workers also need commu- nications and organizational skills, similar to those required of any worker involved in technical project development. There are teamwork skills, such as the ability to work with others who have diverse educations, skills, backgrounds, and cultures; to understand the function of each team member; and to respect the strengths and limitations of others. The worker needs to be able to organize and present technical material to technical peers, manage- ment, and customers. Non-technical skills relating to technical specifica- tions and documentation—such as the ability to work in a team to design a project implementation, the ability to write a clear description of the job of each person on the team, and the management skills to delegate tasks within the team—are also required. The worker must be able to work to and revise specifica- tions, and work to deadlines. Finally, the worker should be able accurately to estimate rates of progress towards goals and be able to report problems early. Table 2-6 shows that different kinds of IT jobs require different mixes of these technical, business, and communications skills. Where does one acquire these skills? University programs in computer science traditionally have taught some of the technical skills, but not the business and communi- cations skills (although students sometimes acquired some of these latter skills through internships). The accreditation bodies CSAB and ABET currently make communica- tion skills a required component of an accredited computer science and computer engineering program, but the accrediting organizations do not specify the department that is to teach the skills or how they are to be applied. Indeed, almost no accredited program’s department actually teaches communications skills as a separate course, although most of them require the applica- tion of these skills in some com- puting courses. These skills may not yet be emphasized as much as industry would like, but the trend is in the direction sought by industry. Business skills are not well ad- dressed in computer science or 39 computer engineering programs, but they are addressed in informa- tion systems programs.26 Graduates in other majors generally gain less technical training, but often they get a better introduction to communi- cations skills and even industry knowledge. Technical schools and self-help courses tend to focus on the technical skills. Corporate training programs often focus on all three. Why Is Informa- tion Technol- ogy Becoming So Prevalent in Our Society? There are many reasons why information technology has become so prevalent in the modern world, and there is no indication that these reasons will fade any time soon. The processing power and storage capacities of semiconductor devices, which are the building blocks of information technology, have been doubling every eighteen months for the past thirty years. At the same time, prices have continued to 26 For an example of an attempt to introduce communications, teamwork, conflict resolution, and ethics into the information systems curriculum, see John Lamp, Chris Keen, and Cathy Urquhart, “Integrating Professional Skills into the Curriculum,” http:// www.man.deakin.edu.au/jw_lamp/acse-96.pdf ; also see “IS ’97 Model Curriculum and Guidelines for Undergraduate Degree Programs in Information Systems,” The DATA BASE for Advances in Information Systems, Vol. 28, No. 1, Winter 1997, ACM Special Interest Group on Management Information Systems (SIGMIS). 4 -1 : e l a c s ( s b o J T I r o f x i M ll i k S , e g d e l w o n K la c i p y T ) n o it a m ro f n I y g o l o n h c e T d n a s s e n is u B y r t s u d n I - i t a c i n u m m o C d n a n o n o it a z i n a g r O s r e iz i l a u t p e c n o C 4 2 3 s r e p o le v e D 3 2 3 s r e if i d o M 2 3 3 s r e t r o p p u S 1 2 3 Scale: 1- least important; 2- moderately important; 3- important; 4- critically important. Source: Computing Research Association, Intersociety Study Group on Information Technology Workers, April 1999. Table 2-6 40 decrease. This means that informa- tion technology, which can be programmed to do practically anything, has become embedded in many kinds of organizational and physical systems. IT products have become commodity items. General- purpose semiconductor devices, such as the microprocessor, can now be used for millions of different purposes, leading to economies of scale. These devices are much more reliable than the mechanical, vacuum tube, and transistor devices that they replace. They add value to the products in which they are used, and they reduce the need for human users to do dangerous or boring tasks. Vast improvements over the past decade in the connectedness of computers and in human-machine interfaces have driven new uses. What does this growing prevalence of information technol- ogy in society mean for IT labor issues? It appears as though information technology will be an increasingly important part of the U.S. national economy for many years to come. Although there are likely to be increases in productivity through new technologies and other means, the production of information technology will continue to rely on a large and growing force of workers who require high levels of skill and knowledge to do their jobs effec- tively. An inadequate supply of such workers will have harmful effects on the economy and the wealth of the nation. Any tightness in the labor market is likely to become a shortage within a few years, as the demand for information technol- ogy-based products and services grows. From a policy perspective, the focus needs to be not only on achieving a proper match between supply and demand today, but also on how the nation will supply the growing number of appropriately trained IT workers in the future. What Are the Characteristics of Information Technology That Affect IT Labor? Information technology has a short life cycle. Figure 2-4 illustrates this short life cycle by charting the revenue earned by the Hewlett- Packard Company during four years in the mid-1990s. It shows that new products introduced in one year earn their greatest amount of revenue in the following year, and that by the second year after their introduction their contribution to the company’s revenue stream has already diminished significantly. In fact, nearly two-thirds of Hewlett Packard’s revenues are derived from products introduced in the previous two years. This is true of many other companies as well. The demands of competition, and the opportunities presented by technological advances, have driven the introduction of new products every few months, and an almost complete turnover of the product line in four years. This rapid turn- over in technology makes it impera- tive that IT workers adapt to new technologies and new products. This means that they must continu- ously work at keeping their skills and knowledge up to date or risk becoming obsolete and unemploy- able. The fluidity of the IT workforce gives labor a power over management. While some IT workers have gained knowledge 41 about particular application areas that represents a valuable asset in their work, there is nothing inher- ently application-specific about the information technology itself. Thus IT workers are not generally bound to specific industries. There is, however, a great variation in the productivity of IT workers. Especially in the software area, the best workers can be as much as ten times as productive as the least productive workers in the same company. Figure 2-5 presents one measure of this wide variation in the productivity of software workers. These kinds of variations occur among IT workers even when the labor market is not particularly tight. In a tight market, companies have to settle for less qualified programmers, and the effects of this variability in worker productivity may hit them harder. Companies may be fully staffed but nevertheless suffer greatly in productivity. Source: Hewlett Packard The Importance of New Products to Company Revenue The Case of Hewlett Packard 1994 1995 1996 1997 $ ’97 ’96 ’95 ’94 ’93 & Prior Nearly two-thirds of HP’s orders are derived from products introduced in the last two years. Figure 2-4 IT workers often have strong preferences about the kind of employer they wish to work for. Given the wide availability of jobs, many IT workers are more willing to change employers than are workers in many other occupations. They have little sense of being “locked in.” Employers who are deemed less attractive because of the nature of their work, the salaries they pay, or the culture of their organization are more likely than other employers to experience IT worker shortages or to employ under-skilled IT workers. Figure 2-6 illustrates the hierarchy of employment. This is grim news for organizations at the bottom of the pyramid, which often includes government organizations. IT work is stratified, and there is much greater demand for managers and other workers with system-level skills than for ‘assembly line’ programmers. The “average annual level of change in employ- 42 27 Burt S. Barnow, John Trutko, and Robert Lerman, “Skill Mismatches and Worker Shortages: The Problem and Appropriate Responses,” Draft Final Report, The Urban Institute, February 25, 1998. ment for computer systems ana- lysts, engineers, and scientists was in excess of 10 percent, well above the 1.2 percent” for computer programmers.27 Managers and more advanced IT workers require Source: “Not all Programmers Are Created Equal,” G. Edward Bryan, IEEE, 1994. Variability in Programmer Productivity 0 20 40 60 80 100 120 140 160 180 200 1 5 10 15 20 25 30 35 40 45 50 Top 50 Programmers by Rank Order # Bugs Fixed/YearFigure 2-5 a longer time to train, both through formal education and on-the-job experience. Consequently, there will be longer lags in responding to changes in demand for these more highly skilled workers. 43 Figure 2-6 Source: Stanford Computer Industry Project, 1999. Who’s Getting the Top Talent? Tier 1 - Hot Software Companies ◆ Software start-ups and boutique service firms ◆ Software publishers ◆ Wall Street ◆ R&D (corporate and university) Tier 2 - Software-aware Companies ◆ VARs, consulting firms, systems, integrators ◆ Software intensive industries (computer hardware, communications, financial services) ◆ Aerospace systems firms Tier 3 - Everyone Else ◆ Other industries with incidental software ◆ Most IS applications development and maintenance ◆ DoD, federal, state, and local governments 44 45 What Are the Dynamics of the Market- place and the Dangers of Government Intervention in the IT Labor Market? In most industries, there are boom and bust cycles that affect the respective labor market. Even the IT sector, which overall has had a rapid upward growth for the past half-century, has experienced economic downturns. It is com- mon in any active profession to have occasional mismatches be- tween labor supply and demand because business cycles tend to move up and down more rapidly than changes in supply. Occasionally, supply changes more rapidly than demand, as shown by the growth of 40 percent per year in newly declared computer science majors at research universities the past two years. The invisible hand of the marketplace will often correct for shortages through wage pricing and other adaptations. Especially when there are many employers vying for the labor pool, wages will typically rise enough to attract workers from other fields. Government interven- tion in a market is generally re- garded as advisable either when the free market is unable to operate on its own, or where the costs are regarded as too high. Examples of these costs are the long time it takes for the market to self-correct, the pain caused to individuals or institutions, or risk placed on the national economy or national security. In fact, it is very difficult for government organizations to effectively control labor supply— not to mention that there is little political will for doing so in this era of free markets. It is hard to predict future demand and to collect timely data about the effect intervention is having; as a result, it is easy to over-stimulate a labor pool. Even when wages rise, the market cannot adjust more quickly than the amount of time it takes to train an adequate supply of work- ers. In the IT sector, such delays are often quite short. Anecdotal evi- Chapter 3. Demand, Constraints, and Consequences 46 dence suggests that it takes about six months to retrain a worker for a low- or mid-level IT occupation, assuming the worker already possesses some basic skills on which to build. Some high-level positions, such as management positions or senior research positions in labora- tories, may require a longer training period. Sometimes, instead of a shortage occurring immediately, the level of talent filling open positions is gradually lowered. This may be especially true for particular seg- ments of the labor market—for example, a geographic region, employers who have a rapid increase in demand, or companies that are regarded by workers as somehow less attractive as employ- ers (e.g., because of the nature of the work, the wages paid, or the corporate culture). The recent history of interven- tion by U.S. government agencies to meet perceived shortages of scientific and technical workers does not provide an encouraging picture. Perhaps the most notorious recent case of failed policy pronounce- ments is the warning during the late 1980s from then-senior manage- ment of the National Science Foundation (NSF) about looming ‘shortfalls’ of scientists and engi- neers. These warnings were based on methodologically weak projec- tion models of supply and demand that were originally misinterpreted as credible forecasts, rather than simulations dependent upon certain key assumptions. The projections yielded numerical estimates of the shortfalls anticipated, eventually reported to be 675,000 scientists and engineers by the year 2006. Based in part on these worry- ing pronouncements, Congress agreed to increase funding for NSF science and engineering education programs. Several years later, in 1990, again influenced by the shortfall claims, Congress agreed to greatly expand the number of visas available for foreign scientists and engineers, for both permanent and non-permanent residents. (This bill was the origin of the H-1B visas, among other measures.) Many educational institutions moved to increase the numbers of graduate students in these fields. By the time these larger cohorts of graduate students emerged with their newly earned doctorates, the labor market in many fields had deteriorated badly, and many found their career ambitions extremely frustrated. This experience proved embarrass- ing, leading to congressional hearings in 1992 and harsh criticism of NSF management from several prominent congressional supporters of science and engineering. A repetition of this experience should be avoided in handling the IT labor market. What Factors Limit the Abil- ity of the Gov- ernment, Indus- try, University System, and Professional Community To Improve the Match Between Supply and Demand? It may be difficult for compa- nies to recognize that there is a worker shortage, especially if they employ only a few workers in a 47 given IT occupation, or if they are used to taking a long time to fill vacancies (which is common for positions that require a high level of education or training or many years of experience, even in times of market equilibrium). But even if the government, industrial, and aca- demic sectors do recognize that there is an IT worker shortage and decide they want to deal with it, there are factors that limit their ability to do so. The high level of competition and the short product life and product development time often make it difficult for compa- nies to hire new employees who require a lengthy period of break-in training before they can become productive. It also makes it difficult to retrain an existing employee for a significantly different job. Thus companies are sometimes forced, by competitive pressures, to lay off workers of one type and hire workers of another type. Or they may refuse to hire anyone who does not already possess all the needed skills. These employer practices receive harsh criticism at times from labor unions and some government officials, but to some degree this is a rational and perhaps necessary reaction to the realities of the marketplace. Universities are sometimes criticized for their slow response to market conditions and their reluc- tance to allocate or reallocate resources to programs with high and growing demand. Perhaps most importantly, it should be noted that the colleges and universi- ties do not control student demand. In this free market, student demand can change quickly—certainly more quickly than most universities can react. It should also be remem- bered that most universities have limited resources, most of which are tied up in long-term commit- ments such as buildings and tenured faculty. It is difficult for universities to shift tenured faculty from one subject area to another—especially from one department to another, but often even within a given department. Even when such shifts do occur (such as library science faculty becoming management information science faculty) these faculty retreads are often not accepted as full citizens, they may never conduct the kind of research that fits into the new department, and they may not provide good leadership in the new area. How- ever, they do take up faculty slots that might have been assigned to a young researcher trained in the area. Part-time and adjunct appointments are one tool that departments can and do use to respond to rapidly changing market conditions. But a commitment to build up a com- puter science or information systems faculty (other than with non-tenure-track faculty) means making a long-term commitment, which is almost certainly made at the expense of some other worthy initiative. The slow response is also partly due to the decision and review process. This process often seeks out views on major initiatives from many parts of the univer- sity—faculty, administration, and sometimes even students and staff. This deliberative process, which largely precludes a response time that can keep up with industry trends, is part of what universities believe gives them strength. Indus- try, however, often sees this operat- ing style as a weakness. There are various factors that limit the government’s ability to act. Supply and demand are not regu- 48 lated by the government; the government can only offer incen- tives to encourage a student to study a particular field or a company to broaden its hiring practices. It is hard for a government to stimulate labor supply in any discipline by just the right amount: the market is constantly changing, the information about supply and demand is imper- fect and is difficult to obtain in a timely fashion, and it is hard to predict the effects that a government initiative might have. Another factor involves state and local versus federal rights. Educational issues, especially at the K-12 level, are considered primarily a local prerogative; but national labor issues require national action, or at least national coordina- tion, of K-12 and higher education. Government organizations also have a limited ability and desire to inter- fere with the actions of a private organization, such as a company or a university. For all of these reasons, even when there is a desire to act, there are often impediments to doing so. What Are the Costs of an IT Worker Shortage? A substantial shortage of IT workers can incur many different costs. The effects are felt on many levels—the nation, various indus- tries, individual firms, and consum- ers: ◆ A shortage of skilled IT workers in the IT industry and other high-tech industries would slow innovation and product develop- ment, which in turn would harm exports and wealth creation in the United States. ◆ Industries dependent on IT workers would grow more slowly if there were an IT worker short- age, and this would have a negative impact on employment overall. ◆ American companies might become less competitive globally because the up-push of salaries in a tight labor market would have to be reflected in the prices of goods and services produced, or because these companies could not get their products on the market as rapidly as foreign companies that are fully staffed. ◆ If American talent were too expensive or in short supply, companies would be more likely to move jobs offshore. ◆ Companies with intensive or company-critical IT functions that were unable to find an adequate supply of qualified IT workers might have to merge with compa- nies that have these talents. While a merger is not a bad thing in and of itself, industry concentration for the purpose of acquiring expertise might harm economic forces and industry efficiency. ◆ Information technology is leading to enhanced productivity in a number of industries. A lack of IT workers would lead to a slow- down in productivity improve- ment.28 When salaries are driven up, certain kinds of organizations might 28 In the early 1990s some economists questioned the productivity added by information technology, but this attitude seems to be changing, coming into line with long-standing anecdotal evidence that this technology can provide significant productivity gains. 49 be less able to meet industry market salaries and would be affected disproportionately by the shortage of workers. This has been true, for example, of government organiza- tions trying to fix their Y2K prob- lems. This factor has also affected the ability of universities and other nonprofits to attract qualified IT talent. ◆ IT graduate students and faculty might be attracted away from universities in sufficient numbers to jobs in industry that there would not be an adequate number of teacher-scholars left to train the next generation of IT workers (the so-called “seed-corn” problem). ◆ A shortage of skilled people would mean that in some cases employers would fill positions with people who are less than adequately qualified. This practice could lead to poorer performance, high rates of project failure, a slowdown in delivery, and decreased innovation. ◆ Software projects, especially large ones, already have a high failure rate (perhaps an artifact of a long history of inadequate numbers of well-trained IT workers). This would likely worsen with a shortage of skilled IT personnel. ◆ Tight labor markets are often characterized by “churning,” the increased movement of the employees from one employer to another. Churning significantly increases recruitment and retraining costs for employers; it also means that the time of technical staff, as well as management and human resources staff, is spent on recruit- ing, retaining, and retraining em- ployees, rather than on more productive elements of the busi- ness.29 New employees are not as productive as employees who have been with a company for some time because new employees need to learn about company projects, processes, skills, and capabilities. ◆ Workers who are respon- sible for conceptualization and development lose productivity when there is a shortage of ad- equate support staff and adequately maintained support systems. ◆ When there is a shortage of staff, employees who might have been assigned to create new prod- ucts sometimes are reassigned to maintain existing products or company support systems. This could limit innovation and stifle competitiveness. ◆ There could be a reduction in the range of products available to both individual Americans and to American companies who use them to improve their own products, services, and well-being. What Are the International Considerations in Dealing with a National Worker Shortage? The IT marketplace and the companies in it are increasingly international in scope. Virtually all of the major companies in the IT 29 For a reflective article on the issue of job churning, see Robert W. Lucky, “Job Churn,” IEEE Spectrum, November 1998, p. 17. 50 industry headquartered in the United States offer their products and services around the world. Most have sales offices in many countries, and some have factories and even research laboratories outside the United States. Beginning in the 1970s, American companies began to increase their use of overseas workers to manufacture compo- nents and assemble products, as labor costs escalated in the United States. Similarly, IT companies headquartered in other countries have opened foreign offices as they try to expand their markets. A few foreign IT companies have estab- lished a substantial presence in this country, and a number of both European and Japanese companies have established IT-related research laboratories here (e.g., Hitachi, Mitsubishi, NEC, Panasonic, Philips, Ricoh, Sharp, Siemens, and Sony). This means that there is increasing worldwide competition for IT contracts; if U.S. companies cannot provide the service and products, increasingly there are other options. This surely could lessen the demand for IT workers in the United States; but it could also prove to be an opportunity for U.S. companies to build up their world business. It was long thought that American industry would maintain control of both the national and worldwide IT indus- tries because of its large civilian and military domestic markets, strong higher educational system, good research laboratories, and domina- tion of software development. But there have been pressures against the American companies. For example, in the 1980s, a globaliza- tion of the software industry began, driven by a search for talent. So far, the United States still dominates the software industry, perhaps because the capacity of foreign labor sources is strictly limited by the numbers of highly educated individuals and by the educational infrastructures in other countries. However, it is hard to know how long this domination will last. The flow of IT work and workers is not limited by national boundaries. It is not uncommon for IT workers from one country to work for a few years or even their entire careers in another country, although no statistics are available on the numbers. Anec- dotal evidence indicates that the United States is by far the destina- tion of choice for IT study and work. Roughly half the graduate students and one-tenth of the undergraduates in IT-related departments are foreign nationals; and foreign-born students who earn science and engineering (S&E) doctoral degrees from U. S. aca- demic institutions are staying in this country after graduation in increas- ing numbers. A recent NSF study indicates that 63 percent of foreign- born students who earned S&E doctorates from U.S. institutions between 1988 and 1996 said they planned to locate here, compared to 50 percent or less of those previ- ously studied. Two-thirds of those who planned to stay had firm plans for further study or employment.30 One might think that the influx of workers and students would help meet the strong de- mand by American companies for IT workers. Indeed, it does help. However, it is fairly clear that 30 See “Statistical Profiles of Foreign Doctoral Recipients in Science and Engineering: Plans to Stay in the United States” (http://www.nsf.gov/sbe/srs/nsf99304/start.htm)
