Information Technology: Assessment of the Commerce Department's Report on Worker Demand and Supply
Released: 1998-04-21T00:00:00

Letter

Background

ITAA, a trade association, issued a report titled Help Wanted: The IT Workforce Gap at the Dawn of a New Century in February 1997 that focused on issues relating to the IT labor market. Responding to this report, the National Economic Council and the Departments of Commerce, Education, and Labor began to discuss the workforce requirements of the IT sector; subsequently, federal officials agreed to cosponsor a convocation on the IT worker issue. The convocation, cosponsored by the Departments of Commerce and Education, the University of California at Berkeley, and ITAA, was designed to bring together leaders from industry, academia, and government to develop new educational strategies and forge partnerships that would increase the quantity and quality of the American IT workforce. Federal officials noted that the convocation would support the administration’s goals for lifelong learning.

New Deficit: The Shortage of Information Technology Workers, examining the potential for shortages of IT workers.

Demand for IT Workers

In its report, Commerce presented BLS projections that between 1994 and 2005 the United States would require slightly over 1 million additional IT workers. BLS projections, based on surveys conducted for the Occupational Employment Statistics program and on the Current Population Survey, estimate future occupational needs resulting from expected national growth and separations from employment over time. Although there is no single, universally accepted definition of the occupations that should be designated as IT occupations, Commerce based its analysis of demand on job growth projections for the three IT occupations used by BLS—computer programmers, systems analysts, and computer scientists and engineers. BLS descriptions of these occupations are as follows: (1) computer programmers write and maintain the detailed instructions, called “programs” or “software,” that list in logical order the steps that computers must execute to perform their functions; (2) systems analysts use their knowledge and skills in a problem-solving capacity, implementing the means for computer technology to meet the individual needs of an organization; (3) computer scientists generally design computers and conduct research to improve their design or use, and develop and adapt principles for applying computers to new uses; and (4) computer engineers work with the hardware and software aspects of systems design and development.

BLS projections for new IT workers over the 11 years from 1994 to 2005 include IT workers to fill newly created jobs (820,000) in the three occupational categories and to replace workers (227,000) who are leaving these fields as a result of retirement, change of profession, or other reasons. The report noted that, according to BLS, of the three IT occupations, the greatest job growth is predicted for systems analysts (92 percent). (See table 1.) The number of computer engineers and scientists is expected to grow by 90 percent, while the number of computer programmer positions is expected to grow at a much slower rate (12 percent). The projected job growth for all occupations between 1994 and 2005 is 14 percent. Since the report was issued, Commerce has issued an update with revised BLS projections showing even stronger growth. Between 1996 and 2006, there will be over 1.3 million projected job openings as a result of growth and net replacements; about 1.1 million of these job openings will be due to growth alone.

Information Technology: Assessment of the Commerce Department’s Report on Worker Demand and Supply 2005 (projected)

Supply of IT Workers

Commerce identifies the supply of potential IT workers as the number of students graduating with bachelor’s degrees in computer and information sciences. The report presents data from the Department of Education showing that 24,553 students earned bachelor’s degrees in computer and information sciences in 1994, a decline of more than 40 percent from 1986. While the Commerce report highlights the supply of IT workers as those with bachelor’s degrees in computer and information sciences, Commerce does note that IT workers may also acquire needed skills through other training paths—master’s degrees, associate degrees, or special certification programs. Commerce’s report also includes information from BLS that indicates, in the case of computer professionals, there is no universally accepted way to prepare for such a career but that employers almost always seek college graduates. number for IT workers when Commerce compared the IT worker demand with the available supply.

Commerce also noted that, although employers almost always seek college graduates for computer professional positions, there is no universally accepted way to prepare for a career as a computer professional. According to the BLS Occupational Outlook Handbook, which defines qualifications for jobs and careers in terms of education and experience of IT workers with a bachelor’s degree, some workers have a degree in computer science, mathematics, or information systems, while others have taken special courses in computer programming to supplement their study in other fields such as accounting or other business areas. According to the National Science Foundation, only about 25 percent of those employed in computer and information science jobs in 1993 actually had degrees in computer and information science. Other workers in these fields had degrees in such areas as business, social sciences, mathematics, engineering, psychology, economics, and education. The Commerce report did not take this information into account in any way in estimating the future supply of IT workers. The report also stated that IT workers acquire needed skills through various training paths, but it provided no analysis of the extent to which companies are training and retraining workers.

Commerce’s Conclusion Regarding Shortage of IT Workers

potential supply of IT workers, it used only the number of students earning bachelor’s degrees in computer and information sciences when it compared the potential supply of workers with the magnitude of IT worker demand.

Salaries for IT Workers

Commerce stated that upward movement in salaries is evidence of a short supply of IT workers and cited several surveys and newspaper articles illustrating salary increases. For example, the report cited a survey conducted by the Deloitte & Touche Consulting Group showing that salaries for computer network professionals rose an average of 7.4 percent from 1996 to 1997. The report also cited an annual survey by Computerworld, a weekly newspaper covering the computer industry and targeting IT workers and managers, showing that in 11 of 26 positions tracked, average salaries increased by more than 10 percent from 1996 to 1997. Increases in starting salaries were also reported in the Wall Street Journal and The Washington Post.

These wage increases, however, may not be conclusive evidence of a long-term limited supply of IT workers but may be an indication of a current tightening of labor market conditions for IT workers. According to BLS data, increases have been less substantial when viewed over a longer period of time. For example, the percentage changes in weekly earnings for workers in computer occupations over the 1983 through 1997 period were comparable with or slightly lower, in the case of computer systems analysts and scientists, than the percentage changes for all professional specialty occupations. Thus, salary increases for these occupations have been consistent with the salary increases for other skilled occupational categories over time. What is uncertain is whether the recent trend toward higher rates of increase will continue.

Reports of Unfilled Vacancies

Regarding unfilled jobs, Commerce cited the ITAA report, which concluded that about 190,000 U.S. IT jobs were unfilled in 1996 because of a shortage of qualified workers and that these shortages were likely to worsen. According to the ITAA survey, 82 percent of the IT companies responding expected to increase their IT staffing in the coming year, while more than half of the non-IT companies planned IT staff increases. provides useful information on unfilled jobs among the firms responding to its survey, the findings cannot be generalized to the national level. ITAA surveyed a random sample of 2,000 large and midsize IT and non-IT companies about their IT labor needs and received a total of 271 responses—a response rate of about 14 percent. We consider a 14-percent response rate to be unacceptably low as a basis for any generalizations about the population being surveyed. In order to make sound generalizations, the effective response rate should usually be at least 75 percent for each variable measured—a goal used by many practitioners. Furthermore, ITAA’s estimate of the number of unfilled IT jobs is based on reported vacancies, and adequate information about those vacancies is not provided, such as how long positions have been vacant, whether wages offered are sufficient to attract qualified applicants, and whether companies consider jobs filled by contractors as vacancies. These weaknesses tend to undermine the reliability of ITAA’s survey findings.

Offshore Sourcing and Recruiting

Commerce cited support for an emerging shortage in its observation that some companies are drawing upon talent pools outside the United States to meet their demands for IT workers. For example, the Commerce report stated that India has more than 200,000 programmers and, in conjunction with predominantly U.S. partners, has developed into one of the world’s largest exporters of software; in 1996 and 1997, outsourced software development accounted for 41 percent of India’s software exports. Commerce also cited a Business Week article, “Forget the Huddled Masses: Send Nerds,” to illustrate that companies are searching for IT workers in foreign labor markets such as Russia, Eastern Europe, East Asia, and South Africa.

United States is exaggerated and that it is not necessary to recruit foreign workers to fill IT jobs. Additional systematic information about the magnitude of the phenomenon of companies meeting their demands for IT workers outside of the United States would be useful.

Estimated Supply Compared With Estimated Demand

The report identified the decline in the number of computer science graduates as a factor contributing to an inadequate supply of IT workers. The introduction to the report stated that evidence suggests that job growth in information technology fields now exceeds the production of talent. Commerce reported that between 1994 and 2005, an annual average of 95,000 new systems analysts, computer scientists and engineers, and computer programmers will be required to satisfy the increasing demand for IT workers and that only 24,553 students earned bachelor’s degrees in computer and information sciences in 1994. Because there is a disparity between these two numbers, Commerce concluded that it will be difficult to meet the demand for IT workers.

Commerce did not adequately explain why the decline in conferred bachelor’s degrees in computer science would reflect a short supply of IT workers. As stated in the section on supply, IT workers come from a variety of educational backgrounds and have a variety of educational credentials such as master’s degrees, associate degrees, or special certifications. In addition, Commerce reported on the decline from 1986, although that year represents a peak in the number of computer science degrees conferred, which had risen steadily from the 1970s but has remained relatively stable in the 1990s.

Commerce’s Conclusions in the Report

Commerce’s conclusions about the IT workforce are inconsistently reported in separate segments of its report. First, the title of the report states that America’s new deficit is a shortage of information technology workers. The introduction also states that there is substantial evidence that the United States is having trouble keeping up with the demand for new information technology workers. However, the report notes that current statistical frameworks and mechanisms for measuring labor supply do not allow for precise identification of IT worker shortages and, in its summary chapter, Commerce concludes that more information is needed to fully characterize the IT labor market. We agree with Commerce’s conclusion that more information and data are needed about the current and future IT labor market.

Mr. Chairman, this concludes my prepared statement. I will be happy to answer any questions that you or Members of the Subcommittee may have.

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