Is There Really An IT Or Any Other Kind Of Labour Shortage?


It is a shortened version of a BASELINE MAGAZINE article entitled “IS THERE REALLY AN IT LABOUR SHORTAGE?”

Although the article focuses solely on the IT industry, its content can be applied to most other sectors.

Expert sources quoted in the article present a picture very different from the conventional one presented of the so-called general “worker shortage”. The major points made are the following:

A. American IT Executive claims (echoed in Canada) of an IT Labour Shortage are not true. In fact, Duke University, Stanford University, the Rand Corporation and the philanthropic Sloan Foundation say that there is a surplus of IT workers.

B. The most telling sign of real labour shortages is that when these shortages occur, wages rise. However, IT wages have remained flat–an indication that there is no shortage.

C. IT executives have refused to recognize that the High-Tech crash of several years ago caused students to re-think IT as a career option. Instead, IT executives have used the immediate post-crash lower enrollment to support their claims. They have even blamed math and science teaching in the education system for lower enrollment. The truth is that students were reacting to the low IT worker demand in the post-crash years. Enrollment has somewhat recovered. In addition, there are many unemployed and underemployed IT workers.

D. The real motive in the claims by IT executives is (1) to loosen immigration restrictions so that they can get cheap labour overseas, (2) to increase labour supply in order to dampen demands for wage increases or in order to lower wages and (3) to justify IT executive claims that they must send the jobs outside the country.

E. IT executives are doing serious harm to in-country workers. They are denying employment to many already-trained people and they are discouraging many others from entering IT. IT executives are also doing long-term damage to IT company interests.

F. Instead of acting deceptively, IT executives should be co-operating with universities/post-secondary institutions to identify IT areas that need to be developed and to employ in-country workers.

What is true in the U.S. is probably true for most developed countries.

In Canada, Alan Green, Professor Emeritus Of Economics at Queen's University, has arrived at similar findings. After years of research, he concluded that the worker shortages that can be solved by immigration are rare and exceptional. In general, in dealing with labour issues, it is better for a country to explore for solutions in its own population.

All Canadians, especially our federal and provincial governments, should take immediate note of the $1 Billion measure (funded by Quebec's private sector and the province) that was announced this week by the Quebec government. The measure is aimed at finding work for Quebec's unemployed and for the employable in Quebec's 183,000 welfare recipients. Within three years, the programme is expected to attract as many as 50,000 into the workforce through incentives rather than coercion. (For details on the Quebec programme, see


IS THERE REALLY AN IT LABOUR SHORTAGE? (The following is a slightly longer version, with quotes, of the original BASELINE MAGAZINE article.)

(1) The claims made by Bill Gates and other IT executives that the U.S. has an IT Labour shortage are not true.

(2) Vivek Wadhwa, a professor in Duke Universitys Master of Engineering Management Program and a former technology CEO himself, says : This whole concept of shortages is bogus, it shows a lack of understanding of the labor pool in the USA.

(3) Wadhwa has been studying the IT labor market since his transition to the academic world, when he began hearing student anxiety over the availability of jobs in the wake of increased offshore out-sourcing and on-shore hiring of foreign guest workers.

(4) He and his students at Duke went straight to the hiring source, the human resource department, at a number of top companies employing IT workers. The portrait painted by the questions answers was very different from their executives opinions on skills shortages, Wadhwa says, explaining that each indicator showed there was no lack of qualified applicants.

(5) Theyre backed up by other studies conducted by RAND Corporation, The Urban Institute and Stanford University, among others, all of which settle upon the same conclusion: There is no shortage of educated IT workers.

(6) Dr. Michael Teitelbaum, vice president of the Alfred P. Sloan Foundation (a philanthropic nonprofit institution, established in 1934) , in testimony to Congress last fall, stated: The RAND Corporation has conducted several studies of this subject; its conclusions go further than my summary above, saying that not only could they not find any evidence of shortages, but that instead the evidence is more suggestive of surpluses.

(7) Dr. Ron Hira (in his capacity as a professor of public policy at the Rochester Institute of Technology, a fellow at the Economic Policy Institute and co-author of the book Outsourcing America) has pored through Bureau of Labor Statistics data and university graduation rates and found that the United States has consistently graduated more than enough computer scientists and engineers to fill the IT jobs available in the country.

(8) Hira believes the most telling pieces of evidence are the IT wage statistics, which havent risen dramatically in years. Wages have been basically pretty flat, he said, and thats where we would see numbers spike if there was any kind of shortage. You would see signing bonuses and so forth.

(9) …seasoned IT workers, like Wadhwas students, increasingly complain of worsening job prospects in the IT market. Some people will reject that as anecdotes or they'll blame those workers for not keeping up with their skills, so there are ways of dismissing it, Hira said. But who's to say that when Bill Gates (and other IT executives)…get up to say that there's a shortage, that thats not an anecdote either? …nobody's really pressed them on providing data to support their statements. We're sort of taking it on faith that what they're saying is right, when in fact … hundreds of thousands (of) job applications…pour into their companies every year.

(10) Hal Salzman at the Urban Institute believes that part of the disconnect between employers view of a shrinking pool of solid recruits and employees views of a shrinking job market comes by way of unrealistic expectations from IT industry leaders.

(11) Last fall Salzman and Lindsay Lowell of Georgetown University produced a paper for The Urban Institute that showed that general Science, Technology, Engineering and Math ( STEM) enrollment at American universities was at least double the net increase of jobs each year. It noted that the IT industry in particular was unique in that up to 40 percent of IT workers have no STEM degree at all. Many …came from the business side and learned the technology on the job. This only further widens the pool of eligible workers, he said.

(12) Saltzman was troubled by Gartners (IT research and advisory company) claims of an impending shortage based on the raw graduation rate decline over the past several years. In their December 2007 paper, Gartner analysts used the argument that businesses are finding it hard to find hybrid professionals trained in technology and possessing business savvy due to a 39 percent drop in computer science enrollment since 2002.

Yes that is true, but also the market crashed, right?, Salzman said. The absurdity of that statement is that they expect students to be blind to the market. The industry collapsed and a year later enrollment declined. Thats a problem? I mean wouldn't you be worried if students kept enrolling without any jobs? Would you want to hire people like that? They say they want these hybrid professionals who understand business and markets and yet they want them to make a career decision without taking into account the market?

(13) Not only are there more than enough new graduates pumped out of universities each year to fill the countrys available technology jobs, but some like Wadhwa believe that there are many more experienced IT workers out of the market who are unemployed or underemployed or unemployed due to age discrimination or those who left IT during a period of unemployment following a bust cycle. Additionally, there are many more business users who could be trained in IT skills if necessary. Wadhwa believes these workers could be easily skilled up in the event of temporary shortages.

(14) So if there is no quantitative evidence pointing to a skills shortfall, why are there so many claims to the contrary? Teitelbaum asked that rhetorical question in front of Congress last fall.

So why, you might ask, do you continue to hear energetic re-assertions of the conventional portrait of 'shortages,' shortfalls, failures of K-12 science and math teaching, declining interest among US students, and the necessity of importing more foreign scientists engineers? he said. In my judgment, what you are hearing is simply the expressions of interests by interest groups and their lobbyists. Interest groups that are well organized and funded have the capacity to make their claims heard by you (in Congress), either directly or via echoes in the mass press. Meanwhile those who are not well-organized and funded can express their views, but only as individuals.

(15) In the case of industry business people, the motive is to get the Feds to loosen immigration restrictions for cheap foreign labor, to increase supply of workers in order to reduce labor costs and to justify offshore outsourcing efforts, Hira said.

(16) If industry would work cooperatively with worker groups in identifying real areas that are emerging where they believe there will be demand and work with universities, then you could then have a more responsive system, Hira said. But instead they throw out the foreign guest worker thing every single time, so its hard to believe that they are serious about this when they use this for political gain. Adjusting the foreign guest worker program is the primary solution that they are looking for.

(17) No matter what the motives for promoting belief in an IT skills shortage, those who contradict that belief say that the perpetuation of such a myth will sting the industry in the end.

What should NOT be done is to take actions (that will increase the supply of scientists and engineers) that are not intimately coupled with serious measures to ensure that comparable increases occur in the demand for scientists and engineers, Teitelbaum told Congress.

“Already job volatility is increasingly discouraging the best and the brightest from entering IT in favor of other more lucrative fields…,” Hira said.

(18) We have a system with certain criteria set out…. (The) problem is they're so loosely written that in fact those workers can be substitutes for American workers and, in effect, American workers can be forced to train the workers who…replace them, Hira said. So that certainly runs counter to both common sense in terms of what the programs are supposed to do; but also what the publicly stated goals are both by politicians as well as by the lobbies.

In addition to this flood of temporary foreign workers on U.S. soil, there is also the offshore outsourcing effect to contend with, which has been largely justified as a way to work around the shortage.

You've seen cases around where (when) (IT companies have) gone offshore, folks on shore either started to leave or …are highly demoralized….” Salzman said. The perception out there is that the future is uncertain.

In both cases these efforts have flooded the market with lower-cost foreign workers who are supplanting an already ample field of home-grown IT labor. The result is that the myth of an IT skills shortage could just end up (to) be self-perpetuating.

The trouble is that it creates a disincentive for Americans to study these technical fields, Wadhwa said. We're hurting ourselves; computer science enrollment is dropping because the incentive is not there for students to study computer science.


The original BASELINE MAGAZINE article can be found by using one of the following links: