Today's Opinions, Tomorrow's Reality
A Severe Shortage of Common Sense
How the High Tech Industry Creates its Own Labor Shortage
WASHINGTON, DC, April 21, 1998 --
The Skyrocketing growth of information technology companies has opened an intense debate about how to manage the job market in the United States. Depending on who you believe, the U.S. is either facing an economic crisis from a shortage of high-tech labor, or high-tech companies are exploiting foreigners and neglecting their responsibility to hire and train U.S. workers.
On the one side is a coalition of chief executives from U.S. software and semiconductor companies. They claim that the current shortage of high technology workers is so severe that it now threatens America's leading position in high technology.1 The Information Technology Association of America has teamed with U.S. Sen. Spencer Abraham (R-MI) to seek expansion by 30,000 the number of work visas given annually to foreign workers with high-tech skills.2
The opposition is being led by Rep. Ron Klink (D-PA). Klink is seeking to halt expansion of the visa program in order to save American jobs. A study bolstering Klink's position was recently released by Univerisity of California-Davis researcher Norman Matloff, who vehemently denies the existence of any labor shortage at all. The lobbying campaign to convince Americans of the labor shortage is just a disingenuous ploy to expand foreign worker visas, he says. "[A]ccess to cheap labor-both in the form of foreign nationals and new college graduates was the 'hidden agenda' behind ITAA's campaign," writes Matloff.3
Both Matloff and the ITAA quote some impressive statistics.
An ITAA study claims 346,000 jobs -- over 10 percent of technology positions in the U.S. -- are unfilled due to a shortage of qualified candidates. 4 The U.S. Commerce Department estimates that an additional 1.3 million technology workers will be needed in the next decade.5
Poppycock, says Matloff. He says that labor shortage can exist when employers turn down high percentages of applicants. He notes that Microsoft -- one of the companies seeking expansion of the visa program -- hires only 2 percent of applicants, and offers jobs to only 25 percent of those it invites to be interviewed.6
"There is simply no room for argument here -- these low hiring rates... flatly contradict the industry claims of a desperate labor shortage," said Matloff. "On the contrary, the fact that employers can be so picky in their hiring demonstrates an oversupply of labor."7
This is where Matloff's argument loses its credibility. It is easy to believe that the industry has overstated the extent of the job shortage. It is even easier to believe that they would do it to access cheap labor. But to deny the very existence of a labor shortage flies in the face of common sense. A quick look at the classified section of any major newspaper will show thousands of high-tech job advertisements.
The problem is one of semantics. In a market economy, it is difficult to come up with a meaningful definition of when a labor shortage exists. As the available pool of qualified workers gets smaller, the market rate for their services naturally increases. From a purely free-market perspective, it is arguable that markets are self-regulating, preventing a severe labor shortage from ever happening in the first place.
Why do so many people perceive that such a shortage exists? The simple answer, ironically, is that high-tech industries are stuck in the past. After years of relatively inexpensive access to high-tech labor, employers are stubbornly reluctant to remedy their need for employees by paying higher salaries. The idea that high-tech wage scales of the 1970s or the 1980s are somehow sacred is ludicrous. Employers believe that a labor shortage exists because they can't get enough people to work for the same wages offered in years past. Pay them, and they will come.
Unfortunately wages are not the only irrational practice when it comes to industry hiring methods. High-tech employers consistently demand that software professionals have experience in the exact skill set utilized in the job, even when a short training period could open the position to hundreds of times as many candidates. It is not uncommon see advertisements for workers with four years experience in the new Java programming language -- when Java didn't even exist four years ago. Such ridiculous expectations exacerbate this apparent labor shortage.
But so what if high-tech companies shoot themselves in the foot with stupid hiring practices? Does this justify keeping immigrants with valuable skills out of the country? Klink thinks so. If you accept his view, foreign workers should be kept out because they will lower the salaries of U.S. high-tech workers.
This argument might be palatable if Klink were talking about helpless down-on-their-luck steelworkers. But low salaries of high-tech workers is hardly a subject that promotes much sympathy. According to the U.S. Labor Department, high-tech workers in the Washington, D.C. area earned an average hourly wage of $25.68 -- 32 percent more than other white-collar workers.8 It simply does not make sense to deny U.S. immigration to valuable foreign workers because it might reduce wages that are already far above average. Indeed, the real argument should not be about whether to expand the cap on high-tech visas, but about whether to eliminate it entirely.