Is There Really A Techie Shortage?

Yes--but it's not as dire as the computer industry says

Don't tell Steve D. Schultz about Silicon Valley's labor crunch. The 48-year-old programmer spent five years designing software for a large drugmaker. Then last year the company brought in a junior programmer from Taiwan at half the $160,000 Schultz earned as a contract employee.

In November, the drugmaker didn't renew Schultz's contract. For four months, he searched for a job but turned up nothing, even at far lower pay. Finally, in April, his former employer called him back--still as a temp--to train his replacement. "The computer industry isn't begging for workers," says Schultz. "It's looking for 20-year-olds who will put in 80-hour weeks or people from overseas who will be captives at one company."

SHARPER PINCH. For several years, the computer industry has sounded dire warnings about labor shortages that could slow the high-tech juggernaut. In recent months, officials from Microsoft Corp., Intel Corp., and other high-tech giants have begged Congress to double the 65,000 visas for skilled foreign workers to help fill the 350,000 jobs now open. The Senate passed such a bill in mid-May, and the House seems likely to follow suit. High-tech "firms do not have the talent to develop new products and grow their businesses," says Harris N. Miller, president of the Information Technology Assn., a trade group.

But some analysts think that Schultz could be on to something: The high-tech labor crunch is bad, but it may not be worse than elsewhere. They point out that employment has jumped only for the highest-skilled computer scientists, not programmers or systems analysts--jobs that often go to immigrants on high-skills visas. Nor are shortages driving pay into the stratosphere (charts, page 97). "There's no evidence that the computer industry has worse labor shortages than other high-skilled industries," says American University economics professor Robert I. Lerman.

High tech may feel the pinch more acutely, say Lerman and others, because it's structured differently and relies on temporary employees more heavily than other industries do. Microsoft, for example, employs 5,000 contract workers alongside its 17,000 permanent U.S. employees. But finding temps isn't easy when full-time positions are plentiful. A severe shortfall would push employers to offer permanent posts to keep temps from taking other jobs. Indeed, "if there really was a labor shortage, someone would hire me full-time," says Robert J. Wade, a systems analyst in Indianapolis with a masters in industrial engineering. Wade, 35, says he has sought permanent jobs around the country but only gets offers for half the $60,000 he makes now.

But temps are a hallmark of high-tech culture, industry officials insist, and can earn up to 40% more than regular employees. "They feel like they have more control over their careers," says Richard Schwartz, a vice-president at Excell Data Corp., a Bellevue (Wash.) firm that supplies temps to Microsoft and others. So the heavy use of temps may not be a reliable economic indicator.

Even by the traditional measure of pay patterns, though, high tech isn't showing classic signs of a crunch. The ranks of computer scientists, for example, have tripled since 1988, but their weekly pay beat inflation by just 4.4% since then and by 1% in 1997, according to the Bureau of Labor Statistics (BLS).

GRUELING PACE. Systems analysts and programmers have done better. Their real weekly pay climbed by 4.3% and 6.7%, respectively, in 1997. But that pales compared with other types of workers: Surveyors beat inflation by 20% and dietitians by 17%, according to the BLS. Programmers' pay has lagged inflation by 1.5% since 1988. "If employers were desperate, they'd be willing to pay more," says Norman Matloff, a computer science professor at the University of California at Davis.

Critics argue that age discrimination helps fuel the shortage. The industry's grueling work pace is difficult to maintain when families come along, tech workers say. Employers also prefer to hire programmers out of school who know the latest computer languages. "I thought it would be easy to get a job, but I'm not 20 anymore," says William L. Spence, 47. The physicist was laid off last year after 13 years at a national lab at Stanford University and has had no offers after applying to hundreds of Silicon Valley companies. Industry officials deny any age discrimination, but they admit they like recent grads. "They have good training and are open to new technologies," says Microsoft Recruiting Director David Pritchard.


Plenty of immigrant labor already helps mitigate shortages--and holds down pay. The high-skills visa program, of which about 40% is high-tech workers, requires employers to pay foreigners the going U.S. wage for the same work. Yet three-quarters of employers couldn't produce evidence that visa workers' wages match U.S. ones, according to a 1996 Labor Dept. audit, and some 19% pay less than they had promised on the visa application. Pritchard counters that foreigners actually cost more than U.S. employees, since Microsoft, which has some 1,000 workers on visas, pays to relocate them.

Lerman and others worry that more visas could turn off students from high-tech fields and even feed future shortages. Enrollment in college computer science courses jumped 40% in both 1996 and 1997, according to surveys by Computing Research Assn. in Washington. But as students see jobs filled by immigrants at lower pay rates, their interest could wane. For now, there's no doubt high-tech companies are hustling to find workers. But their predicament may be no more severe than that of other sectors.

Before it's here, it's on the Bloomberg Terminal.