What Tech-Worker Shortage?

The shortage of tech workers isn't real and can be attributed to a failure by employers to boost pay and politicians' unwillingness to allow more high-skilled immigrants.

Not exactly an endangered species.

Photographer: Andrew Harrer/Bloomberg

In economics, I learned that a shortage is when demand exceeds supply. People want to buy Goldfish crackers at the posted price, but the shelves go empty. I was also taught that the only way that this happens is when something stops the price from adjusting -- a price-control law, perhaps, or the difficulty of printing out new prices for the shelves. Normally, I was told, the store would just raise the price until the last package of Goldfish is so expensive that no one can afford it, and there would then be no shortage.

But it looks as if I was taught the wrong definition of shortage, because everyone else in the world seems to use the word in a very different way. When normal people say, “There is a shortage,” they don’t mean, “The shelf is empty.” They mean “Please lower the price, so I don’t have to pay as much.” And when normal people say, “No, there’s no shortage,” what they mean is, “Please increase the price I get for my wares because I’d like to make more money.”

So I guess my econ classes got it all wrong.

The most controversial case is the question of whether there is a shortage of tech workers in the U.S. Josh Eidelson of Bloomberg Businessweek reports on the debate:

[T]ech companies...contend more green cards or guest worker visas are needed to keep tech industries growing because of a shortage of qualified American workers. But scholars say...[t]he tech worker shortage doesn’t actually exist.

 “There’s no evidence...that there’s a shortage in the conventional sense,” says Hal Salzman, a professor of planning and public policy at Rutgers University. “They may not be able to find them at the price they want. But I’m not sure that qualifies as a shortage, any more than my not being able to find a half-priced TV.”

 Go Hal Salzman! Stand up for Econ 101!

 Well, or not:

 For a real-life example of an actual worker shortage, Salzman points to the case of petroleum engineers, where the supply of workers has failed to keep up with the growth in oil exploration. The result, says Salzman, was just what economists would have predicted: Employers started offering more money, more people started becoming petroleum engineers, and the shortage was solved. In contrast, Salzman concluded in a paper released last year...real IT wages are about the same as they were in 1999.

Apparently if wages rise, it was a “real-life example of an actual worker shortage,” but if wages don’t rise, then it wasn’t a real shortage. Sorry, Econ 101, no one uses your vocabulary after all.

Remember the app that replaced every YouTube comment with “herp derp herp derp”? I want to write an app that replaces every argument about whether there’s a tech-worker shortage with, “Please enact policies that result in a redistribution of income toward my demographic!” Hmm, not as catchy, I guess.

The real issue is this: Tech companies want cheap labor. Tech workers -- or prospective tech workers -- want expensive labor. So they fight over whether to let in more skilled immigrants. Letting in more skilled immigrants will expand the industry (and the overall economy) a bit faster, but more of the revenue will flow to the owners and top-level managers of the companies. Letting in fewer immigrants will slow growth a bit for the industry and the economy, but will give a bigger piece of the pie to native-born skilled workers.

Ignored in this argument are the rest of the people in the economy, the grocery clerks, cab drivers and landscapers who don’t have tech skills. A few of those people will lose out if we let in more skilled immigrants -- imagine out-of-work "Ruby on Rails" developers taking jobs as roofers and driving down wages in the roofing industry.

But most of those low-skilled workers will benefit if we let in skilled immigrants. The skilled immigrants will shop at the grocery stores, take cab rides and get their lawns landscaped, thus putting money into the pockets of the low-skilled American workers.

Meanwhile, some native-born tech workers will be put out of a job, but since the number of jobs in the world isn’t fixed, they will find new jobs at new companies -- possibly for a bit less money than they earned before, but they will be OK. And with the creation of those new companies, the economy will grow.

So I say, go ahead and let in the skilled workers. Some Americans might lose out, but more will gain, and the people who gain will be working-class laborers, not highly trained engineer types.

But in a modern rich economy, a lot more people care about distribution than about efficiency, so everyone will keep on arguing about “shortages.” I wish we could focus on expanding the pie, but the fact is, most people are more concerned about how the pie gets divided.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.