An Information Technology Labor Shortage? Legislation in the 106th Congress

Order Code RL30140

CRS Report for Congress

Received through the CRS Web

An Information Technology Labor Shortage?

Legislation in the 106th Congress

Updated June 14, 2001

Linda Levine

Specialist in Labor Economics

Domestic Social Policy Division

Congressional Research Service ˜ The Library of Congress

An Information Technology Labor Shortage?

Legislation in the 106th Congress

Summary

Concern about an information technology (IT) labor shortage prompted

Congress, in Title IV of P.L. 105-277, to raise for 3 years the ceiling on H-1B visas

for skilled temporary alien workers. The law also called on the National Science

Foundation to assess employers’ future requirements for workers with computerrelated skills, the future education/training needs of U.S. students to ensure an

adequate supply of workers at requisite skill levels, and the potential costs/benefits to

the U.S. economy from admission of foreign workers with science and engineering

skills. The study requirement suggested that disagreement persisted about the

existence of an IT labor shortage. The imposition of a user fee on employers who file

H-1B visa petitions to largely go toward funding technical skills training and math,

engineering or science education similarly implied ambivalence over the preferred

solution to the perceived shortfall of IT workers.

While many (including the National Research Council in its congressionally

mandated report released in October 2000) would agree that the IT labor market

became tight in the late 1990s, the paucity of good data made it difficult to

unambiguously determine that an IT labor shortage existed. For example, although

employment increased rapidly for IT jobs overall during the 1990s and is projected

to continue to do so through 2008, job growth rates varied between individual IT

occupations. In addition, while the decline in bachelor’s degrees conferred in

computer/information sciences was used to demonstrate that firms faced a dwindling

supply of workers, bachelor’s degree holders in other disciplines commonly work in

IT jobs and other sources (e.g., community colleges) prepare persons for IT positions.

Although estimates of job vacancies were pointed to as proof of a labor shortage, they

are an insufficient indicator — especially those made without reference to the duration

of job openings or the wage levels associated with them. Moreover, an occupation

could have both a high unemployment rate (which suggests excess supply) and a high

vacancy rate (which suggests excess demand) if firms search in the labor market for

experienced workers who already possess the hottest IT skills and simultaneously

layoff, rather than retrain, their own IT employees. (A subtext of the IT worker

debate was whether demand exceeded supply for all workers; for workers already

trained in the latest skills; or for young workers to whom firms could pay relatively

low, entry-level wages.) Surveys also presented a mixed picture of IT pay which,

under shortage conditions, should increase much faster than wages for jobs with a

more abundant supply of labor.

Proposals were introduced in the 106th Congress to promote education and

training in math, science and engineering skills among U.S. residents. Other bills

returned to immigration policy as a way to lessen tightness in the IT labor market

while often also raising P.L. 105-277’s user fee and changing its allocation formula.

The legislation that the 106th Congress passed to address this issue continued the twopronged approach initiated by the 105th Congress, namely, further raising the limit on

H-1B visas as well as increasing the user fee for education/training purposes and

altering its allocation formula. With the IT sector experiencing reduced product

demand and employee layoffs in 2001, interest in this issue has waned.

Contents

The Demand for and Supply of IT Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Demand Side . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Supply Side . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Measures of Labor Market Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The Unemployment Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Vacancy Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Wage Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Selected Results from the ACWIA-Mandated Studies . . . . . . . . . . . . . . . 11

Legislation and Education/Training Programs . . . . . . . . . . . . . . . . . . . . . . . . . 12

The 105th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

DOL’s 56.3% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

NSF’s 28.2% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

P.L. 105-220 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

The 106th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Bills Amending ACWIA’s User Fee Level and Allocation Formula . . 14

Using Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Other Bills Unrelated to ACWIA’s User Fee and

Education/Training Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 16

Appendix: The Older Worker Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

List of Tables

Table 1. Employment in Selected IT Occupations, 1989-1999 . . . . . . . . . . . . . . 2

Table 2. Employment, 1998 (Actual) and 2008 (Projected) . . . . . . . . . . . . . . . . 3

Table 3. Percent Distribution of Workers in Selected Occupations by Highest

Level of Education Completed, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Table 4. Unemployment Rates in Selected Occupations, 1989 and 1999 . . . . . . 7

Table 5. Median Weekly Earnings of Full-Time Wage and Salary Workers

in Selected IT Occupations, 1989-1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Appendix Table 1. Average Wages in Selected ITOccupations, 1999 . . . . . . . 18

Appendix Table 2. Average Salary Offers to Bachelor’s Degree Candidates, by

Major Field of Study and by Job Function . . . . . . . . . . . . . . . . . . . . . . . . 19

An Information Technology Labor Shortage?

Legislation in the 106th Congress

Concern about an information technology (IT) labor shortage culminated during

the congressional debate over raising the ceiling on H-1B visas for skilled temporary

alien workers.1 The 105th Congress chose to raise the cap for 3 years on the

admission of nonimmigrant professionals who work in specialty occupations2 in Title

IV (the American Competitiveness and Workforce Investment Act, ACWIA) of P.L.

105-277 (the FY1999 Omnibus Consolidated and Emergency Supplemental

Appropriations Act).

ACWIA also called on the National Science Foundation (NSF) to, among other

things, study and report on employers’ requirements over the next 10 years for

workers with computer-related skills, the future education/training needs of U.S.

students to ensure an adequate supply of workers at requisite skill levels and the

potential costs/benefits to the U.S. economy (i.e., to employers, workers and

consumers) from admission of foreign workers with science and engineering skills.

The study requirement suggested that disagreement persisted about the existence of

an across-the-board IT labor shortage. And, the imposition of a filing fee on

employers of $500 per H-1B visa petition to be used largely to fund technical skills

training and math, engineering or science education suggested ambivalence about the

preferred solution to the perceived shortfall of workers with computer-related skills.

This report presents information on the demand for and supply of IT workers

during the 1990s. It analyzes the adequacy of measures that arguably demonstrated

the presence of an IT labor shortage around the turn of the century. The ACWIA

provisions that the 105th Congress intended to expand the supply of appropriately

educated or trained U.S. workers as a means of fulfilling employers’ demand for IT

personnel are next set forth, along with subsequent changes to ACWIA made by the

106th Congress. The report closes with a description of legislation introduced during

1

U.S. Congress. Senate. Committee on the Judiciary. Subcommittee on Immigration.

Hearings on the High Tech Worker Shortage and U.S. Immigration. 105th Cong., 2d Sess.,

February 25, 1998. (Hereafter cited as Senate Committee on the Judiciary, High Tech

Worker Shortage); and U.S. Congress. House. Committee on the Judiciary. Subcommittee

on Immigration and Claims. Hearings on Immigration and America’s Workforce. 105th

Cong., 2d Sess., April 21, 1998. For a summary of the hearings and of P.L. 105-277, Title

IV see CRS Report 98-531, Immigration: Nonimmigrant H-1B Specialty Worker Issues and

Legislation, by Ruth Ellen Wasem.

2

In addition to computer-related jobs, employers have obtained H-1B visas for such

occupations as physical, occupational, and speech therapists; electrical engineers; auditors and

accountants; university faculty; and physicians and surgeons.

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the 106th Congress that was meant to further increase the number of domestically

available workers with computer-related skills.

The Demand for and Supply of IT Workers

The U.S. statistical system does not include a direct measure of occupational

imbalances in the supply of and demand for workers.

The Demand Side

The U.S. Bureau of Labor Statistics (BLS) collects data on current employment

and estimates future employment by occupation. These statistics represent only the

demand side of the labor market. They understate the real demand for labor to the

extent supply limitations constrain employment growth.

Table 1. Employment in Selected IT Occupations, 1989-1999

(numbers in thousands)

Year

Computer systems

analysts, engineers

and scientists

Computer

programmers

Total, computerrelated occupations

1989

566

561

1,127

1990

605

594

1,199

1991

675

546

1,221

1992

693

550

1,243

1993

769

578

1,347

1994

916

549

1,465

1995

933

553

1,486

1996

1,093

561

1,654

1997

1,236

626

1,862

1998

1,471

613

2,084

1999

1,549

685

2,234

Source: U.S. Bureau of Labor Statistics. Employment and Earnings, January issues.

Note: The data are derived from a survey of households, the Current Population Survey, and use the

Census Bureau’s occupational classification system.

Over 2.2 million persons worked in IT jobs as computer systems analysts,

computer engineers, computer scientists and computer programmers in 1999 —

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twice the number in 1989, the last peak in the business cycle. As shown above in

Table 1, the ranks of computer systems analysts, engineers and scientists expanded

to a much greater extent (174% or 983,000 workers) than those of computer

programmers (22% or 124,000 workers). In contrast, total U.S. employment rose by

slightly less than 20% between 1989 and 1999.

Employment gains among computer programmers, who are classified in the

technicians and related support occupational division, did not exceed the average

across all occupations until the latter half of the period. The much flatter growth

trajectory of programmers vis-a-vis professional computer-related occupations (e.g.,

computer systems analysts) may be partly related to technological considerations,

such as “consolidation of systems and applications, developments in packaged

software, advanced programming language and tools, and the growing number of

users who design, write, and implement more of their own programs.”3 In addition,

computer programmer is a narrowly defined group; BLS assigns new, emerging IT

occupations to the computer systems analysts, engineers and scientists group within

the professional specialty occupational division.

Table 2. Employment, 1998 (Actual) and 2008 (Projected)

(numbers in thousands)

Number

Projected change

Occupation

1998

2008

Number

Percent

Total, all occupations

140,514

160,795

20,281

14

Total, IT occupations

2,177

3,891

1,712

79

Computer engineers

299

622

323

108

Computer support specialists

429

869

439

102

Database administrators

87

155

67

77

All other computer scientists

97

212

115

118

Systems analysts

617

1,194

577

94

Computer programmers

648

839

191

30

Source: Braddock, Douglas. Occupational Employment Projections to 2008. Monthly Labor

Review, November 1999.

Note: The base year data are derived from a survey of firms, the Occupational Employment

Statistics (OES) survey, and use the OES rather than the Census Bureau’s occupational classification

system.

3

Veneri, Carolyn M. Here Today, Jobs of Tomorrow: Opportunities in Information

Technology Occupations. Occupational Outlook Quarterly, fall 1998. (Hereafter cited as

Veneri, Here Today, Jobs of Tomorrow.)

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BLS projects that IT employment could increase to almost 3.9 million workers

by 2008. (See Table 2 above.) As has been the case, the professional IT occupations

are expected to grow much more than the technical IT occupation of computer

programmers. Nonetheless, employment of programmers is projected to expand by

much more than the average occupation, 30% versus 14%, respectively.

These demand-side data are somewhat wanting in detail, however. The figures

do not indicate the level — entry or experienced — at which firms want to hire IT

workers. A subtext of the IT worker debate was whether demand exceeded supply

for all workers; for workers already trained in the latest, sophisticated skills; or for

young workers to whom firms could pay relatively low, entry-level wages. (See

Appendix for data on average salaries for all workers by IT occupation and on

average starting salaries offered to bachelor’s degree recipients with IT majors or for

IT jobs.) ACWIA called upon the National Academy of Sciences to assess and report

on the status of older workers in the IT field. (See section below on Selected Results

from the ACWIA-Mandated Studies.)

The Supply Side

The supply-side data are even more problematic than the demand-side data with

regard to providing insights about conditions in the IT labor market. Because there

rarely is just one source of workers for a given job, it is very difficult to estimate the

supply of labor to a particular occupation and hence, whether an imbalance exists

between supply and demand.

A common assumption is that individuals with bachelor’s degrees in

computer/information sciences are the major source of IT workers. This supposition

underlies the notion that the decline in bachelor’s degrees conferred in

computer/information sciences through the early 1990s means that, in a period of

rising demand, employers have faced a dwindling supply of new qualified workers.

However, as shown in Table 3, roughly one-half of computer programmers, systems

analysts, engineers and scientists in 1999 had completed bachelor’s degrees regardless

of field of study. Moreover, as already was shown in Table 1, the employment of IT

professionals doubled in the 1990s despite the downward trend in

computer/information sciences bachelor’s degree recipients early in the period.4 A

Commerce Department report that declared the existence of an IT labor shortage was

faulted for failing to adequately take into account sources of supply other than college

4

The National Center for Education Statistics collects data on degrees awarded in

computer/information sciences separately from data on degrees awarded in engineering (e.g.,

computer engineering). Degrees awarded in engineering exhibit the same declining trend as

degrees awarded in computer/information sciences. While a substantial share of bachelor’s

degree holders employed as computer engineers in 1995 had majored in engineering, large

proportions had majored in related or in unrelated fields. More specifically, among bachelor’s

degree recipients employed as computer software engineers, 35% had graduated with

engineering majors; 31% with computer/information sciences majors; 13% with mathematical

sciences majors; 11% with life, physical, social and related sciences majors; and 10% as

nonsciences/nonengineering majors. Veneri, Here Today, Jobs of Tomorrow.

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graduates who had majored in computer/information sciences.5 And, the number of

bachelor’s degrees awarded in computer sciences reversed direction in the last few

years, increasing modestly between the early 1990s (24,200) and late 1990s (24,768).6

Table 3. Percent Distribution of Workers in Selected

Occupations by Highest Level of Education Completed, 1999

Computer

systems

analysts,

engineers and

scientists

All

professional

specialty

occupations

Computer

programmers

All technicians

and related

support

occupations

100.0

100.0

100.0

100.0

6.3

7.3

10.0

21.6

Some college,

no degree

14.9

9.3

19.5

26.7

Associate’s

degree

8.2

8.6

12.3

21.1

Bachelor’s

degree

51.5

38.7

44.5

25.8

Master’s degree

16.5

21.6

12.0

4.0

Professional

degree or PhD

2.7

14.6

1.7

0.9

Educational

level

Total

High school

graduate or

equivalenta

Source: U.S. Bureau of Labor Statistics. Unpublished Current Population Survey data.

a

Includes a small number of workers without a diploma who completed less than 12 years of

schooling.

Not only are persons with bachelor’s degrees in computer/information sciences

employed in non-IT jobs, but also persons with bachelor’s degrees in related and

unrelated fields of study work in IT occupations. For example, about 48% of

5

U.S. Department of Commerce. Office of Technology Policy. America’s New Deficit: The

Shortage of Information Technology Workers. Washington. September 29, 1997; and U.S.

General Accounting Office. Information Technology: Assessment of the Department of

Commerce’s Report on Workforce Demand and Supply. GAO/HEHS-98-106R.

Washington, March 20, 1998. (Hereafter cited as GAO, Information Technology:

Assessment of the Department of Commerce’s Report on Workforce Demand and Supply.)

6

National Center for Education Statistics. Digest of Education Statistics, 1999. NCES

2000-031. Washington, D.C., May 2000. (Hereafter cited as NCES, Digest of Education

Statistics.)

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bachelor’s degree recipients in 1992-1993 who majored in computer/information

sciences worked in non-computer occupations in April 1994. The same was true for

some 36% of bachelor’s degree recipients who majored in computer programming.

Alternatively, bachelor’s degree recipients who majored in the related fields of

engineering and mathematical sciences accounted for 19% of college graduates

employed as computer systems analysts in 1995, while bachelor’s degree recipients

who majored in nonsciences and nonengineering fields accounted for 28% of the total.

Similarly, bachelor’s degree recipients in related fields of study accounted for 26% of

college graduates employed as computer programmers, while bachelor’s degree

recipients in unrelated fields accounted for 9% of the total.7

Community colleges and private vocational institutions also prepare students for

IT jobs, as do company and military training programs. For example, associate’s

degrees accounted for 23.5% of the postsecondary degrees in computer/information

sciences conferred in 1996-1997.8 In addition, as shown in Table 3, 23.1% of

computer systems analysts, engineers and scientists as well as 31.8% of computer

programmers had completed postsecondary education below the bachelor’s degree

level in 1999. And, unlike the previously mentioned downward trend in bachelor’s

degrees awarded in computer science/information and computer engineering, the

number of associate (as well as masters and doctoral) degrees in IT and related

disciplines has been on the rise since the 1980s.9

Measures of Labor Market Conditions

Because neither demand nor supply can be measured directly, “the determination

of labor market imbalances must rely upon indicators ... The best-known example of

such an indicator is the unemployment rate ... Using only one indicator, however —

even one as relevant as the unemployment rate — can still lead to an incorrect

conclusion” about the existence of a labor shortage.10 Indicators in addition to those

previously discussed (i.e., the trend in employment and projected employment change)

include the occupational unemployment rate and the trend in wages. Vacancy

information also is an indicator, but such estimates are not currently part of the

government’s statistical system. BLS intends to reestablish a job openings/labor

turnover survey, but it will not yield measures of job vacancies by occupation.

BLS cautions that available labor market indicators should be combined with

information on the supply of labor to one or more related occupations (e.g.,

7

Veneri, Here Today, Jobs of Tomorrow. Note: The remaining major field of study (i.e., life,

physical, social and related sciences) accounted for 16% of systems analysts and 18% of

computer programmers with bachelor’s degrees.

8

NCES, Digest of Education Statistics.

9

U.S. Department of Commerce. Office of Technology Policy. The Digital Work Force:

Building Infotech Skills at the Speed of Innovation. Washington. June 1999. (Hereafter

cited as DOC, The Digital Work Force.)

10

Cohen, Malcolm S. Labor Shortages as America Approaches the Twenty-first Century.

Ann Arbor, Michigan, University of Michigan Press, 1995. p. 25. (Hereafter cited as Cohen,

Labor Shortages.)

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educational attainment by field of study vis-a-vis skill requirements of employers) and

with “knowledge of the workings of the labor market” (e.g., whether there are lags

between rising demand and a supply response) in order to analyze existing or potential

labor shortages. “Conclusions about shortages should not be based on general labor

market statistics alone or anecdotal evidence alone.”11

The Unemployment Rate. While most observers would acknowledge that

the comparatively low jobless rates of IT occupations reflect a tight labor market,

fewer would agree that it proves a shortage. As shown in Table 4, the unemployment

rate in 1999 for computer programmers, at 2.3%, was identical to that of all

technicians. The jobless rate in 1999 for professional IT workers was 1.7%, just 0.2

percentage points below the rate for all professional workers. The unemployment

rates of IT workers in 1999 was virtually the same as in 1989 (see table note), the last

time there was concern about labor shortages generally.

Table 4. Unemployment Rates in Selected Occupations, 1989

and 1999

Occupation

1989

1999

All professional specialty occupations

1.7

1.9

Computer systems analysts, engineers & scientists

1.4

1.7

All technicians and related support occupations

2.4

2.3

Computer programmers

1.6

2.3

Source: U.S. Bureau of Labor Statistics. Unpublished data from the Current Population Survey.

Note: Because of the fairly small number of workers in computer-related occupations, year-to-year

changes in their unemployment rates must be several tenths of a percentage point (0.6-0.9) to be

considered statistically significant.

An occupation’s unemployment rate is a tenuous measure of shortages because

it is based on only those in the labor force who report that their current or last job was

in that occupation.12 The jobless rate of computer programmers, for example, does

not pick up workers with programming degrees who either currently are employed

in other occupations or who are newly entering or reentering the labor force but have

not yet gotten a job, all of whom represent potential sources of supply. The jobless

rate of programmers also does not reflect individuals who may be qualified for such

work (e.g., math majors) but are now employed in another occupational group. In

11

Veneri, Carolyn M. Can Occupational Labor Market Shortages be Identified Using

Available Data? Monthly Labor Review, March 1999. p. 21.

12

Ibid. Note: The occupational unemployment rate is the number of workers without a job

in a given occupation as a percent of the labor force in that occupation. The labor force in a

given occupation is the number of workers currently employed in the occupation and the

number of unemployed workers whose last job was in the given occupation.

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addition, it does not capture qualified workers who are out of the labor force (e.g.,

retirees with IT skills) who might reenter under the right circumstances. Thus, the

multiple paths to employment in many occupations not only make it difficult to

determine the supply of labor to particular jobs but also complicate the unemployment

rate’s usefulness as a conclusive indicator of an occupational labor shortage.

Vacancy Data. Two surveys conducted for the Information Technology

Association of America (ITAA) and from which IT vacancies were estimated were

heavily relied on to substantiate the existence of a labor shortage in the late 1990s.

ITAA surveyed 2,000 medium and large companies, of which 271 responded. (Firm

size was measured by number of employees or sales volume.) It was estimated from

this sample that roughly 190,000 IT positions were unfilled at all medium and large

firms in the United States, and that the vacancies represented about 10% of all IT

positions at these private sector firms.13 The Virginia Polytechnic Institute and State

University, in collaboration with the ITAA, surveyed 1,500 companies having at least

100 employees, and 532 responded to this survey. It was estimated that 346,000

positions for computer programmers, systems analysts and computer

engineers/scientists were unfilled at all U.S. companies with 100 or more employees

on their payrolls.14 The accuracy of either of these estimates is questionable,

however, because of the surveys’ low response rates (14% and 36%, respectively).15

A subsequent ITAA-commissioned survey used a much broader definition of IT

occupations.16 Firms (excluding non-profit organizations and government) reportedly

needed an additional 1.6 million IT workers in 2000, and a little over than one-half

(843,328) of the required positions would go unfilled due to a shortfall of qualified

IT workers. (The shortage measure was based on the proportion of applicants that

a nationally representative sample of 700 hiring managers at IT and non-IT for-profit

firms with at least 50 employees considered to be qualified for specific IT job

13

Information Technology Association of America. Help Wanted: The IT Workforce Gap

at the Dawn of a New Century, 1997.

14

ITAA and the Virginia Polytechnic Institute. Help Wanted: A Call for Collaborative for

the New Millennium, 1998.

15

GAO, Information Technology: Assessment of the Department of Commerce’s Report on

Workforce Demand and Supply.

16

In the two previous ITAA-sponsored studies, the following standard occupational categories

were used to define the IT workforce: computer programmers, systems analysts, engineers,

and scientists. In the latest report, a broader definition consisted of the following eight job

categories derived from skill standards of the NorthWest Center for Emerging Technologies

(NWCET) and an “other” category:

programmer/software developer; database

administrator/developer; web administrator/developer; network systems specialist; enterprise

information systems integrator; interactive digital media specialist; technical writer; and

computer systems (“tech”) support representative. (The NWCET was established in 1995

with an NSF grant and had as one of its goals the development of voluntary skill standards

that reflect the expectations of IT firms.)

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categories.) Based on an estimated IT workforce of 10 million, a vacancy rate of

8.4% was calculated.17

Vacancies in general are an insufficient measure of labor shortage. An

occupation could have both a high unemployment rate — which suggests excess

supply — and a high vacancy rate — which suggests excess demand — if employers

and workers find it difficult to make matches due to imperfect information or due to

the different locations of job openings and qualified workers.18 The same situation

also could indicate a skills mismatch rather than a shortage per se if employers want

to fill vacancies with persons who already possess and have experience applying the

latest specialized skills (e.g., C++ expertise) rather than retraining their mid-career IT

employees who lack the currently hot skills. Evidence exists that companies, because

of short product-life and product-development cycles in IT-intensive industries, have

been pursuing a “buy” (from the external labor market) rather than a “make” (by

training employees within the firm) employment strategy.19

Moreover, data that cover one point in time do not indicate whether the current

level of IT vacancies is consistent with or differs from past conditions. A firm could

regularly have a high proportion of vacancies if it experiences high turnover or is

growing rapidly, or if vacancies take a long time to be filled.20 In addition to

information being absent on the duration of IT vacancies today and over time,

information also is lacking on the salaries associated with the vacancies. Such data

could help to demonstrate whether there is a shortage of qualified workers per se or

whether employers have not been raising wages sufficiently to attract enough workers

(e.g., from other occupations or from outside the labor force).

Wage Increases. If occupational demand is nearing or outstripping supply,

economic theory suggests that employers will bid up wages to attract workers.

“Thus, rapidly rising wages are consistent with a labor shortage.”21 The picture of pay

trends in the IT labor market is unclear, however. Private surveys show larger gains

than government surveys primarily due to differences in sample size and methodology.

The government sources are more likely to be accurate.22

Based on a source that compares hundreds of occupations over time, the relative

earnings trends of IT workers have varied by occupational group and by year. As

shown above in Table 5, the median weekly earnings of computer systems analysts,

engineers and scientists employed full-time in the private and public sectors rose by

42% between 1989 and 1999 — 4 percentage points more than the all occupations’

17

ITAA. Bridging the Gap: Information Technology Skills for a New Millennium. April

2000. (Hereafter cited as ITAA, Bridging the Gap.)

18

Cohen, Labor Shortages.

19

DOC, The Digital Work Force.

20

Testimony of Robert I. Lerman in Senate Committee on the Judiciary, High Tech Worker

Shortage.

21

Cohen, Labor Shortages, p. 33.

22

DOC, The Digital Work Force.

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average. The differential is wider — at 10 percentage points — in the case of

computer programmers whose median earnings per week grew by 48% over the

period. After barely rising in 1998, the pay of computer programmers increased at

an above average rate in 1999 (6.5% and 5.0%, respectively). The increase in median

earnings of computer professionals (5.9%) in 1999 also surpassed the all occupations’

average gain (5.0%), but to a much smaller extent.

A compensation survey conducted for the ITAA by William M. Mercer found

that the average hourly pay of IT workers rose between 12% (for software

development architect) and 20% (for operating systems/software architect/consultant)

in one year alone, 1996. In contrast, a Computerworld survey found that in the same

year compensation changes ranged from -2% (for systems analyst, administration) to

0% (for senior systems programmer) to 5% (for chief information officer (CIO),

CIO/vice president of IT or information systems). Substantial salary increases did not

occur until 1997, according to this source, when CIOs averaged a 28% gain and at

the opposite end of the spectrum, senior systems programmers’ compensation grew

by 9%.23

Table 5. Median Weekly Earnings of Full-Time Wage and Salary

Workers in Selected IT Occupations, 1989-1999

Year

All

occupations

Computer systems analysts,

engineers and scientists

Computer

programmers

1989

399

711

606

1990

415

744

654

1991

430

792

662

1992

445

810

685

1993

463

821

747

1994

467

846

738

1995

479

872

743

1996

490

891

772

1997

503

918

840

1998

523

952

843

1999

549

1008

898

Change,

1989-1999

38%

42%

48%

Source: U.S. Bureau of Labor Statistics. Employment and Earnings, January issues.

23

Melymuka, Kathleen. We’re in the Money. Computerworld, 11th Annual Salary Survey,

September 1, 1997. [http://www.computerworld.com].

CRS-11

According to data collected quarterly by the National Association of Colleges

and Employers (NACE), average starting salaries offered to graduates with bachelor’s

degrees in computer science rose by 54% between the September 1994 and 2000

surveys. Much of that increase occurred in one year alone, 1998, when the entry-level

wage offer for new graduates with bachelor’s degrees in computer science spiked by

12.7%.24 (For starting salary offers in other IT fields see Appendix.)

There was some evidence that pay raises in IT occupations may have slowed

somewhat in the waning years of the 1990s. Computerworld’s annual salary survey

found that the typical increase in IT salaries was between 4% and 5% in both 1998

and 1999. In 1997, it had been 11%. But, some IT jobs did continue to command

large pay raises (e.g., 20% for the average CIO and 11% for the average IT director

in 1999). The more subdued growth rate in IT pay partly may have been due to

having fewer workers tied up with Y2K-compliance efforts. In addition, firms

reportedly were expanding their (re)training of existing employees and thereby

internally growing the pool of IT workers.25 From a more long-term supply

perspective, enrollment in computer-related programs at 4-year colleges began to

trend upward.26

Selected Results from the ACWIA-Mandated Studies 27

The National Research Council released a report in October 2000 which

complied with P.L. 105-277’s requirement of a study by the NSF concerning IT

shortages and by the National Academy of Sciences concerning older IT workers.

After analyzing the best available statistics, the Council’s Committee on Workforce

Needs in Information Technology found them wanting in terms of yielding a definitive

determination of whether an IT shortage existed. The committee chose to call the IT

labor market a tight one, and it expected the market — especially for IT occupations

in which there is a lengthy educational process — to remain tight for the foreseeable

future. With regard to older workers, the committee also found the data inadequate

to conclude whether employers of IT workers illegally engaged in age discrimination.

The report acknowledged that without H-1B workers to fill IT positions, the

sector would likely have experienced slower growth and that reliance on “foreign

24

Starting salary offers to new computer science graduates (bachelor’s degree level) averaged

$31,783 in September 1994, $33,712 in September 1995, $35,222 in September 1996,

$37,216 in September 1997, $41,949 in September 1998, $44,649 in September 1999 and

$49,055 in September 2000. NACE, Salary Survey, various issues.

25

Fryer, Bronwyn. Return to Sanity. Computerworld, 13th Annual Salary Survey.

September 6, 1999 and Goff, Leslie. The E-lusive Staff. Computerworld, 4th Annual Hiring

Forecast Survey. Note: For information on IT hiring managers’ views about the relative

effectiveness of different sources of skill development (e.g., on-the-job employer-provided

training) see ITAA, Bridging the Gap.

26

Bachelor’s degree enrollments in the fields of computer science/computer engineering have

risen over 108% between 1996 and 1998. DOC, The Digital Work Force.

27

National Research Council. Building a Workforce for the Information Economy.

Executive Summary from a prepublication copy dated October 21, 2000.

CRS-12

workers will continue to be necessary for the immediate future.” The relatively large

number of H-1B visa holders in IT jobs put “nonnegligible” downward pressure on

wages, according to the committee. In other words, the availability of H-1B workers

kept the pay of IT workers from increasing as much as it otherwise would have in a

tight labor market.

Although the committee could not find an analytical basis upon which to

determine the “proper” level of H-1B visas, it offered several recommendations (e.g.,

the provision of training incentives to employers as well as the collection of more

timely, disaggregated data on the IT labor force in the United States). Other

recommendations dealt specifically with employment-based immigration policy and

with the federal government as an employer of IT workers.

Legislation and Education/Training Programs

The 105th Congress

In addition to temporarily importing more already qualified workers to alleviate

the tight IT job market, some Members of the 105th Congress wanted to promote a

home-grown remedy to the perceived shortfall of computer-related workers.

Consequently, P.L. 105-277 included a provision that requires firms filing petitions

to bring into the country, to extend the stay of, or to hire from another U.S. employer

nonimmigrant professionals on or after December 1, 1998, but before October 1,

2000, to pay a $500 user fee per petition.

Under P.L. 105-277, the fees deposited in the H-1B Nonimmigrant Petitioner

Account initially were allocated as follows:

The U.S. Department of Labor (DOL) is to issue grants amounting

to 56.3% of the fees for demonstration programs under the Job

Training Partnership Act (JTPA, Section 452(c)) or its successor, the

Workforce Investment Act of 1998 (WIA, Section 171(b)), to

establish demonstration programs and projects that provide training

in technical skills to employed and unemployed workers.The National

Science Foundation (NSF) is to use 28.2% of the fees for

scholarships to low-income students enrolled in programs that confer

associate, undergraduate, or graduate degrees in mathematics,

engineering or computer science.

! The NSF is to expend 4% of the total fees to award merit-reviewed

grants under the National Science Foundation Act of 1950 (Section

3(a)(1)) for programs that provide opportunities for enrollment in

year-round K-12 academic enrichment courses in mathematics,

engineering or science; and 4% to carry out systemic reform

activities in K-12 under Section 3(a)(1) of the 1950 Act.The

remaining fees are to go to the Attorney General to reduce the

processing time of H-1B petitions and to improve the enumeration

of nonimmigrant workers, including the submission of periodic

reports to the House and Senate Committees on the Judiciary

!

CRS-13

(1.5%), and to the DOL to reduce the processing time of visa

applications and for enforcement (6%).

(See the section below on the 106th Congress for information about how it changed

the user fee’s level and allocation formula.)

DOL’s 56.3%. In the August 16, 1999 Federal Register (p. 44543-44554), the

Employment and Training Administration (ETA) announced the availability of grant

funds from ACWIA’s user fee to private industry councils (PIC) under the JTPA,

local workforce investment boards under the WIA, and regional consortia of PICs or

local boards for technical skills training programs in high-demand occupations (e.g.,

those for which employers have submitted H-1B applications)28 targeted at employed

and unemployed persons. There is a 50% non-federal matching requirement.

Although the federal grant must be used only for training services, applicants can

count non-federal resources for supportive services (e.g., transportation or child care)

toward the matching requirement.

In February 2000, the ETA announced the first-round awards of $12.4 million

in nine grants for the provision of training to some 3,000 workers. The typical grant

award was $1.5 million.29 The second-round grant solicitation appeared in the March

29, 2000 Federal Register (p. 16658-16670). In July, a total of $29.1 million was

awarded in 12 grants to serve approximately 5,000 workers. The awards ranged from

a little more than $900,000 to $3.0 million. The third-round grant solicitation was

issued August 1, 2000 (see Federal Register, p. 46958-46969). Some $54 million

was awarded in October 2000 to fund 22 grants that ranged from almost $1 million

to about $2.8 million.

NSF’s 28.2%. ACWIA authorized the Computer Science, Engineering, and

Mathematics Scholarships (CSEMS) program which is to award funds to accredited

institutions of higher education. They, in turn, are to select students for a 2-year

CSEM scholarship of up to $2,500 per year per student. Low-income,30 academically

talented students must be in associate, bachelors or graduate degree programs in

computer science, computer technology, engineering, engineering technology, or

mathematics to be eligible for scholarships. They must be pursuing their studies on

a full-time basis and be U.S. citizens, U.S. nationals, refugee aliens or permanent

resident aliens.

About 280 proposals from public and private schools were submitted by the

August 30, 1999 deadline for first-round award applications. The NSF subsequently

announced the provision of $22.49 million to 114 institutions which will enable each

to offer about 40 scholarships annually over a 2-year period. The institutions’ total

28

Appendix A of the solicitation lists selected H-1B professional, technical and managerial

occupations (and fashion models) by number of job openings certified by the DOL.

29

More information on grant awards can be found at the following internet website:

[http://www.wdsc.org/sga/awards/].

30

Determination of financial eligibility relies on U.S. Department of Education criteria for Pell

grants and for Graduate Assistance in Areas of National Need.

CRS-14

awards include funds for administrative and other expenses.31 Applications for

second-round grants were due to the NSF by August 3, 2000 and awards were made

during Spring 2000. About $24 million went to 110 institutions.32

P.L. 105-220. Subtitle C of WIA created The Twenty-First Century

Workforce Commission to study the skills needed to obtain IT jobs, explore ways to

increase the supply of IT workers, and compare the success of U.S. and foreign

programs at training individuals for IT employment. The Commission’s report was

released in June 2000. Among other things, it endorsed not only preparing more U.S.

students and upgrading the skills of incumbent workers to fill IT jobs, but also raising

the H-1B visa cap as a response to skill shortages in conjunction with increasing the

fee for employers who file H-1B petitions. As it turned out, this was the path

ultimately chosen by the 106th Congress.

The 106th Congress

Bills introduced during the 106th Congress to alleviate the tightness in the IT

labor market took several tacks, which are described below. The one ultimately

settled on saw the Congress returning to immigration policy as a remedy. This

approach was prompted, in large part, by an announcement from the Immigration and

Naturalization Service (INS) that the 115,000 limit on H-1B visas for all of FY2000

effectively had been reached in March 2000. In FY1999, the 115,000 cap had not

been hit until June 1999.

Bills Amending ACWIA’s User Fee Level and Allocation Formula.

Several bills were offered that included raising the user fee and altering its allocation

formula. Both the House and Senate ultimately passed S. 2045 (the American

Competitiveness in the Twenty-First Century Act of 2000) and the President signed

it in October 2000. Among other things, P.L. 106-313 raised the cap on H-1B visas

to 195,000 annually between FY2001 and FY2003 while making additional visas

available for FY1999 and FY2000. It exempted from the cap aliens employed by

institutions of higher education, nonprofit research organizations or governmental

research organizations. P.L. 106-311, enacted on October 17, 2000, raised the user

fee from $500 to $1,000 for those petitions filed 2 months on or after the date of

enactment. (For more information on other changes specific to immigration policy

31

The total grant award includes up to 5% of the total scholarship amount for student-support

infrastructure (e.g., recruitment of students from groups underrepresented in CSEM fields

including women, racial/ethnic minorities, and persons with disabilities; retention of CSEMS

recipients to degree completion; and support in employment placement) and up to 5% for

project management and administration (e.g., confirmation of scholarship applicant’s

eligibility and evaluation of program outcomes). Note: For information on the

underrepresentation of certain groups in the IT labor force, see Freeman, Peter and William

Aspray. The Supply of Information Technology Workers in the United States. Washington,

D.C., Computing Research Association, 1999; National Science and Technology Council.

Ensuring a Strong U.S. Scientific, Technical, and Engineering Workforce in the 21st

Century. April 2000; and National Science Foundation. Women, Minorities, and Persons

with Disabilities in Science and Engineering: 1998. NSF 99-87, February 1999.

32

For more information see: [http://www.ehr.nsf.gov/ehr/due/programs/csems/].

CRS-15

see CRS Report RL30498, Immigration: Legislative Issues on Nonimmigrant

Professional Specialty (H-1B) Workers.)

P.L. 106-313 amended the allocation of funds in the Nonimmigrant Petitioner

Account in the following ways:

The DOL’s share for training fell from 56.3% to 55.0%.

The NSF’s share for the previously described CSEMS program fell

from 28.2% to 23.5%. The level of scholarship awards rose from

$2,500 to $3,125 (the Pell Grant amount), with scholarships

renewable for up to 4 years.

! An additional 15% went to the NSF to carry out a direct or matching

grant program to support private-public partnerships in K-12

education in lieu of the 8% for K-12 activities enumerated in

ACWIA. (Funds for the systemic K-12 reform activities referenced

in ACWIA were subsumed in the new, broader NSF program.)

! The Attorney General continued to get 1.5% to reduce the

processing time of H-1B petitions and to improve the enumeration

of nonimmigrant workers, while the DOL’s share for reducing the

processing time of H-1B applications dropped from 6% to 5%.

!

!

As in ACWIA, the legislation directed the DOL to use its 55.0% share to create

demonstration programs to provide technical skills training for both employed and

unemployed workers. P.L. 106-313 specified that the training need not develop skills

commensurate with a 4-year college degree and that it should prepare workers for a

range of occupations along a career ladder. Further,

Consideration shall be given to the use of grant funds to demonstrate a significant

ability to expand a training program or project through such means as training

more workers or offering more courses, and training programs or projects resulting

from collaborations, especially with more than one small business or with a labormanagement training program or project.

P.L. 106-313 directed the Secretary of Labor, in consultation with the Secretary

of Commerce, to award

75% of the grants to WIA’s local workforce investment boards or

consortia of such boards in a region. These grants require a 50%

non-federal match. (Under ACWIA, 100% of the DOL grants had

to go to workforce investment boards or consortia.)

! 25% of the grants to partnerships consisting of at least two

businesses or a business-related nonprofit organization that

represents more than one business. These grants require a 100%

non-federal match.

!

Further, at least 80% of all DOL grants from the user fee must be awarded for

skills training in high technology, information technology and biotechnology (e.g.,

skills required for “software and communications services, telecommunications,

systems installation and integration, computers and communications hardware,

advanced manufacturing, health care technology, biotechnology and biomedical

CRS-16

research and manufacturing, and innovation services”). And, no more than 20% of

the grants shall go toward training persons for skills in a single specialty occupation

(as defined in Section 214(i) of the Immigration Nationality Act).

P.L. 106-313 also required the DOL and NSF to track and monitor the

performance of programs funded from the Nonimmigrant Petitioner Account. The

two agencies are to submit a report on the programs’ performance to the House and

Senate 1 year after the date of enactment.

Using Tax Incentives. Companion bills H.R. 838 and S. 456 would have

amended the Internal Revenue Code (IRC) to allow an employer an income tax credit

for expenses that he paid or incurred in connection with the provision of technology

training. The IT training credit would have been equal to 20% of the employer’s

annual IT training program expenses. If the IT program were operated in certain

areas (e.g., an urban or rural empowerment zone/enterprise community, a school

district where at least one-half of the students are eligible for subsidized lunches, or

a disaster area) or by a small employer (i.e., 200 or fewer employees on the payroll),

the rate would have been 5 percentage points higher. The maximum amount of IT

program expenses employers could have taken into account when calculating the

credit was $6,000 per individual for the taxable year. IT program expenses were

defined as a program that trains computer programmers, systems analysts, and

computer scientists or engineers; involves a partnership between employers and state

training programs, school districts, universities or certified commercial IT training

providers; and that entails the employer paying or incurring at least 50% of the costs.

The IT training credit would have been part of the general business credit under the

Code.

H.R. 5004 (Technology Education and Training Act of 2000) also would have

amended the IRC to provide a credit for 100% of the expenses paid or incurred by

taxpayers in connection with IT training programs. Although the maximum amount

of IT program expenses per individual generally would have been $1,500, it could

have gone up to $2,000 if the training programs were operated in empowerment

zones/enterprise communities, school districts in which at least one-half of the

students are eligible for subsidized lunches, disaster areas, rural enterprise

communities, rural economic area partnership zones, or if the programs were operated

by small employers (i.e., those who had 200 or fewer employees daily in each of 20

or more calendar weeks in the current or preceding calendar year). The amount of

the credit would have been reduced for employees whose employers paid or incurred

qualified training expenses. IT training program expenses were those that lead to an

industry-accepted IT training certification for the participant. The NSF, through a

newly created advisory group, would have developed a list annually of the latest

industry certifications that could qualify for the credit.

Other Bills Unrelated to ACWIA’s User Fee and Education/Training

Provisions. H.R. 709 (The Technology Education Capital Investment Act of 1999)

would have authorized the appropriation of funds to involve the NSF, Secretary of

Education, Secretary of Commerce, and a Technology Workforce Commission in an

effort to alleviate the perceived shortage of IT workers. Under the legislation, the

NSF would have expanded its informal science and math education programs (i.e.,

science education provided outside a formal school setting) as well as its national

CRS-17

advanced scientific and technical education program under Section 3(a) of the

Scientific and Advanced Technology Act of 1992. The Secretary of Education would

have made grants to states for the purpose of awarding scholarships to students in

programs leading to a postsecondary degree in science, math, engineering or a related

field. The Secretary of Commerce would have made grants to institutions of higher

education so that they could develop industry-sponsored internship programs which

give undergraduate engineering students the opportunity for hands-on training at local

businesses. The Technology Workforce Commission would have examined the

causes of and possible solutions for the IT labor shortage as well as the comparative

efficacy of programs in the United States and other countries to increase the supply

of IT workers, especially those programs that offer secondary or postsecondary

education other than a 4-year bachelor’s degree. It would have issued a report to the

President and the Congress.

H.R. 1265 (The Mathematics and Science Proficiency Act of 1999) would have

authorized a demonstration project through the NSF to encourage interest in the fields

of math, science and IT. Under the bill, the Director of NSF would have awarded

grants to local educational agencies in five urban and five rural areas so that they

could develop an IT program which builds upon or expands math, science and IT

curricula; purchase necessary equipment for such a program; and provide teacher

training in the IT, math and science fields. Maximum grant awards could not have

exceeded $300,000. Grant applications would have had to include assurances of

agreements with private sector representatives for such things as donation of

computer hardware and software, establishment of internship and mentoring

opportunities for students who participate in the IT program, and donation of

scholarship funds for students who have participated in the IT program. The Director

would have been required to assess the effectiveness of the activities carried out under

this legislation and to conduct a longitudinal study of students who received

scholarships including the number of students who graduated from institutions of

higher education with degrees in math, science or IT and the number of graduates

who took jobs in these fields. The bill authorized to be appropriated to the NSF

$3,000,000 to carry out the Act.

CRS-18

Appendix: The Older Worker Issue

As previously mentioned, the debate over whether there was an IT labor

shortage around the turn of the century is related to the kind of workers employers

wanted versus those who were available. Some asserted that firms wanted younger

workers who were well-schooled in the latest IT skills, who were more willing to put

in very long hours allegedly because they have not yet taken on non-work

responsibilities (e.g., raising a family) and who could be paid less than more senior IT

workers. IT-intensive firms countered that for reasons of competitiveness they could

not take the time, nor did they have the staff available, to train mid-career IT

employees in currently hot IT skills. Moreover, given the tightness of the labor

market, companies argued that the employees to whom they provided training might

well then take jobs with other firms.

The first table below shows the earnings of all workers, regardless of age or

experience, in selected IT occupations. The second table relates to starting salaries

offered (1) to students graduating from bachelor’s degree programs in IT-related

disciplines regardless of the occupation they are entering, and (2) to students

graduating from bachelor’s degree programs, regardless of the field of study, who are

being hired into IT-related jobs. A comparison of the data in the two tables not

unexpectedly reveals that the starting salaries of presumably inexperienced, young

workers typically are below those of all workers on average.

Appendix Table 1. Average Wages in Selected IT

Occupations, 1999

Occupational group

Computer hardware engineers

Computer & information scientists, research

Computer programmers

Computer software engineers, applications

Computer software engineers, systems

software

Computer support specialists

Computer systems analysts

Database administrators

Network & computer systems administrators

Network systems & data communications

analysts

Hourly wage

32.19

32.30

26.42

31.62

31.84

18.95

27.85

25.26

24.08

26.78

Annual wage

66,960

67,180

54,960

65,780

66,230

39,410

57,920

52,550

50,090

55,710

Source: BLS’ Occupational Employment Statistics survey database.

Note: Data for 1999 reflect the redesigned Standard Occupational Classification system and are not

comparable with figures for prior years.

CRS-19

Appendix Table 2. Average Salary Offers to Bachelor’s Degree

Candidates, by Major Field of Study and by Job Function

Major field of studya

September 1999

September 2000

Computer engineering

45,666

50,182

Computer science

44,649

49,055

Computer programming

40,839

43,058

Information sciences

38,902

43,737

Systems analysis

38,879

37,343

Software design & development

45,590

50,373

Hardware design & development

45,892

49,596

Computer programming

40,935

45,962

Information systems

41,596

45,387

Systems analysis & design

41,083

46,462

Job functionb

Source: National Association of Colleges and Employers (NACE). Salary Survey, various fall

issues.

Note: The September 2000 salary survey, for example, reports on information the NACE received

September 1, 1999 and August 7, 2000 about starting salary offers made to students graduating with

bachelor’s degrees between September 1, 1999 and August 31, 2000. The offers are a representative

sample of actual job offers made to new college graduates during the recruiting year. The survey is

published four times a year.

a

b

Graduates may have entered any occupation.

Graduates may have had any major field of study.