Commentary | Education

Lessons—How to Create a Skilled-Labor Shortage

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These pieces originally appeared as a weekly column entitled “Lessons” in The New York Times between 1999 and 2003.

[THIS ARTICLE FIRST APPEARED IN THE NEW YORK TIMES ON SEPTEMBER 6, 2000]

How to Create a Skilled-Labor Shortage

By Richard Rothstein

To alleviate apparent shortages of computer programmers, President Clinton and Congress have agreed to raise a quota on H-1B’s, the temporary visas for skilled foreigners. The annual limit will go to 200,000 next year, up from 65,000 only three years ago.

The imported workers, most of whom come from India, are said to be needed because American schools do not graduate enough young people with science and math skills. Microsoft’s chairman, William H. Gates, and Intel’s chairman, Andrew S. Grove, told Congress in June that more visas were only a stopgap until education improved.

But the crisis is a mirage. High-tech companies portray a shortage, yet it is our memories that are short: only yesterday there was a glut of science and math graduates.

The computer industry took advantage of that glut by reducing wages. This discouraged youths from entering the field, creating the temporary shortages of today. Now, taking advantage of a public preconception that school failures have created the problem, industry finds a ready audience for its demands to import workers.

This newspaper covered the earlier surplus extensively. In 1992, it reported that 1 in 5 college graduates had a job not requiring a college degree. A 1995 article headlined “Supply Exceeds Demand for Ph.D.’s in Many Science Fields” cited nationwide unemployment of engineers, mathematicians and scientists. “Overproduction of Ph.D. degrees,” it noted, “seems to be highest in computer science.”

Michael S. Teitelbaum, a demographer who served as vice chairman of the Commission on Immigration Reform, said in 1996 that there was “an employer’s market” for technology workers, partly because of post-cold-war downsizing in aerospace.

In fields with real labor scarcity, wages rise. Yet despite accounts of dot-com entrepreneurs’ becoming millionaires, trends in computer technology pay do not confirm a need to import legions of programmers.

Salary offers to new college graduates in computer science averaged $39,000 in 1986 and had declined by 1994 to $33,000 (in constant dollars). The trend reversed only in the late 1990’s.

The West Coast median salary for experienced software engineers was $71,100 in 1999, up only 10 percent (in constant dollars) from 1990. This pay growth of about 1 percent a year suggests no labor shortage.

Norman Matloff, a computer science professor at the University of California, contends that high-tech companies create artificial shortages by refusing to hire experienced programmers. Many with technology degrees no longer work in the field. By age 50, fewer than half are still in the industry. Luring them back requires higher pay.

Industry spokesmen say older programmers with outdated skills would take too long to retrain. But Dr. Matloff counters by saying that when they urge more H-1B visas, lobbyists demonstrate a shortage by pointing to vacancies lasting many months. Companies could train older programmers in less time than it takes to process visas for cheaper foreign workers.

Dr. Matloff says that in addition to the pay issue, the industry rejects older workers because they will not work the long hours typical at Silicon Valley companies with youthful “singles” styles. Imported labor, he argues, is only a way to avoid offering better conditions to experienced programmers. H-1B workers, in contrast, cannot demand higher pay: visas are revoked if workers leave their sponsoring companies.

As for young computer workers, the labor market has recently tightened, with rising wages, because college students saw earlier wage declines and stopped majoring in math and science. In 1996, American colleges awarded 25,000 bachelor’s degrees in computer science, down from 42,000 in 1985.

The reason is not that students suddenly lacked preparation. On the contrary, high school course-taking in math and science, including advanced placement, had climbed. Further, math scores have risen; last year 24 percent of seniors who took the SAT scored over 600 in math. But only 6 percent planned to major in computer science, and many of these cannot get into college programs.

The reason: colleges themselves have not yet adjusted to new demand. In some places, computer science courses are so oversubscribed that students must get on waiting lists as high school juniors.

With a time lag between student choice of majors and later job quests, high schools and colleges cannot address short-term supply and demand shifts for particular professions. Such shortages can be erased only by raising wages to attract those with needed skills who are now working in other fields – or by importing low-paid workers.

For the longer term, rising wages can guide counselors to encourage well-prepared students to major in computer science and engineering, and colleges will adjust to rising demand. But more H-1B immigrants can have a perverse effect, as their lower pay signals young people to avoid this field in the future, keeping the domestic supply artificially low.

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