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The decline in wage offers and recent information technology graduates

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Snapshot for December 8, 1999

The decline in wage offers and recent information technology graduates

Entry-level wages of recent college graduates fell in the early and mid-1990s and have only recently returned to their pre-recession 1989 level (see the November 10 Snapshot). This trend holds true even for students hired into computer science jobs, the so-called “information technology” (IT) workers.

Wage offers (in 1998 dollars) to all recent college graduates started falling in 1985 and plummeted $3,414, or 9.8%, from 1989 to 1995. Although this decline finally began to reverse in 1997, when the low unemployment levels precipitated a rapid up-tick of $4,600 in wage offers to college graduates, it was not until 1999 that the offers exceeded their 1985 level. (Incidentally, it should be noted that these data on wage offers exaggerate the recent growth in actual wages paid, since a recent graduate with several exceptional offers gets counted for each offer, not just the one accepted).

This pattern, perhaps surprisingly, is the same for wage offers to students who accepted jobs in the computer science field. Wage offers peaked in 1986 at $39,005 (in 1998 dollars), fell to $36,321 in 1989, and bottomed out at just $33,434 in 1994. Thus, employer wage offers to computer science employees fell 14%, or $5,571, from 1986 to 1994.

Wage offers in computer science have bounced back, particularly since 1997, but it was not until 1998 that employer wage offers for computer science personnel returned to their prior peak in 1986. It should not be surprising, then, that enrollment in computer science programs declined in the late 1980s and early 1990s. This trend also suggests that the supposed emergence of an IT worker shortage — to the extent that there is one — is partly induced by the stinginess of wage offers from 1986 to 1994. In fact, only recently has the alleged shortage of IT workers had a positive effect (from the workers’ perspective) on wages. Interestingly, offers to computer science grads have followed the same pattern as those for business majors, indicating that there does not seem to be anything special about the situation in the information technologies workforce.

Source: EPI analysis of National Association of Colleges and Employers data.

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