Information Technology Labor Shortage? Legislation in the 106th Congress

Publication Date: June 2001

Publisher: Library of Congress. Congressional Research Service


Research Area: Labor; Science and technology



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.