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Hey Buddy, Can You Spare a Job Offer?

Will the downturned economy affect the chances of IT students finding the jobs they want?

By Brandon G. Stahl

The prevailing job-hunting acumen for computer science students during the late '90s and early 2000 was that you didn't need to—job hunt, that is. A new graduate with a warm body and half a brain could attract multiple job offers with high salaries and great benefits. Because, as the wisdom went, employers were desperate to hire.

Good news, says the Information Technology Association of America (ITAA). Even in the midst of an economic slump, things haven't changed too much. In April, the ITAA, the largest trade association of tech employers in the United States, released an extensive survey of 685 IT hiring managers. The report noted that although the numbers were down from over a million last year, there were still 425,000 IT jobs that would go unfilled this year, due to a lack of qualified IT personnel. And that doesn't include the 900,000 jobs hiring managers say they plan to fill this year.

But maybe we should back up for a second, because with our current economic downturn (and the crashing tech stock market) one might think that the ITAA would be singing a sad song. Tech companies and the media make seemingly daily announcements of massive layoffs and hiring freezes. Giants such as Lucent, Motorola, Dell, Intel, 3Com, Nortel, and Texas Instruments, to name just a few, have hemorrhaged workers by the thousands.

And let's not forget about the dotcoms' misfortunes. As of early July, e-business magazine The Industry Standard estimated that over 127,716 ebusiness jobs had been cut by 862 companies, a toll that rises daily.

Some companies have gone so far as to try to convince their recently hired college graduates not to come to work for them after all. Intel, for example, recently offered to pay its new hires to not take the jobs they were offered. Those who didn't take the payment and went to Intel anyway were told they would probably be reassigned to a position they hadn't accepted. Cisco Systems rescinded 25% of its job offers to college graduates, handing them a "severance" package of 12 weeks pay and help finding work elsewhere.

Yet the ITAA is certain IT jobs all over the country will go unfilled, and they have numerous allies on their side of the debate. The Meta Group, for example, an IT business research and consulting firm, estimates through its own polling that 600,000 IT jobs will go unfilled—175,000 more than ITAA is estimating.

And even though the nation's unemployment rate rises by the month, it remains low and static for tech workers. According to the Bureau of Labor Statistics (BLS), the unemployment rate for the first quarter of 2001 was 2.6 for computer systems analysts and an astonishingly low 2.0 for programmers, while the national rate was 4.2. According to the ITAA, every field is desperate, not just IT positions that don't necessarily require a computer science degree to perform, such as tech support.

So what's going on here? Is there really a shortage of qualified IT workers to fill the demand? Will a steady pulse be the only requirement job-hunting students need to land one of the thousands of IT positions supposedly available for the taking? Or should students worry that when they graduate, they'll have to take any IT job they can find, even if it means taking a less desirable position? The answers are vague and constantly debated, but understanding the data that's out there will help you determine the hiring outlook you'll face at graduation.

The Tech Shortage's Wet Blanket

By far the most well-known detractor of the industry's claim of a tech shortage is Norman Matloff. The computer science professor at the University of California, Davis, has earned a reputation by being the ITAA's contrarian, declaring the tech shortage is just a myth (even during the glory years of 1997 to early 2000). He's also an outspoken critic of the H-1B visa, which allows foreign workers—mostly those specializing in IT and programming—to work in the U.S. for up to six years. He claims the visas take programming and other IT positions away from U.S. workers, who are struggling to find these jobs in the first place. His editorials on the subjects have appeared in the New York Times, the Washington Post and Forbes and he has been profiled in U.S. News & World Report.

Matloff's testimony before the U.S. House Judiciary Committee Subcommittee on Immigration, "Debunking the Myth of a Desperate Software Labor Shortage," was presented April 21, 1998, and he's constantly updated it since then. (For the most current version, visit http://heather.cs.ucdavis.edu/itaa.real.html). It is a long and comprehensive manifesto that attempts to deflate every truth we thought we knew of the tech shortage and answer every question we've ever had about the labor gap. Examples: "In all this 'high-tech labor shortage' talk, what kinds of workers are we discussing?" (His answer: Mostly programmers and software engineers, the most sought after and highly skilled IT jobs.) "Don't low unemployment rates among programmers indicate a labor shortage?" (Matloff: No, because programmers who can't find work in IT are forced to find it elsewhere.) And, most importantly, "How can we evaluate all these conflicting claims about whether a high-tech labor shortage exists or does not exist?"

His answer: Perform a simple experiment. Call up the human resources manager for any tech firm that hires programmers and "ask if they reject the vast majority of applicants." (By applicants, Matloff means those that simply send in a resume, whether a job was advertised for or not, because "they should be hiring any programmer, as long as they're a good programmer.") Once the H.R. person says yes, "Ask them why they do this, and they will say the vast majority of the applicants don't have some new software skill set the employer wants, even though the applicants have years of programming experience."

Matloff says he's found that companies typically offer jobs to, at most, 2% to 3% of applicants and reject the rest, most of those without even an interview. He says he's called two to three dozen companies, using the same questions with each h.r. person he surveys (to help achieve, he says, a statistically valid conclusion), and each has responded the same way. This evidence does seem to put a bit of a wrench into the ITAA's numbers, because it goes to the source—tech hiring managers. If there is a shortage, why has every company he's contacted turned away many qualified applicants? "The competence in programming is all that should matter," he says.

But Matloff goes further in his argument, claiming that of those that get an interview, very few are offered a position. He cites several newspaper studies and personal interviews with 18 companies ranging from Broderbund to Microsoft that hire from under 5% to half of interviewed applicants—and that was done two years ago, when the job market was supposedly red-hot. "Now, I'm sure it's much lower," he says.

But what about salaries, weren't those rising rapidly during the tech job boom? No, says Matloff. Salary increases in the tech industry have only been around 7% to 8% per year since 1990, according to several salary surveys and government economic gauges, including BLS data. "And though figures like 7% or 8% are a few percentage points above inflation, they are still very mild. If employers were as desperate to hire as they claim, they would certainly be willing to pay a premium of more than 7%."

Accounting, sales, marketing, business administration and other professions have had salary increases two to three times that of programmers during the same time span, says Matloff. "When the industry claims a shortage of programmers, what they mean is a shortage of cheap programmers," Matloff writes in his testimony.

To hear Matloff tell it, there's not a shortage of workers, but a shortage of jobs. But he's not the only person claiming the tech shortage has been overblown. Dr. Robert I. Lerman, a professor of economics at American University, gave a 1998 report to the U.S. Senate claiming the evidence of a tech gap was inconclusive, citing, among other things, lack of salary increases and an industry that didn't take significant steps to retain workers. He found that there were plenty of trained and experienced workers who could fill IT job openings. "Several IT occupations are expanding rapidly but the supply networks have proved reasonably successful in absorbing the demand," he concluded.

Even the investigative arm of Congress—the U.S. General Accounting Office (GAO)—agrees with Matloff and Lerman's findings. In their September 2000 report, "H-1B Foreign Workers: Better Controls Needed to Help Employers and Protect Workers," the GAO criticized the surveys provided by the ITAA and other associations because they "provide little information about these vacancies, such as how long positions were vacant, whether sufficient wages to attract workers were offered, or whether companies considered jobs filled by contractors as vacancies." Because of this, they concluded, "definitional and methodological problems in these studies [that] do not permit a conclusion as to the extent of any IT skill shortage."

The question then becomes, if those were the statistics and hiring outlooks then, how can the ITAA and other organizations still claim a shortage now?

The Other Side

"Anyone who has been active either on the supply side or the demand side has no question about the [tech labor] gap," says Ed Lazowska, professor and chair of the department of computer science and engineering at the University of Washington, Seattle. "It is simply loony to suggest there has not been a gap."

Lazowska's got a good bench from which to judge: His department is one of the Seattle area's main arteries for entry-level IT employment, filtering students into companies such as Intel, Microsoft and Boeing. Lazowska cites studies conducted by the ITAA, the Computing Research Association, the Department of Labor, the National Research Council and the Washington Software Alliance that indicate there is a shortage of skilled IT workers. And, he says, his own students have never had trouble finding the jobs they want.

However, says Lazowska, this year's slumping economy and tech layoffs have somewhat slowed hiring, especially for students seeking internships. He surveyed his graduating students in May to assess their success in job and internship searches. The results: "Many smaller companies have suddenly cancelled their internship programs for the summer, so there are students who thought they were set for the summer but suddenly were not," he says. "The reason is that these companies have had to reduce staff, and there would be adverse morale impacts from bringing in interns." Lazowska points out, though, that larger firms such as Microsoft, Intel and IBM are still seeking interns.

With the boom and bust economy on the bust side, students now need to actively seek out jobs. "Students at UW have not had to job hunt for the past few years; they have been able to sit around and literally have great employers find their resumes on the Web and extend them offers." But things have changed. "Those days are over. If you sit on your keister, you are not going to get a job."

The weakened economy has forced companies to be pickier when hiring, and, says Lazowska, "the strongest companies have always been highly selective, and they are even more so today. Companies such as Microsoft and Intel and the hot startups can be even more picky than before in terms of who they hire."

So what of Matloff's survey of human resource directors, which sought to determine the number of applications that get tossed aside? "That is such a non-sensical experiment, I don't even think it's worth paying attention to," says Dr. Peter Freeman, Georgia Tech's dean of computer sciences. "That's like saying I spit in the wind and it blew in my face, so I guess we're having a hurricane."

"Anybody can apply for a job. I mean, the obvious rejoinder would be that when there are high paying jobs there are, of course, going to be lots of people applying for them," Freeman says. "If Matloff would care to carry out a scientific study of things, I might be willing to (extensively) comment."

Matloff, in his defense, says that his prior career as a statistician forces him to be careful with data that he uses. "When I work with data, I'm not doing it casually," he says. "The sample size for my employer survey IS large enough to make a statistically valid conclusion." "Related to that, as for 'anybody can apply for a job,' I ask hiring managers to only count people that have experience as professional programmers."

The argument over rejected yet qualified applicants may be impossible to quantify, but salaries are not. So if companies are still desperate, why haven't salaries risen to compensate? Lazowska attributes the lack of increase to stock options added to base salaries. "Students who take jobs in this industry are hoping that they are accepting a relatively modest paycheck/wage, in return for a huge dollop of deferred compensation via their stock options," he says.

Matloff, however, in his testimony to Congress, disagrees with this, saying that the value of stock options aren't rising with salaries. TThe median value of stock options only rose $2,900 between 1996 and 1998, certainly not enough to support the ITAA's claims of dramatic increases in overall compensation."

This year, Lazowska's students tell him that while job offers are down, salaries are up, perhaps as a response to worthless options. (As a side note, a few organizations in the IT industry, including the Meta Group and the ITAA, have been pushing for tech salaries to level off or even start falling. The Meta Group, for example, wrote in a CNET.com editorial that IT workers "still cost too much.")

And, while the media is quick to point out how many people have been laid off, often they fail to report how many are getting hired at the same time. (Companies frequently fail to report that data, too.) "Oftentimes what doesn't get promoted or publicized as much is the number of downsized workers who do find new positions or companies that continue to hire in the midst of this economic downturn," says the ITAA's vice president of work force development Marjorie Bynum.

Take, for example, the job slaughter in the dotcom sector. That, says Meta Group program director Maria Schaffer, is misleading. Dotcom employment accounts for only 1% of total IT jobs. "You've got huge corporations out there that not only are not laying anybody off, but they are still trying very hard—desperately in some cases—to find those critical skills that are still missing," she says. "And that's the other thing that's been misrepresented. It's a skill issue."

She's right, it is a skill issue. Actually, a specific skill set issue, because what's gotten lost in the shuffle these past few years is that companies have gotten pickier for the specific skills they want their new hires to possess. Just open your Sunday want ads for computer programming positions; companies aren't just looking for knowledge of basic languages, but ability to execute a variety of coding and IT skills—all of them minute and constrained to the company's needs. And maybe one of the reasons that the shortage exists is that few workers can meet such specific requirements, and the unfilled job gets listed into the ITAA's study.

And if you think a company will gladly train you in these skills, even if you're an experienced IT worker, think again. If a company is given a choice between the applicant that already has the skill set and the one that needs training, guess who's going to get the job.

Shortage or Not, You Still Have to Find a Job

Despite the debate over the shortage, nearly everyone agrees that it's more difficult for a college senior studying computer science to find a desirable job now than when they tried two to three years ago. But some things haven't changed: If you're a star in your class with top grades, internships and other extra-curricular activities to put on your resume, you shouldn't have a problem. Nevertheless, middle-of-the-road students may still find fortune if they have the one trait that every employer seeks: experience. "It has never been possible to get a job in Washington's computing industry with a degree and no experience," says Lazowska.

Matloff agrees that having internship experience is critical to finding a desirable job, but also stresses the importance of having computer science professors assist the students in finding the positions, and that means they have to understand and study what employers are looking for. "One of the most important byproducts of this whole mess is the failure of computer science departments, both administrators and faculty, to pay real attention to the job market," he says. "That would be fine for a philosophy department, but computer science is by nature a jobs-oriented major, and I say that computer science departments have a responsibility here."

And if you want a programming job but are only able to find other tech positions, such as a tech support? "Keep pestering your boss to give you at least some programming work. Be polite but very persistent," says Matloff. "The longer you are in a non-programming job, the harder it will be to ever break into the programming field."

Brandon G. Stahl is a former editor of Graduating Engineer & Computer Careers.

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