Workforce

Information Technology (IT) encompasses a broad array of products and activities related to computing and communications in the modern economy. While many workers make use of IT in the course of their work, the IT workforce may be defined more narrowly as including "…workers…engaged primarily in the conception, design, development, adaptation, implementation, deployment, training, support, documentation, and management of information technology systems, components or applications" (National Research Council 2001, 44). This definition includes hardware and software engineers, programmers, database administrators, help desk personnel, and technicians who install and service PCs, networks, and software, but excludes most office workers who use IT products as part of their jobs.

The IT workforce can be further subdivided into two subgroups based largely on skill requirements. What the National Research Council calls Category 1 workers, and others have termed the "core" of the IT workforce, are those professionals involved primarily in the "development, creation, specification, design and testing of IT artifacts." Workers engaged in these activities require a relatively high degree of specialized training and skills. Category 2 workers, by contrast, are employed primarily in the "application, adaptation, configuration, support or implementation of IT products or serviced designed or developed by others" (Ellis & Lowell 1999, 1). Category 2 workers may also require high levels of technical knowledge, but they do not require the breadth of vision, creativity, or communication skills of Category 1 workers.

IT has become a global industry, with significant employment throughout Western Europe, Asia, and the Indian subcontinent. The industry’s origins are in the United States, however, and the United States continues to be the source of most new technologies and remains home to a disproportionate share of IT employment. A recent OECD (OECD 2001, 86) study reports that in 2001 the United States accounted for 36 percent of Information and Communications Technologies(ICT) employment among the 17 countries surveyed. The next largest IT employer, Japan, had roughly half (17 percent) of the employment of the United States, while France and the United Kingdom each accounted for 8 percent of ICT employment. This essay focuses primarily on the characteristics and evolution of IT employment in the United States, though it briefly consider the trends contributing to the diffusion of IT employment in the conclusion.

Two independent sources of statistics are available to measure the size of the IT workforce–the Current Population Survey (CPS), and the Occupational Employment Statistics Survey (OES). The CPS relies on data gathered from households, while the OES collects information from employers. Both yield comparable estimates of the size of the IT workforce, but each has its particular strengths. The CPS provides the longest running time series of data, and provides a broad array of demographic information not available in the OES. On the other hand the OES offers more detailed occupational breakdowns than the CPS.

Neither source conforms precisely to the definitions of the IT workforce that scholars have developed, and the rapidly changing character and content of jobs in the IT workforce make it especially hard to track changes in this component of the workforce. Nonetheless, it is possible to assemble reasonably good measurements of the size and characteristics of Category 1 IT workers. Although a complete list of occupations engaged in IT would be quite large, the bulk of Category 1 IT workers are found in a relatively small number of occupations. These are (with 2001 employment in parentheses): software engineers (623,100), programmers (501,550), systems analysts (448,270), network and computer systems administrators (227,840), computer operators (177,990), Network Systems and Data Communications Analysts (126,060), Database Administrators (104,250), Computer Hardware Engineers (67,590), Operations Research Analysts (57,520), and Computer and Information Scientists, Research (25,620) (U.S. Department of Labor 2001). Together these core occupations account for a little more than 2.5 million workers, or about 2 percent of the total U.S. workforce.

Measuring the size of the Category 2 IT workforce is much harder because occupational titles do not adequately capture the IT content of the support activities of many of the technicians and other occupations included in this group. Estimates of the size of this group vary more widely as a result, but most researchers believe that it is approximately the same size as the Category 1 IT workforce.

IT has become pervasive throughout the economy, and IT workers are found in all sectors and industries although the largest concentrations remain in computer-related industries. For instance, the Computer and Data Processing Services industry employs more IT workers than does all of manufacturing. Other large employers of IT workers include Finance, Insurance and Real Estate, Wholesale and Retail Trade, and Federal, State and Local governments (Ellis and Lowell 1999, 4). Geographically, IT employment is highly concentrated as well. More than one-third of category 1 IT workers are employed in just five cities–New York, Washington, DC, San Francisco, Los Angeles, and Boston–and the top ten cities account for just over 50 percent of all IT workers.

Because of the rapidly evolving nature of IT occupations none of the available data sources accurately captures the full scope of the IT workforce. Of the available sources, the U.S. Department of Labor’s Current Population Survey (CPS) is the best suited to understanding the characteristics of the IT workforce and tracing its historical evolution over the past two decades.

Contrary to trends in the rest of the labor force, the IT workforce has become increasingly dominated by men over the last decade. In 2002, 70 percent of full-time IT workers were male while only 30 percent were female. In 1992, by comparison, 42, percent of the IT workforce was female. The racial composition of the core IT workforce has also changed substantially in recent years. While 77 percent of Category 1 IT workers are white in 2002, this is down from 85 percent in 1992. This decline is accounted for by a more than doubling of the share of Asians (from 6 to 14 percent). Meanwhile the share of Black workers has held steady at about 8.5 percent.

IT workers are younger than the workforce as a whole. The average age of IT workers in 2002 was 38.2 years, versus 40.5 for all non-IT workers. Part of the relatively younger ages in IT occupations results from the fact that the IT industry itself is relatively young. As the industry has matured average ages have been converging toward those in the rest of the workforce. There has been some suggestion of age discrimination in the IT workforce given these statistics and the observation that older IT workers (40 years and above) are more likely to lose their jobs than younger workers. However, older and younger IT workers who have lost their jobs take about the same amount of time to find new employment

Foreign born IT workers constitute about 17 percent of the core IT workforce but comprise only about 10 percent of the U.S. population. These foreign workers also tend to be highly concentrated in just a few states. As a result of the industry’s dependence on foreign workers, the IT workforce is influenced by legislative changes in immigration and visa policy, the most important of which is the H-1B visa program. The H-1B visa is an employer-sponsored, non-immigrant visa for a foreign worker coming temporarily to the U.S. to perform services in a specialty occupation. The annual H-1B visa cap rose from 65,000 in the U.S. government's fiscal year 1998 to 115,000 in 1999 and 2000 and then to 195,000 in 2001 and 2002. The cap on the number of new foreign workers entering the U.S. on H-1B visas reverted back to 1998 levels on October 1, 2003 (the start of the federal fiscal year). The change will likely have little short-term impact because the visas already issued are valid for three years and can be extended for three more once they expire; however, the longer-term impact on the IT workforce could be more noticeable. There is some indication that the IT industry’s reliance on H-1B visas is diminishing. A recent report by the American Electronics Association concluded that the IT industry relied on 65% of the capped number in 2001 but only 34% in 2002.

As the industry has evolved into a more conceptual field in which the development, creation, specification and design of IT products becomes increasingly important, employers are requiring higher levels of education. These changes are reflected in high and increasing levels of educational attainment within the IT workforce. Nearly two-thirds of the IT workforce holds a Bachelor’s degree or higher compared to only 30 percent of the non-IT workforce. Slightly less than half of the IT workforce had at least a Bachelor’s degree just ten years ago.

Career paths into IT occupations have become more complex and less linear even when compared to those traditionally followed as little as a decade ago. The traditional career path was one in which the prospective IT worker went through formal education, found employment in the industry and gradually progressed into higher-level jobs. The place at which one exited the formal educational system largely determined one’s initial position within the workforce, and most IT workers remained with one or a small number of employers until retirement.

Today, however, there are many opportunities for training in addition to formal degree programs. For example, there exist a variety of non-degree programs, distance education programs and employer-based training organizations. Workers now frequently move back and forth between the educational system and the workforce as they continuously retrain throughout their careers. As a result, there is no "most common path" into the IT industry. IT workers with a bachelor's degree might enroll, in a community college for a particular certification program or in a four-year college to take courses that will bolster their basic knowledge. Others may take courses or enroll in a degree program at the graduate level in disciplines such as information systems or business. There are still others who will enroll in a doctoral program in computer science or a related discipline. The end result is that there are many paths into a particular IT career.

Anticipated growth in the higher-end IT occupations will require an increasingly educated IT workforce but the pipeline into the more traditional IT training does not show signs of meeting this demand over the coming years. The Computing Research Association’s Taulbee Survey is an annual survey of Ph.D.-granting programs in computer science and computer engineering in the U.S. and Canada . According to the 2001-2002 Taulbee Survey, 849 Ph.D. degrees were awarded by the 182 departments responding to the survey, which was the lowest figure reported since 1989. This may reflect a hangover of the high-tech boom of the late 1990s in which many students who would otherwise have pursued Ph.D. degrees were pulled into the job market. Consistent with this interpretation, the number entering Ph.D. programs increased by 22 percent over the last year, and departments are reporting a record number of applicants to their programs. It is unclear whether these trends will ultimately have a substantial effect on IT labor supply since there has also been a shift in the areas of specialization for these Ph.D. students who are moving away from industry-related training and toward academic-related training. If this is the case, then the Ph.D. pipeline may not alleviate labor shortages in the industry despite the increased numbers of students. White and non-resident alien men account for a very large percentage of both Ph.D. production and enrollment in the Taulbee Survey, whereas women account for only 19 percent of enrollment and 18 percent of graduates.

Evidence on trends in Bachelor’s degree enrollment from the Taulbee Survey shows that the period of explosive growth in enrollment is likely over. There were 20,677 Bachelor’s degrees in Computer Science and Computer Engineering awarded in the 2001-2002 academic year. Trends in the undergraduate population also suggest that the share of women in the field may continue to decline: over 82 percent of Bachelor’s degrees awarded went to men. These figures are consistent with broader national-level data from the National Center for Education Statistics (NCES), which includes a wider range of IT-related disciplines. The NCES reports that there were a total of 41,954 bachelor’s degrees in computer and information sciences awarded in 2001, with 72.3 percent awarded to men. Just over 66 percent of the 16,038 Master’s degrees conferred in Computer and Information Sciences were awarded to males in 2001 and 82.3 percent of the 768 Ph.D. degrees awarded went to men.

Much of the failure to attract students to IT-related academic disciplines in larger numbers is likely do to negative perceptions and a general lack of information about these fields. A 1999 survey of eighth grade students and high school juniors in Silicon Valley, the heart of the American IT industry, indicated a greater understanding of the types of training required for professions such as lawyer, doctor/nurse and sales/marketing than for computer-related occupations. Survey data also indicate that students who do well in mathematics have a positive attitude toward computer-related occupations. But these studies have also shown that student interest in mathematics tends to decline with age. By the time they reach college, many have decided against further study of mathematics and are thus directed away from technical careers in IT. This has been especially true for female students. Efforts by policymakers to improve the supply of qualified IT workers has thus understandably focused on improving education, access to computers and changing perceptions of mathematics and IT-related academic fields. These are, of course, long-term strategies for re-shaping the pipeline into IT careers and will take some time to start producing tangible results.

The rapid pace of advances in the power of computing hardware, and the capabilities of software have been one of the main drivers of economic growth and change in the U.S. and other advanced economies in the past half century. These changes have produced dramatic shifts in the size and composition of the IT workforce over time. The Bureau of Labor Statistics’ Current Population Survey provides the best source of data to measure the growth of a fixed group of core IT occupations (systems analysts, programmers, computer operators, and operations and systems researchers) over time.

Over the past two decades the CPS data indicate that employment in core IT occupations increased by 92.5 percent, rising from about 1.47 million in 1983 to 2.83 million in 2002. At the peak of IT employment in 2000, the total had reached just over 3 million. By comparison non-IT employment increased only 31.6 percent over the same period. As a result, IT employment increased from 1.45 percent of the labor force in 1983 to 2.16 percent in 2002.

Much of the growth in IT employment has been concentrated in the higher level occupations, such as systems analysts, whose numbers increased 520 percent from 1983 to 2002. In comparison, the number of programmers has grown much more slowly, and the number of computer operators has fallen considerably. These changes reflect a variety of factors. On the one hand, the relative stagnation of programmers’ employment reflects an increased tendency to export the routine work of writing code to lower-cost locations overseas, such as India, while U.S. based employees focus on the conceptual tasks of specifying software tasks and outlining procedures necessary to achieve business ends. On the other hand, it reflects the shifting costs of hardware and software. As hardware costs have fallen, programming tools have become much more sophisticated, making it possible to automate many of the steps involved in producing lines of code. Indeed, the increased power of desktop software, such as spreadsheet programs allows individual users to accomplish tasks that in the past would have required the services of specialized programmers.

The rapid growth of the IT workforce reflects rising demand for IT workers. Rising relative wages of IT workers indicate that this growth of demand has outstripped increases in supply, creating a relative scarcity of IT workers. Despite the recent technology sector slowdown, all forecasters expect IT employment to grow more rapidly than overall employment. Increasing the supply of qualified IT workers is clearly critical to meeting future industry demands. Rising real wages will attract more workers to the IT sector. The marked changes in IT education in the past decade are a response to the rising demand among workers for IT training that can provide alternative pathways to enter the field. The high cost of IT labor in the US will also encourage the continued growth of off-shore employment or increase employer pressure for further changes in immigration restrictions such as higher caps on H-1B visas issuances to allow more immigration of foreign workers.

Information technology is a $2.5 trillion global industry. While the U.S. is the largest single customer of IT products and services, no one country has a dominant position in terms of the human capital or intellectual property needed to design and develop information technology. Unlike other more traditional industries, IT does not derive its value directly from geography-specific natural resources and much of IT production is not bound by the conventions of time or physical space. As a result, the relocation of IT operations offshore is an important consideration with significant implications for the domestic IT industry. This outsourcing of operations may be undertaken to reduce cost structures or to tap into labor supply that cannot be found in the U.S. According to a recent ITAA study, only 6 percent of all firms have moved their IT jobs overseas but 12 percent of IT firms have already moved jobs overseas. While the relocation of jobs offshore is commonly thought to primarily affect Category 2 workers, who do not have highly specialized skills, the ITAA survey indicates that this is increasingly not the case. In fact, programming and software engineering jobs are the most likely types of IT jobs to be moved offshore, which may indicate an increasing tendency to outsource more sophisticated value-added jobs.

The small and shrinking share of women and minorities in the IT workforce is problematic as it suggests that some potential talent is somehow being discouraged from entering IT occupations. This trend has serious implications for the domestic IT industry since locating and employing qualified labor is central to a firm’s success in the increasingly competitive global economy of the 21st century.

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About the authors

Joshua L. Rosenbloom is a Professor, University of Kansas Department of Economics and Research Association National Bureau of Economic Research.

Brandon Dupont is a Graduate Student, University of Kansas Department of Economics.