Executive Summary

The products of advanced technology and, in particular, information technology (IT) permeate our lives. These products extend from the personal computer in homes and offices to smart chips that make cars more fuel-efficient. In medicine, the research leading to the recent success in mapping the human genome, based in large part on advanced use of information technology, has already led to fundamental advances in understanding the mechanisms of many diseases and, in the foreseeable future, will result in the design of interventions to improve health that can be more highly customized to the needs of individual patients. We live in the midst of a time when IT is—on a worldwide basis—transforming how businesses interact with their customers and with one another and even how people interact with each other for business, social, educational, governmental, and recreational reasons. Many familiar with IT trends, pointing to the substantial and sometimes surprising impact of the Internet in just a few years, suggest that we have only begun to see the societal transformations enabled by IT.

The need for information technology workers depends on the demand for information technology throughout the economy, both in the United States and worldwide, and IT markets and talent can be found all over the world. Information technology is becoming increasingly ubiquitous, and with that trend has come a burgeoning demand for IT workers, both to enable the use of existing information technologies and to develop such technologies for the future. There is a growing body of evidence that IT is playing a significant role in improving national productivity, and that



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Building a Workforce for the Information Economy Executive Summary The products of advanced technology and, in particular, information technology (IT) permeate our lives. These products extend from the personal computer in homes and offices to smart chips that make cars more fuel-efficient. In medicine, the research leading to the recent success in mapping the human genome, based in large part on advanced use of information technology, has already led to fundamental advances in understanding the mechanisms of many diseases and, in the foreseeable future, will result in the design of interventions to improve health that can be more highly customized to the needs of individual patients. We live in the midst of a time when IT is—on a worldwide basis—transforming how businesses interact with their customers and with one another and even how people interact with each other for business, social, educational, governmental, and recreational reasons. Many familiar with IT trends, pointing to the substantial and sometimes surprising impact of the Internet in just a few years, suggest that we have only begun to see the societal transformations enabled by IT. The need for information technology workers depends on the demand for information technology throughout the economy, both in the United States and worldwide, and IT markets and talent can be found all over the world. Information technology is becoming increasingly ubiquitous, and with that trend has come a burgeoning demand for IT workers, both to enable the use of existing information technologies and to develop such technologies for the future. There is a growing body of evidence that IT is playing a significant role in improving national productivity, and that

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Building a Workforce for the Information Economy any constraints on IT production and support—such as those that might arise from excessive tightness in the IT workforce—may have a pervasive impact on the growth of the economy. The creation, acquisition, and management of information have emerged as the central focus of the new economy, a development contemporaneous with the shift in the mid- to late-20th century from a manufacturing to a services emphasis in both the United States and other developed nations. The primacy of information drives a continuing and growing need for information technology that supports the use of this information, and the scale, scope, and speed of the diffusion of information technology throughout the global economy—in developing and developed nations —are important drivers of economic change. This speed rewards adaptability and responsiveness for individual IT-sector firms. Rapid IT diffusion and business transitions also reduce the effectiveness of the market in reconciling labor supply and demand and the effectiveness of many putative policy solutions. Even when demand is growing, it takes time for technologically sophisticated workers to become adept at new skills. It also takes time for the promise and importance of the new information technology to motivate students and other workers to move into IT fields. As the economy comes to depend on IT, the availability of IT workers has become a question of national importance. But perceptions of the IT labor market depend in large part on who perceives it. Employers often report that they cannot find qualified workers to fill their vacancies, especially when they are trying to hire systems designers, systems engineers, computer scientists, systems analysts, and programmers to design and build IT systems and applications. Many employers assert the existence of an IT labor “shortage” and additionally argue that if they are unable to hire qualified foreign workers to fill open positions, they will be at a competitive disadvantage in a global IT industry. At the same time, some job seekers find it difficult to obtain jobs in information technology, despite having credentials that they think should qualify them for employment. Some who are older (over 40) observe that the majority of IT workers are younger, and some assert the existence of widespread and rampant age discrimination in the IT industry. Some who are U.S. citizens observe that many IT workers are foreigners, and suspect that they are being displaced from good jobs by foreigners residing in the United States, particularly those who are in the United States under a special class of nonimmigrant visas known as H-1B visas. And it is apparent to all that relatively few women and non-Asian minorities are employed in IT jobs, compared with jobs in other sectors of the economy. Policymakers are caught in the middle. While they recognize the important role that information technology has played in driving economic growth, they hear the concerns of both employers asserting critical

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Building a Workforce for the Information Economy shortages of labor and IT workers who are not sharing fully in the benefits of the strong economy. The economic benefits of IT are compelling, and numerous government actions have celebrated and sought to nurture IT-related economic activity. But the rising expressions of concern about such side effects as possible age discrimination and other inequality of opportunity for U.S. IT workers are troubling for policymakers. What is needed is an objective analysis of today's circumstances and the likely conditions for tomorrow. When Congress raised the H-1B visa quota on temporary immigrants in 1998 in response to industry's demand for skilled workers, it called for two studies. The first study, assigned to the National Science Foundation, was to investigate domestic high-technology workforce needs and sources of supply over the next 10 years. The second study, assigned to the National Academy of Sciences, was to investigate the status of older workers in the information technology field. Because these issues are so closely related, the National Science Foundation asked the National Academy of Sciences to address both subjects through the National Research Council process, which centers on the deliberations of a committee of diverse experts. That committee —the Committee on Workforce Needs in Information Technology—focused on IT workers, that subset of high-technology workers that has been at the core of H-1B and other policy controversies, with a complementary (though less detailed) consideration of biotechnology workers for contrast. Given the divergent perceptions of the high-technology labor market, it was clear to the committee from the outset that an examination of future workforce needs in high technology had to be embedded in a larger context that went beyond the immediate political debate. What defines a labor shortage, and what evidence is needed to assert its existence? How is the IT labor market likely to evolve in the future? What are the current sources of workers, and how are these sources changing? What role do foreign workers play in the IT labor market? To what extent can education and training help to reduce employer difficulties in hiring? What is needed to tap previously untapped pools of potentially productive workers? The committee sought answers to questions such as these by gathering statistical data, inviting experts to discuss the issues, holding public information-gathering sessions that were open to all in centers of high-technology employment, soliciting comments on a Web site, reviewing a wide range of published analyses and reports, and commissioning analytical papers. Its research underscored how little was truly known—as opposed to believed or hypothesized—about the IT workforce and how fragmented and inadequate is the knowledge base regarding the many component issues. Its deliberations were a microcosm of the larger policy debate, embracing both stakeholders and analysts. The committee's

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Building a Workforce for the Information Economy report is designed to present in one place a wide range of information useful for understanding IT workforce issues while explaining the shortcomings of that information and the range of inferences that can and cannot be made from it. THE NATURE OF IT WORK For purposes of this report, IT workers are those persons engaged primarily in the conception, design, development, adaptation, implementation, deployment, training, support, documentation, and management of information technology systems, components, or applications. As in many other domains, expertise in IT depends both on formal knowledge that is generally acquired in the context of formal education and on situated knowledge that is specific to a work or problem situation. In addition, it is useful to differentiate between two gross categories to understand the full range of IT work. What the committee calls Category 1 work involves the development, creation, specification, design, and testing of an IT good or service, or the development of system-wide applications or services. Category 1 work also includes IT research. What the committee calls Category 2 work primarily involves the application, adaptation, configuration, support, or implementation of IT products or services designed or developed by others. Some types of work, such as implementation of a concept, have some characteristics of Category 1 work and others of Category 2 work. Most IT jobs require a mix of Category 1 work and Category 2 work, though the mix depends on the responsibilities of the specific job in question. Because most jobs require such a mix, the boundary between Category 1 and Category 2 workers is fluid. However, these distinctions are important for making sense of, and responding to, issues in the supply of and demand for IT workers. (In this report, the term “ IT worker” without qualification refers to both Category 1 and Category 2 workers.) Like other workers, IT workers care about their financial compensation, which can be a mix of salary, bonuses, and stock options and/or equity stakes. But for many, the opportunity to work on challenging projects with new and interesting technology is a great motivator, and many surveys report that employees commonly rank compensation lower on their priority lists than technical challenges and the opportunity to learn new technical skills. THE PROBLEM The committee believes that today's IT labor market is tight and likely to remain so for the immediate future, barring dramatic change. The

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Building a Workforce for the Information Economy fundamental driver of this tightness is growth in the use of IT throughout a strong economy, a tightness that is significantly exacerbated by the currently low unemployment rate in the overall labor market. The committee has chosen the term “tightness” rather than “shortage” for several reasons. First, there is no universally accepted definition of “shortage.” Second, the use of the term “shortage” can imply a binary condition—either there is or is not a shortage. But the term “tightness” can encompass “shortage” as its limiting case—the condition in which employers find it impossible to find qualified workers no matter what they pay or how long they wait—and still account for the continuum nature of the phenomenon. Third, the committee feels that “tightness” is a broader and more encompassing term that does better justice to the complexity of the issue. Tightness in the overall labor market helps to account for the consistent employer reports of difficulty in hiring IT workers. However, perceptions of tightness reported by individual employers are driven by job openings and vacancies (i.e., variables that are perceived at firm level), which are recognized by labor market analysts as unreliable indicators of tightness or shortage in the overall market per se. This point is significant because vacancy rates depend as much on job turnover as on company growth in employment. High job turnover is common during periods of sector-wide growth, but employers have a number of methods available to reduce turnover. Tightness in the overall IT labor market is not uniformly distributed across all positions, all geographic regions, or all levels. The uneven experience is due, in part, to the fact that IT work is highly diverse—not only can IT work be divided into the two different categories defined by the committee, but it can also, of course, be more finely differentiated into job requirements of varying stringency. And workers trained for one type of IT work may not be able to move easily to another type of work. Uneven experience in the IT labor market across the nation is also due to the different mix of industries and employers in a given region. Thus, labor market experience in Silicon Valley, home to many IT-producing businesses, has national impact, but it is not comparable to labor market experiences in Austin, Seattle, Boston, New York City, or other places examined by the committee. A significant increase in the supply of Category 1 workers is likely to take at least several years (i.e., the time needed for large numbers of these individuals to earn degrees as well as time for workers to ground their formal learning in real-world experience and context), while training efforts for Category 2 workers can—in principle—bear fruit in a matter of months. This differential arises because Category 1 work tends to require more years of formal exposure to IT-related disciplines than does Cat-

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Building a Workforce for the Information Economy egory 2 work. Reflecting tightness and to attract and retain workers, real wages have grown in Category 1 IT occupations overall at a rate of about 3.8 to 4.5 percent annually from 1996 to 1999, according to data from the Current Population Survey (CPS), though this figure masks much more substantial growth in certain subspecialties and lower growth in others, and also does not include the impact of stock options and equity stakes on total compensation. By comparison, all other professional specialty occupations as a whole experienced an average annual increase in income during this period of 3.2 percent. The wage trajectory for the Category 2 workforce is unknown because of its highly heterogeneous composition and a lack of consensus on which occupations should be included. THE SIZE AND STRUCTURE OF THE IT WORKFORCE The IT workforce in the United States draws workers from many sources, including recipients of degrees in IT-related fields such as computer science or computer engineering and nonmajors who take a number of IT courses. Other sources include those who study IT after they have completed their formal education (in a non-IT-related field) and foreign workers who have generally been educated in whole or in part abroad. The size of the IT workforce is difficult to estimate. However, the committee estimates that the overall size of the IT workforce is at least 5.0 million, with approximately 2.5 million Category 1 workers and a number of Category 2 workers that is at least as large. Because IT has permeated the economy, society, and workplace in myriad ways, the bounds on the Category 2 workforce are unclear. Consequently, estimating the number of Category 2 workers is difficult and, ultimately, depends on a definition on which there is little consensus (or data). (For comparison, the total U.S. labor force is approximately 140 million.) The IT workforce has grown rapidly in the last 8 years, with the Category 1 workforce having increased by 60 to 75 percent. Nearly two-thirds of Category 1 workers are employed in firms with 500 or more employees, and nearly three-fourths of them are employed outside the “computer services” segment of the IT sector. These noncomputer services employers include those in manufacturing, finance and related industries, retail and wholesale trade, and government. This distribution belies the stereotypical image of IT workers in small start-up “dot-com” firms or even in large computer or software firms. Demographically, the Category 1 workforce is predominantly male, white, and younger than the workforce in general, as well as U.S.-born. Trends indicate that the Category 1 IT workforce is becoming increasingly diverse in terms of race, ethnicity, and country of birth and less so in terms of gender; it is also aging. And the Category 1 workforce is highly

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Building a Workforce for the Information Economy educated, with most Category 1 workers having at least a bachelor 's degree (though frequently not in an IT-related discipline); Category 2 workers often have a bachelor's degree or less. Furthermore, IT occupations are expected to experience a growth rate that is significantly higher than those of other occupations for the next decade, assuming that down-turns of economic significance do not materialize. AGE AND EMPLOYMENT IN THE IT WORKFORCE Despite rapid and continuing growth in IT employment, concerns have been raised that older workers are less likely to be hired and retained than younger workers who appear to have the same skills. Some who have gone on record on this issue, and others responding to the committee 's call for input, allege that widespread age discrimination is an important cause of the asserted IT worker shortage. The committee found limited data useful in assessing age discrimination questions, but its assessment yields some important observations. Given the demand for IT workers today and the number of jobs expected to be added to the IT workforce yearly, elimination of all potential age discrimination in the IT workforce would not likely have a significant impact on tightness in the IT workforce in the long term, although it could have a small, but important, one-time effect. The available data relevant to age and employment of older Category 1 IT workers indicate that the IT workforce is younger than that in other occupations with workers of comparable educational attainment, and that older IT workers (those 40 years and older) are more likely to lose their jobs than younger IT workers. However, these data also indicate that older IT workers are just as likely to find new jobs as are younger IT workers, and the length of time it takes for them to find new jobs is similar to that for younger IT workers. Finally, these data indicate (though not at a level that is statistically significant) that when displaced older workers find new jobs, their base salary is lower than that of their previous jobs, whereas displaced younger workers in a comparable position find higher base salaries. However, the data available to the committee do not allow the causality of differences to be determined. The data available are insufficient to establish either the presence or the absence of age discrimination, and did not allow the committee to determine whether these differences are the result of illegal age discrimination, legal conduct by employers that may be perceived as discriminatory, personal choices made by individual employees, or the ramifications of a rapidly changing industry. As a result, the committee could not determine whether illegal age discrimina-

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Building a Workforce for the Information Economy tion exists to a greater or lesser extent among employers of Category 1 IT workers as compared to employers of other professional occupations. With all that said, the committee believes that the nation cannot afford to underutilize valuable labor resources, especially during times of labor market tightness, and the differential experiences of older IT workers indicate some likelihood that this qualified segment of the workforce is not being fully utilized. FOREIGN WORKERS AND THE IT WORKFORCE The use of foreign workers (defined to be those working in the United States on either temporary or permanent resident visas) in the U.S. IT workforce inspires concern and passion, reflecting earlier debates over the appropriate role of foreigners in the labor force and their impact on the U.S. economy. Today, the politics of this debate have been shaped by arguments over the appropriate number of H-1B visa holders that the United States will admit each year. According to data collected from the CPS, foreign-born individuals (a term that encompasses foreign workers as well as naturalized citizens) constitute about 17 percent of the Category 1 IT workforce and about 10 percent of the total U.S. population. The committee estimates that H-1B workers constitute about 10 percent of the Category 1 IT workforce, though this figure most likely represents an upper bound. From the perspective of employers, the critical feature of the H-1B program is that it enables them to hire qualified foreign workers in a matter of months, in contrast to the years required to attract and train additional U.S. students or to obtain green cards for prospective permanent residents. The committee believes that foreign Category 1 and Category 2 IT workers—including the H-1B visa holders working in IT—can make positive contributions in a number of ways to the U.S. IT sector, IT-intensive firms, and the economy as a whole. For example, while H-1B visa holders are far from the dominant influence on the IT workforce, their relative number is large enough that without these workers there would likely be a slowdown in the rate of growth in the IT sector. At the same time, economic theory implies that an increase in the supply of IT workers, including temporary nonimmigrant workers, will cause the corresponding IT wage rates to be lower than they otherwise would have been. Theory alone does not imply any particular numerical magnitude of this effect. It is the committee's judgment that the current size of the H-1B workforce relative to the overall Category 1 IT workforce is large enough to exert a nonnegligible moderating force that keeps wages from rising as fast as might be expected in a tight labor market. The committee recognizes very well the political salience of the H-1B

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Building a Workforce for the Information Economy issue, but it has found no analytical basis on which to set the “proper” level of H-1B visas. Thus, decisions to reduce or increase the cap on H-1B visas are fundamentally political. The committee also believes that the use of foreign workers will continue to be necessary for the immediate future, and that foreign workers will continue to make important contributions as described above, but policy governing the use of foreign workers must consider not only the benefits of admitting foreign IT workers but also potential negative effects on the domestic workforce, and take steps to ameliorate those negative effects. ENGAGING THE EXISTING IT WORKFORCE To produce more without additional hiring, a firm may ask its workers to work overtime. Some amount of overtime work is common in the IT industry and in IT-intensive firms. But the common stereotype portrayed in the popular press of IT workers who work as much as 80 hours per week is not supported by any of the quantitative data available to the committee. The data also do not support the notion that longer workdays are more typical in smaller firms. Nevertheless, anecdotal evidence suggests that the large-scale averages indicating a minimal amount of overtime may mask a wide variation in work hours characteristic of different IT employers. It is also possible for employers to relax the requirements needed by a successful job applicant. While it is understandable that an employer would search for the perfect candidate, insistence on a long list of qualifications inevitably makes it harder to find a qualified worker, and in the time they are waiting to find the perfect applicant, they may be able to hire an almost-perfect applicant and provide training. There are limits to this process, of course, but in fact some employers are indeed adopting the hire-and-train strategy with some success. Assessment is central to engaging the pool of job applicants. On the whole, IT employers have been generally successful in screening out unqualified applicants, a claim that can be reasonably inferred from the IT sector's broad success and growth throughout the economy. On the other hand, given existing tightness in the IT workforce, IT employers may be able to do a better job in finding additional qualified and productive applicants from underrepresented groups that are now overlooked to some degree. Because of the heterogeneity of IT-sector firms, it is difficult to make broad generalizations about assessment practices across the IT sector. Nevertheless, it appears that many IT firms do not make use of structured assessment methods (i.e., procedures that are used to evaluate a job applicant that are administered in a standardized and uniform manner, scored

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Building a Workforce for the Information Economy in a consistent manner, and validated against indicators of job success). Many such methods have a solid empirical basis, a long and consistent record of validity, and cost-effectiveness, and also have been shown to expand the selection process to include larger numbers of persons from traditionally underrepresented groups such as women and minorities. At the same time, the success of structured assessment depends largely on a formal job analysis that specifies the duties, responsibilities, and requirements of a job. But, because many aspects of IT work change as rapidly as the technologies change (i.e., very rapidly), it may be difficult to apply traditional methods of job analysis to many IT jobs, especially those in Category 1. Some structured assessment methods have the further advantage that an employer who uses them can protect itself against legal challenges that more often arise when applicants and employees are being evaluated against a set of employment standards less formal than those implied by structured assessment. There is some controversy in the IT community regarding the amount of productivity gain that can be expected in the coming decade from tools and management approaches. Nevertheless, while individual productivity has been and can in the future be increased through the use of tools and/or the use of different organizational or managerial strategies, such tools and strategies are not likely to play a decisive role in reducing the current tightness in the IT labor market in the coming decade. FORMAL EDUCATION Education and training increase the supply of qualified workers by attracting and preparing new entrants to the IT workforce, enabling individuals already working in IT to acquire skills qualifying them for higher-skilled and better-paying jobs, and helping current highly skilled IT workers keep their skills up to date. Current high school mathematics education in the United States is inadequate to meeting the challenge of increasing the supply of IT workers. By developing reasoning and problem-solving skills needed in IT work and by providing the prerequisites for entry into many 4-year IT programs, improving secondary mathematics education can increase the number of students who are interested in and prepared for IT work or postsecondary study in IT-related fields. At the postsecondary level, the quality of formal education at 4-year colleges in IT-related fields is such that graduates in these fields are in great demand by IT employers. Exposure to formal computer science education provides an in-depth understanding of the fundamentals of the subject, the skills to work successfully on large IT projects, and a greater ability to adapt to new technologies. Although the number of graduates

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Building a Workforce for the Information Economy in IT-related fields is increasing annually, there is concern that lack of resources (e.g., faculty, laboratory space) will limit further expansion. IT minors and other forms of partial IT concentration provide an additional way to increase the IT labor pool. Community colleges also play an important role in extending and enriching the IT workforce. They provide 2-year associate's degree programs in IT, feed students into the IT programs at 4-year colleges, and provide lifelong IT skills development for students of all ages and educational backgrounds. Although 2-year and 4-year institutions face similar barriers to expansion (lack of qualified faculty, lack of computing facilities), community colleges are generally able to respond more quickly to changes in local labor markets and to increase the capacity of their IT courses more rapidly. Postbaccalaureate education in computer science competes for talent with an IT sector that offers the promise of greater—and more immediate —financial rewards. Because it depletes the talent engaged in the research enterprise, this trend does not bode well for the long-term health of the IT field. Finally, education aimed at certification is a large and rapidly growing source of skills for IT workers, particularly those who perform mostly Category 2 work. Certification is supported by the IT industry largely as a way to provide support for products that it offers. TRAINING Training refers to activity aimed at improving a current IT worker 's job performance or preparing an individual for IT work. For new hires, training often includes orientation to the culture of the company. In other cases, training is oriented toward the acquisition of new skills, whether technical or nontechnical. The term “training ” generally includes formal training as well as more informal training, such as learning by doing. It is generally accepted that all users of computer systems, and especially IT workers, must continually learn and update their skills to keep pace with rapidly changing technology. However, the training that most, especially smaller, employers make available to their employees tends to be small compared to the need. In both the shorter and longer terms, ongoing training could relieve tightness in the IT labor market both by reducing turnover and by increasing the supply of qualified labor. The pace of technological change in IT increases the costs and benefits of training for both employers and workers. Employers gain by having an alternative to hiring new workers, and thus, appropriately structured training, involving the integration of work experience with “formal” learning, can help to relieve tightness in the IT labor

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Building a Workforce for the Information Economy market. On the other hand, workers who receive training may be more likely to leave, and economic and competitive pressures discourage employers from providing support for ongoing training. From the worker 's standpoint, rapid technological change increases the intellectual burdens to stay current, but staying current also makes him or her more employable. The committee believes that IT workers are likely to receive an adequate level of ongoing training only if the responsibilities are shared between worker and employer. Workers must be willing to spend some of their own time on training efforts, and employers must be willing to explicitly support worker training. INTEGRATION OF WORK EXPERIENCE, TRAINING, AND EDUCATION The committee heard considerable testimony that employers prefer a combination of formal education and training with work experience that is relevant to the jobs for which applicants are being hired. Cognitive theory and workplace experience both suggest that application is usually necessary for formally acquired knowledge to become useful “on the job.” Such experience implies very strongly that internships and work-based education and training opportunities have many advantages over other approaches to education and training that do not integrate work experience as an essential component. A POINT OF COMPARISON: IT AND BIOTECHNOLOGY Information technology and biotechnology are both “high-tech” industries. A comparison of the environment and workforces of the two industries provides a broader appreciation of IT workforce issues. The biotechnology industry is similar to the IT industry in a number of key dimensions. Both depend on research and development, are entrepreneurially driven, and place a very high premium on speed—IT in its concern over “time to market” and biotechnology in its concern to be “first to invent” and “first to patent.” There are also key differences. Compared to IT product development, product development in biotechnology is generally more risky, more costly (a characteristic cost of development and trials is $50 million), and generally more time-consuming because of clinical testing required following product development (several years). (Today, only about 1 in 10 drug products entering the clinical phase succeeds commercially. Thus, a successful commercial biotechnology drug today reflects development and trial costs of $500 million—of which $450 million is accounted for by products that were unsuccessful.) The capital investment needed for biotechnology (especially in the initial

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Building a Workforce for the Information Economy stages) is generally much higher than that for much of the IT industry (chip fabrication aside). Furthermore, the biotechnology industry is highly regulated, for example, through the Food and Drug Administration and the U.S. Department of Agriculture. While both industries are driven by the creation of innovative products and processes, the complexity of modern biotechnology generally requires on average a more highly educated and trained workforce than does IT. At many R&D-based biotechnology companies, the majority of the workforce has college degrees in the life sciences; often more than half the workforce has advanced degrees, and several years of postdoctoral laboratory-based training as well. Despite a widely acknowledged oversupply of individuals with Ph.D.s in the life sciences, biotechnology employers share with IT employers similar difficulties in hiring people with appropriate expertise (e.g., analytical chemistry, instrumentation, organic synthesis, clinical biostatistics, bioinformatics, production quality, regulatory affairs). These difficulties have arisen because universities have not yet been able to respond to the changing skills requirements as the biotechnology industry becomes more manufacturing-oriented and biotechnology becomes a highly data-intensive enterprise. Bioinformatics presents particular employment challenges. Biotechnology is a data-rich field, and it will become more so as increasing amounts of genomic information become available. Other areas that will increase the need for managing large amounts of information include rational drug design and the conduct of genotype-profiled clinical trials, both of which shorten development times and target drug delivery more precisely. Increasing numbers of bioinformatics specialists —with an understanding of both biotechnology and computer science—are needed to analyze and understand the growing volumes of data that are becoming available. COPING WITH A TIGHT LABOR MARKET In the face of labor market tightness, firms in the near term must pursue some combination of the strategies available to employers in all sectors. These include recruiting newly available domestic or foreign workers, paying higher wages, making do with fewer workers than they would like, and retooling or making better use of the workers they have. In the longer term, steps need to be taken to increase the supply of IT workers. Those steps include attracting more students to study and teach IT, increasing the efficiency of employee screening and recruiting, and supporting the training and retraining of those already in the labor force. Responses to tightness in the IT labor market are already evident —

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Building a Workforce for the Information Economy enrollments are up in computer science degree programs, and employers are taking many of the steps described below to increase supply. But under conditions of sustained growth in demand, supply will lag demand, and today, the ability of market forces alone to bring supply and demand into close balance is an open question. Tight labor market conditions can be alleviated through policies or actions that reduce employer demand for workers and/or that increase the supply of qualified workers. In the absence of such policies and actions, work is produced differently, postponed, abandoned, or altered in character. PRINCIPLES FOR ACTION The committee believes that there is no single solution to relieving the tightness in the IT labor market, and multiple approaches involving public and private stakeholders as well as individual workers will be necessary. Effective approaches to addressing tightness must be responsive on the time scale of significant change in information technology, and employers must be able to hire workers on a business time scale (i.e., weeks or months rather than years). Policy actions taken to relieve tightness in the IT labor market must be reversible or capable of being moderated if and when such tightness no longer obtains. Policy decisions would be easier and less controversial if there were data that permitted analysts to quantify benefits, costs, and the degree of labor market tightness. Unfortunately, the relatively recent emergence of IT as a major element in the economy and the speed with which it has become critical to the global economy have far outpaced the rate at which data collection systems evolve. Many numbers are developed, published, and debated, but even the best among them are deficient for a variety of reasons. The committee has limited its recommendations to those that can be supported by evidence and be adjusted if economic conditions change. RECOMMENDATIONS Coping with a tight labor market requires the best efforts of all stakeholders: employers, employees, educational institutions, and government at all levels. Yet any action taken to alleviate labor market tightness will take time to show results. Further, actions that provide relief in the short run may diminish the urgency of longer-term measures. The steps recommended below are not novel— and most are already being taken by some stakeholders in some places. The committee believes it is important to gather them in one place to illustrate the multiplicity and interdependence of steps needed to ensure the continued health of the IT workforce.

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Building a Workforce for the Information Economy Employers should expand their repertoire of human resources practices by: Using validated structured assessment techniques in recruiting and promotion. These can help by identifying able candidates who might be missed when more informal techniques are used and by expanding the selection process to include people from traditionally underrepresented groups such as women and minorities. They also have a higher likelihood of eliminating unconscious bias on the part of those responsible for making employment-related decisions. Developing strategies to increase the numbers of women and minorities involved in IT work. Providing programs that allow members of underrepresented groups to enter the IT field through alternative paths would help to encourage women and minorities who were discouraged from considering or were unable to pursue IT early in their careers. Identifying and implementing steps to improve the quality of life for current and future workers. Employers have a wide range of nonmonetary approaches to improving job attractiveness, including alternative work arrangements (e.g., telecommuting), policies that support work-family integration, opportunities for on-the-job learning of new technologies, and high-quality project management. Increasing job attractiveness can significantly help with the recruitment and retention of top-quality employees. Promoting training opportunities for current workers in order to enhance skills and increase loyalty. While human capital theory predicts that an employee who receives training may well move on to another job, thereby depriving the employer of the benefits of a more highly skilled employee, recent empirical research indicates that in some cases training both helps the employer and increases employee loyalty. Training existing employees may be a better option than recruitment. Collaborating with other employers to provide training helps expand the local workforce, benefiting all employers in a region. Educational institutions are critical to IT workforce development in the longer term. They should: Improve secondary school mathematics education so that high school graduates are better prepared for studying technical fields and for IT-related fields in particular. Improvements should emphasize problem solving and conceptual thinking, encompass both individual and group work, and demonstrate that the skills learned can address real-life problems. Give greater emphasis to promoting IT fluency in K-12 and in higher

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Building a Workforce for the Information Economy education. The ability to use IT tools for learning and at work is a skill that every citizen should have. Better align educational programs in IT with the demands of the IT workplace. Classroom learning and workplace experience are both necessary in the education of an IT worker. IT students should participate in co-op and internship programs in industry. Conversely, IT problems facing industry should be studied in the classroom. Expand available faculty in IT-related fields. The number of computer science majors has increased in recent years, but further increases are limited by constraints on the number of faculty available. To overcome this problem, computer science departments should seek more faculty, make greater use of adjunct faculty drawn from industry, upgrade the skills of existing faculty, and allow faculty in other departments to assume some of the teaching load. Encourage IT course taking by those not majoring in an IT-related discipline. The growing ubiquity of IT means that familiarity with IT techniques and issues will be required of most students when they enter the workforce. Significant exposure to the formal content of computer science curricula will increase the pool of students prepared for a career in IT. Develop and implement ways to increase the attractiveness of IT-related majors to women and underrepresented minorities. These groups are underrepresented in IT, as well as in other areas of science. Increasing their numbers would significantly expand the pool of potential IT workers. Individual workers have a responsibility for maintaining the currency of their technical skills in the face of rapidly changing technologies. They should: Negotiate release time for training and professional development where possible; employer financial support for training, professional development, and additional formal education; and placement into jobs that will develop and enhance skills with current technologies. Seek internships with potential employers when using formal education to learn new skills. Take advantage of training opportunities offered by their employers. Participate in professional societies that publish technical journals and sponsor technical conferences and tutorials. Take advantage of self-study programs, community college courses, vendor certification programs, and other resources for updating their skills.

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Building a Workforce for the Information Economy Government policymakers should take steps to shape the labor market environment by: Supporting training and research and improving data collection. Specifically, government should: Provide incentives for employers to increase training. Under conditions of sustained growth, market forces alone are unlikely to balance the supply of and demand for IT labor. This argues for some form of government incentives for employers to increase training. For example, a mix of public and private funding could support regional training consortia in which member companies define the training program, and 2- and 4-year colleges provide some of the pedagogical resources. Sharing the costs and benefits of training might be especially helpful for smaller IT firms that lack expertise and resources for training. Collect more timely, disaggregated data on different dimensions of the IT workforce and flows into and out of it. The committee has found existing data to be lacking in detail and too out-of-date for many purposes. To make empirically based policy and business decisions, disaggregated data are needed on the size of the IT labor force, including information on all forms of compensation and data describing the career paths of IT workers. These data must be made available more quickly, in more detail, and for larger samples than data the government typically collects through surveys such as the Current Population Survey and the Occupational Employment Statistics program. Better data on immigration are also needed to analyze the role of foreign workers in the IT sector. Support research directed toward reducing tightness in the IT labor market by addressing areas such as organizing work for improved productivity, developing structured assessment tools specialized for IT jobs, improving software engineering (focusing on flexibility, security, reliability, manageability, quality of service, modifiability, scalability, and reuse), and achieving a better integration of the above areas. More generally, support of high-risk, high-payoff research would help to retain and attract top researchers in and to academia. Ensuring that foreign workers are as free as domestic workers to change jobs, and streamlining the green-card process, i.e., the process through which a foreign worker can obtain permanent residency in the United States. Much of the controversy over the H-1B program is rooted in the belief that the use of H-1B workers places U.S. workers at a disadvantage, because the H-1B workers' lack of mobility and their status as “temporary” in the labor force enable employers to exploit them in ways that are not possible when more mobile workers, such as U.S. citizens and green-

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Building a Workforce for the Information Economy card holders, are involved. To reduce these presumed disadvantages for U.S. workers, the committee believes that the government should take action in two ways: H-1B visas should be made more “portable” so that a foreign temporary nonimmigrant worker can more easily change jobs in the United States. The green-card process should be reformed and significantly streamlined, thus reducing the time needed to obtain green cards. Furthermore, the government should consider the effect of having increased the numbers of H-1B visas without having significantly streamlined the labor certification process or reevaluating the numerical limits on permanent residents available in the current employment-based immigration program (i.e., the number of permanent visas available to foreign workers based on their job skills and country of origin). The committee believes that it would be a mistake to adopt “stopgap ” measures for this group of workers and miss the opportunity for a considered debate on the nation's policies regarding employment-based immigrants in the light of increased globalization of the U.S. economy. Reconsidering the government's own employment policies as a major employer of IT workers. The federal government has severe recruitment problems—an imminent major retirement bulge of IT workers, limited remuneration packages as compared to those for private sector employers, and restricted opportunities to use foreign labor. The federal Chief Information Officers (CIO) Council's Education and Training Committee has been active in seeking solutions to these IT workforce problems. The committee supports the recommendations in the council's 1999 report, Meeting the Federal IT Workforce Challenge, for the federal government to: Be more flexible in remuneration and recruiting methods, by eliminating fully the restrictions on the remuneration of retired federal employees and by emphasizing the federal government's special advantages as an employer, including the defined hours, the family-friendly work environment, the stability of employment, and the health care and pension benefits. Make more resources available for training its IT workers and raise its investment in IT training to match the best levels in the private sector. Use contractors more effectively by removing unnecessary skill requirements for contract workers, and giving more flexibility for billing for the training of contract staff. Establish a mechanism, such as the Federal Cyber Corps, through which

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Building a Workforce for the Information Economy the government can pay for undergraduate and/or graduate IT education in return for government service. Taken together, these recommendations, if followed, should increase both the numbers and the effectiveness of the IT workforce and, in so doing, improve the competitiveness of the U.S. economy, both now and in the future.

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