definition, a shortage of engineers exists if the analyst making the determination concludes that society would be better off if there were more engineers. This type of definition does not imply that the labor market is in disequilibrium; instead it describes a situation where the person who claims there is a shortage does not like the market's results. To quote Arrow and Capron, “Careful reading of such statements [of shortage] indicates that the speakers have in effect been saying: There are not as many engineers and scientists as this nation should have in order to do all the things that need doing such as maintaining our rapid rate of technological progress, raising our standard of living, keeping us militarily strong, etc. In other words, they are saying that (in the economic sense) demand for technically skilled manpower ought to be greater than it is—it is really a shortage of demand for scientists and engineers that concerns them.”¹

Market Disequilibrium Models

The committee uses the term “market disequilibrium models” to describe situations where the number of workers willing to work in an occupation is less than the number of workers employers would like to hire at the prevailing wage rate and where something prevents an adjustment that results in the market achieving an equilibrium. An equilibrium exists when the number of workers willing to work at the market wage rate is exactly equal to the number of workers employers would like to hire at that wage.

Why might we have market disequilibrium occupational shortages? One possibility is that government or institutional forces restrict wage rates or entry into an occupation. For example, if the government wage structure limited the salary of IT workers in the federal government to half of what they could receive in the private sector, the number of workers demanded would exceed the number willing to work in the federal government, and there would be a shortage.

Another reason that shortages might exist is that market changes occur faster than labor supply can adjust. In occupations such as IT, where it takes a number of years for people to gain the skills necessary to participate, sustained increases in the demand for labor can prevent supply from “catching up,” at least for a period of several years. A number of studies have developed formal models and applied them to the market for engineers, scientists, and IT workers.² What these models have in common is that so long as demand grows more rapidly than supply grows, it is impossible for the market to reach equilibrium.