Amid cries of ‘tech-labor shortage,’ tech wages fall

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Politics,Beltway Confidential,Science and Technology,Timothy P. Carney

The notion of a “shortage” is one that economists are often dubious of. Who’s to determine the appropriate amount of something?

When farmers talk of a shortage of farm labor, I think the only way to interpret that is that wages are higher than farmers want to pay. “We’ve got neighbors literally competing against each other just to have enough of a workforce to harvest their crops,” one farm lobbyist lamented.

At the very most, in unskilled labor, a shortage means that it becomes unprofitable to make some things (or harvest some crops) because the labor costs push the overall costs above the point where people are willing to pay for it.

In skilled labor, it’s a different thing. There may be some jobs companies want to fill, and which they are willing to pay good wages, but for which we simply don’t have enough people available with the needed skills.

You see lots of folks warning about a “tech worker shortage.” One proposed solution by the industry’s lobbyists: favor high-tech workers in immigration.

But if there were a “shortage” of tech workers in any meaningful sense, wouldn’t tech wages be rising?

They aren’t, it seems.

ComputerWorld reports “The U.S. tech industry added nearly 64,000 software-related jobs last year, but as the workforce expanded, the average size of workers’ paychecks declined by nearly 2%.”

More highlights from the article

“It is also possible that with the recession, wages [for new hires] dropped as more people were competing for jobs. So wages for new jobs are below average,” said Kazmierczak.

David Foote, the CEO of Foote Associates, which analyzes IT hiring trends and wages, said the supply of workers in the software services segment “is plentiful” because “there are many unemployed workers who want to get back to work.”

Employers, consequently, did not need to offer generous wage packages to fill many of their jobs. “In fact, [employers] could get workers pretty cheap,” said Foote.

Now, in some corners of the industry, wages are rising, and there are many possible explanations for where wages are falling. But this sure isn’t evidence of a shortage.

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