Dr.Norm Matloff: Tech Demand NOT “Outstripping Supply in Boston, San Francisco”

Dr. Norm Matloff writes to his email list

About 10 days ago, an article by Computerworld`s veteran reporter on H-1B issues, Pat Thibodeau, caused a stir among some people who follow the H-1B/green card issue:

Fed Says Tech Demand Outstripping Supply in Boston, San Francisco,” Computerworld, September 9, 2013

As is often the case, the headline turned out to be rather misleading (headlines are written by editors, not the authors of the articles). The subheadline is a fairly accurate summary of the article, though:

“The IT employment outlook has provided nothing but mixed signals. Tech employment is showing signs of slowing, but not everywhere. Now the Federal Reserve is saying that in some markets — Boston and San Francisco — demand for certain types of tech skills is outstripping supply.”

However, though the subheadline is an accurate summary of the article, I don`t think the article is quite so good a summary of the Fed`s report. (Again, this may be due to cuts by the editor.)  Let`s first look at the case of the Boston region, for which the Fed`s report is here: Beige Book, Boston,  September 4, 2013

Though the CW quote from the report is correct, the report also said, under the category Software and Information Technology Services,

“New England software and information technology services contacts generally report weaker than expected business activity through August, with slow revenue growth…Four out of five contacts continue to be cautious in hiring, and plan to remain close to their current headcounts through 2013…  Looking forward, New England software and IT firms are cautiously optimistic, with most expecting only modest growth through the second half of 2013.”

That hardly supports the notion that there is a tech labor shortage in Boston.

By the way, note that sample size, n = 5.  Who said this is the era of Big Data? :-)

Similarly, the San Francisco part of the report states,

“Reports indicated that overall wages at technology firms have been mostly stable or modestly increasing. However, firms in various industries continued to compete vigorously for a limited pool of qualified workers to fill certain technical positions, spurring significant wage growth in these slots.”

Putting aside the presumably small value of n there too, again the Fed`s own report counterindicates a raging general tech labor shortage in the Bay Area.

It`s interesting how the industry lobbyists have retrenched recently. Some of them continue to claim we`ve got a nationwide shortage, but I`ve increasingly seen them claim only small regional shortages.  Vivek Wadhwa also makes this assertion.  Yet even the report by the Fed doesn`t really support the claim.

Dice.com data is controversial, but since the industry PR people like to cite it, it is of interest to note that a survey in Fall 2012 found that IT salaries in Silicon Valley were DOWN 2.8% from the year before.

They did find that wages in Boston were up 6.9%, possibly reflecting the recruiter`s point in the CW article that Google and several other big guys have recently been opening offices.  Google greatly expanded its Kendall Square office in December 2011, according to Boston Magazine, Dec. 2011.  Kendall Square is MIT`s subway stop, two stops from Harvard, three from Tufts, a short bridge away from Boston University, etc.  The article shows the youth theme throughout, consistent with my continuing point that the industry is hiring the young, including young H-1Bs, while shunning the older workers.

That of course is the other point to keep in mind when one sees claims of shortages and wage increases:  The “shortage” is often one of young workers, not qualified workers in general.

At any rate, though a sudden new influx of tech firms into a region may create a temporary “shortage,” it is no reason to bring in the H-1Bs. Let the market do its job.

The CW article makes brief mention of specific skill sets, such as setting up Apache (or other) Web servers to handle high volume traffic. Yes, this is nontrivial, but no, it`s not rocket science.  This is not some wizard stuff, limited to select cognoscenti, and there should be people available, if employers stop automatically rejecting the older workers.

As to the recruiters` mention of Python, I must say this irritates me, as I`ve written before, I`m actually a big Python fan–that`s the programming language, not Monty Python :-) — and I know good Python programmers who have had trouble in the job market in the last year or so.  It`s just a phony issue.

Bottom line, though, is that the Fed report for the most part confirms that we do NOT have a general tech labor shortage, including in the Boston and San Francisco regions, so an expansion in the H-1B and green card programs is NOT warranted.  Given that the Fed has long been a vigorous supporter of the H-1B program, this is saying a lot.

Norm

Archived at http://heather.cs.ucdavis.edu/Archive/FedSaysUmWhat.txt