NCPA - National Center for Policy Analysis

EPF Report: Spending On Worker Training Misdirected

March 17, 1998

Responding to reports the U.S. faces a severe shortage of information technology (IT) workers, the Clinton administration recently announced spending initiatives aimed at this perceived problem. But economists question whether additional federal spending is needed or will solve the IT skill shortage.

The initiatives include $3 million in demonstration projects to train dislocated workers for high-tech jobs, $6 million in grants to industry groups for school to work programs and $17 million in competitive grants to bring advanced telecommunications and technology to underserved communities.

  • According to the Bureau of Labor Statistics, demand for IT workers will rise by 1.3 million over the next 10 years.
  • Employer survey results show that a bachelor's degree is required for all or most IT jobs; but almost 80 percent of displaced workers lack a college degree (see figure). LINK
  • And other programs to retrain dislocated workers have shown little success; for example, three evaluations of the federal Trade Adjustment Assistance program found no significant increase in earnings or employment from short-term training and job search assistance.

Dire predictions of looming shortages discount the strong market forces at work in the U.S. economy.

  • In fact, a William M. Mercer compensation survey found that average hourly compensation for operating systems/software architects and consultants rose by nearly 20 percent between 1995 and 1996.
  • A Deloitte & Touche survey shows that salaries for computer network professionals increased between 1996 to 1997 by an average of 7.4 percent.

The figures show the labor market corrects for shortages -- the "price" of workers is driven up, encouraging new market entrants.

Source: Anita Hattiangadi, "Government Efforts to Increase the Number of Information Technology Workers Are Misdirected," E-Mail Trends, March 17, 1998, Employment Policy Foundation, 1015 15th Street, N.W., Suite 1200, Washington, D.C. 20005, (202) 789-8685.


Browse more articles on Tax and Spending Issues