Geeks Don't Need Welfare

Geeks Don't Need Welfare

Geeks Don't Need Welfare

The conventional wisdom debunked.
March 13 1998 3:30 AM

Geeks Don't Need Welfare

So why are the feds putting them on the dole?

The multibillion-dollar computer industry is adamant about doing things its own way, insisting that the government stay out of its business. So why is the Clinton administration spending $28 million to remedy an alleged shortage of "information technology" workers?

Advertisement

The info-tech worker shortfall cited by the government is documented in a recent Virginia Tech study, which claims that 346,000 computer-related jobs are going begging for lack of trained people. This shortage, said Secretary of Education Richard Riley, "translates into billions of dollars in unearned wages and unrealized corporate earnings." According to the Bureau of Labor Statistics, the volume of vacant high-tech positions will increase fivefold in the next decade--but the number of college students majoring in computer science is shrinking. "Today," said Vice President Al Gore mournfully, "many employers report difficulty in recruiting enough workers with these skills."

Assuming that there is a shortage of info-tech workers, the administration's $28 million remedy, announced in January, won't fix it. The Clinton plan is an amalgam of several modest programs divided among the Commerce, Education, and Labor departments. (For comparison's sake, Sun Microsystems spends $50 million a year on education and training.) Much of the effort is little more than exhortation, like the Commerce Department's plan to hold four town hall meetings to examine the shortage and discuss ways to alleviate it. Other elements are only coincidentally helpful. The Education Department touts Pell grants and HOPE scholarships, and calls for national testing and better teachers--which are no more helpful to computer-related businesses than to banks, breweries, or oil companies.

Much of the administration's program is mere packaging--the rest is well-meaning chatter, notably a plan to launch an advertising campaign to convince kids that computer jobs are not just for geeks anymore. There is a little meat on these bones, including $3 million to fund local efforts to retrain dislocated workers for information-technology jobs and $8 million for a computer job bank on the Internet. But neither promises to make a dent in the supposed shortage.

42000_42733_980311_moneycomputerani

I keep writing about a "supposed" or "alleged" shortage, because the dearth of info-tech workers is an illusion. Translated into English, what the academics and bureaucrats are saying is that businesses can't hire all the computer specialists they want at prevailing rates. They're saying that businesses could make use of more of these trained workers if they were abundant and cheap--just as I could drink Dom Perignon every night if it were priced like Old Milwaukee. When the unemployment rate is below 5 percent, as it has been since last July, a lot of industries find that hiring is not quite as easy as it used to be. In a fast-growing industry that requires technical skills, it's no shock that demand for workers is rising faster than the supply. (The cheapest way to close the "gap" would be to increase the number of essential-skilled immigrants--currently fixed at a maximum of 65,000 each year--but the administration rejects that proposal.)

Advertisement

Fortunately, there is a simple solution to the shortage: higher pay. Since last September, salaries for new college graduates with computer science degrees have jumped by 8.6 percent, reports the Information Technology Association of America. That may be painful for the companies signing the paychecks, but it's good for the youngsters who had the foresight to enter the field. It also advances the goal of encouraging kids to consider computer careers. What's more likely to dispel the nerdy image of programmers and software writers--public-service commercials on TV or a big pile of cash? Even if higher pay doesn't improve the image of computer jockeys, it will doubtless provide sufficient consolation to enable more young people to live with it. Rising salaries will also encourage midcareer adults to enroll in the nearest community college to retool for a second career. It should also induce firms to provide more computer training for existing workers.

The ITAA, which advocates raising the visa limit, says the industry it represents can't wait for the market to fix the problem. "We operate on Internet time," ITAA President Harris Miller told Congressional Quarterly. Well, everybody operates on Internet time these days. The notion that the computer industry is uniquely important is common but groundless. All sorts of industries are important to national prosperity, yet the federal government doesn't take on the responsibility of monitoring and adjusting the flow of workers into each one. Riley claims that all those unfilled jobs represent lost wages and profits. But the money that would be spent doesn't vanish up the chimney--it ends up in paychecks and dividends in other industries whose products are also valued by consumers.

As with most Clinton proposals, this one's modesty is meant to disarm. The natural response is: Oh, what could it hurt? Not much. But some students will be induced to study computer science rather than some other subject, and each one of these gains for computer-related businesses is a loss for other businesses. A lot of the money is likely to be simply wasted, though.

Despite Clinton's infatuation with the idea, the federal government's record in training people for better jobs is not studded with triumphs. The Job Training Partnership Act, a decades-long federal program, appears to be almost entirely futile. "It's been a failure overall," says University of Chicago economist James Heckman. A 1994 survey by the Organization for Economic Cooperation and Development, an international association of market economies, found "remarkably meager support for the hypothesis that such programs are effective." The best programs, nearly everyone agrees, are those conducted by companies for their own workers. Why? Because employers have strong reasons to tailor the training to assure its practical value and to avoid wasting funds on feel-good exercises.

If it makes cold economic sense to invest more in training computer workers and attracting more people to high-tech jobs, we can sleep easy knowing that the relentlessly rational propeller-heads who run computer-related businesses will do so, eliminating the need for taxpayers to do it for them. Corporate welfare is a bad enough idea without adding the Silicon Valley gang to the rolls.