Sifting through the raw data on wages for IT and, more broadly, STEM is a tough job. Perhaps that’s why reports are so contradictory. For instance, according to the Computerworld IT Salary Survey 2015, average total compensation rose 3.6% year over year; PayScale, however, reports that IT salaries in 1Q15 have increased only 1.7% year over year. In addition, the battle over the ostensible STEM shortage rages on, with both sides claiming the other is out to lunch. Shall we believe Robert D. Atkinson or Robert N. Charette? Is the fact that at about half of all graduates with STEM degrees find jobs in other fields mean there’s a glut, or is it just that STEM degrees are useful for all sorts of jobs? If you’re already confused, prepare to get more confused.
Digging Through the Data
The U.S. Bureau of Labor Statistics (BLS) provides information on number of employees, salaries and so forth by industry and occupation. These statistics can help provide a picture of what’s happening in the labor market, in so far as they are reliable. Even though they may not be perfect, they are a place to start.
Despite their mystique and the clamor for more candidates, IT jobs as a whole don’t really stand out from some other major industries. In 2006, the BLS category “computer and mathematical science occupations”—which includes programmers, software engineers, network administrators and so on—comprised about 3.08 million employees at a mean annual salary of $69,240. (Note that this salary statistic is a mean, not a median.) In 2014, that same category reached 3.83 million employees at a mean annual salary of $83,970, for a compound annual growth rate (CAGR) of about 2.4% (for salary). But for “healthcare practitioners and technical occupations,” mean salary rose from $62,030 in 2006 to $76,010 in 2014, for a 2.6% CAGR. The computer category led in mean salary in 2013 by about 10%, but its growth was slower. For legal occupations, salary growth was a bit lower at a 2.1% CAGR between 2006 and 2014, but at a mean $101,110 in 2014, it blew away both of the other before-mentioned categories in absolute terms.
As for total employment (i.e., numbers of employees), the computer category saw about a 2.8% CAGR between 2006 and 2014. For the health-care category, it was about 2.0%, and for legal, it was only about 0.9%. So, these numbers show that for three major industry categories, no one stands out above the others in three employment metrics: salary, salary growth and employment growth.
The three industries discussed above apparently have vastly different employment characteristics. Health care is generally viewed as suffering a shortage of available labor, and the legal profession (particularly lawyers) is generally viewed as having a glut. The growth in employment in these categories may bear those views out to some extent: health-care employment is growing at a much faster rate than legal. The computer category (which we can roughly equate to IT) is growing even faster, yet growth in wages is not keeping pace with that of health care. Presumably, a shortage should lead to faster wage growth in accordance with the laws of supply and demand. Furthermore, those costs should then be passed on to customers in the form of higher prices. Yet growth in health-care spending far outpaces growth in IT spending. Factors such as Moore’s Law may have some role to play in keeping prices down for IT, although that situation may change over the next decade.
Furthermore, mean annual wages for all occupations between 2006 and 2014 grew at a 2.4% CAGR—falling below that of health care but matching that of IT (specifically, the BLS’s computer professions category). In addition, the CAGR of the consumer price index between 2006 and 2014 was about 2%, meaning wage growth in real terms was nigh on negligible.
In an attempt to make sense of the data, however, reported trends seem rather odd. Patrick Thibodeau at Computerworld, for instance, said that according to the IEEE-USA, the number of electrical engineers in the U.S. fell 10.4%. Yet according to BLS data, the category “electrical and electronics engineers” has risen steadily in number of employees between 2012 and 2014 at a 2.2% CAGR. Granted, the IEEE may be making some category changes or factoring in other data, but the sharp distinction between steady if unimpressive growth and staggering losses is a stark contrast that bears resolution.
Are you confused yet? It’s tough not to be.
At best, an unsophisticated look at the raw BLS data suggests that IT (and, more broadly, STEM) seems to be no real standout relative to some other industries, or even to the economy as a whole, in terms of wage growth. It leads by some metrics, but not by others. Of course, however, the proponents of vastly different conclusions (e.g., a STEM shortage versus a STEM surplus) don’t make judgments solely on the basis of numbers like these. They make judgments on the basis of who’s making the most noise. If, for instance, company executives or Bill Gates claim that there aren’t enough STEM candidates, there must indeed be a shortage—right?
The problem, however, is that by its nature, technology is a relatively fast-changing industry, so the demand for talent in certain areas will always lead available employees with given expertise. If a new technology becomes a hot market over a few months, then naturally four-year universities will take time to spit out candidates trained in the combination of skills appropriate to that market. Does that mean there is a shortage of talent? Well, yes, in the sense that demand received a short, sharp boost that supply takes time to catch up with. But that’s not a systemic problem that requires retooling all of society to produce candidates for a broad industry when what is needed is a relatively few specially trained professionals in narrow categories.
The fact that IT wage increases, judging from BLS data, are not all that stellar suggests that—by the laws of supply and demand—what’s really happening is that the “shortage” is a shortage of less expensive labor. Also, because one in two STEM graduates pursues other fields, one cannot help but suspect that the corporate hand-wringing over not enough women and minorities in technology positions is not so much about company executives and their burdened consciences, but about a largely untapped source of labor to make the glut even worse and stifle wage growth. Why consider such nefarious motives? Consider who benefits from the huge stock buybacks that so many technology companies are pursuing—it’s not the employees who are performing the labor.
A look at the raw employment and wage data for IT-related industries as well as some other major industries suggests that the best thing we can say is that we don’t really know what’s going on. The variations in even a relatively narrow category like IT (i.e., narrow relative to the economy as a whole) are too numerous to make an industry-wide assessment that resolves some of the ongoing debates—particularly, regarding the supposed STEM shortage. Growth in mean IT wages (judging from the BLS industry categorizations) was about the same as that of the broader economy. At a minimum, however, the data seems to fail to make a strong case for IT being some special category around which public policy should focus. In the end, IT is just another job that’s integral to the economy, and market forces—if allowed to work without the “help” of fiddlers in government and central banks—will work things out.