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Is the technology skills gap fact or fiction?

Gary Beach | Sept. 6, 2013
Does a skills gap exist in the United States in general and in the IT market in particular?

Four years after the Great Recession officially ended, the nation's unemployment rate remains above seven percent. Twelve million Americans are unemployed. Ten million more are classified as "underemployed," meaning they work in jobs that they are overqualified for.

But the news for the unemployed gets worse. The U.S. Department of Labor Statistics reports the number of "open" jobs — positions that employers advertise but have not found "qualified" applicants for — has doubled from 1,900,000 jobs in June 2009 to 3,900,000 vacant positions in June 2013.

That shouldn't happen, according to a well-established economic theory known as the Beveridge Curve, named after 20th century English economist William Beveridge. The Beveridge Curve has documented since 1958 that as unemployment rates rise the number of open job postings drop because employers are either reticent to hire and add to payroll in uncertain economic times or see no reason to advertise for "open" jobs because job-seeking applicants flood their human resource department's electronic inboxes.

And They Call It a 'Skills Gap'
As disheartened job applicants, frustrated employers and bewildered economists try to understand this structural employment imbalance, the media has given it a name. They call it a "skills gap."

The American Society for Training and Development (ASTD), a professional development association, defines the term skills gap as follows:

Though a bit lengthy, the ASTD definition appears reasonable and straightforward. After all, if a company can't attract, or retain, the people it needs to grow or execute its strategic goals, it falls into a skills gap and whithers away to irrelevancy.

There is, however, a fly in the "skills gap" ointment.

And that fly is stubborn economists, and academics, who laugh at the mere mention of a "skills gap." For them, if a skills gap existed, there must also be a corresponding spike in wages earned, or the length of the average work week must increase. Their review of reams of macroeconomic data reveals no broad consensus in those areas. Hence, a "skills gap" does not exist.

But it sure does in the IT market and here's data to back up that assertion.

A recent study funded by Microsoft reports there are 120,000 new jobs created in the United States each year that require the skills of workers with degrees in computer science.

The U.S. education system, however, produces only 49,000 such degrees annually creating a gap of 71,000 available jobs. Those jobs that remain "open" without qualified candidates. This creates a "skills gap" that some companies want to fill with foreign workers via the highly controversial H-1B visa.

The existence of an IT skills gap is further substantiated by PayScale, a global compensation firm based in Seattle, which reports salaries for information technology jobs are rising 5.1 percent per year. A rate that is 45 percent higher than an average job in America.


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