Only about a third of the IT workforce has an IT-related college degree

From Guestworkers in the high-skill U.S. labor market An analysis of supply, employment, and wage trends by Hal Salzman, Daniel Kuehn, and B. Lindsay Lowell. From the summary:

This paper reviews and analyzes the science, technology, engineering, and mathematics (STEM) labor market and workforce and the supply of high-skill temporary foreign workers, who serve as “guestworkers.” It addresses three central issues in the ongoing discussion about the need for high-skill guestworkers in the United States:

Is there a problem producing enough STEM-educated students at sufficient performance levels to supply the labor market?

How large is the flow of guestworkers into the STEM workforce and into the information technology (IT) workforce in particular? And what are the characteristics of these workers?

What are the dynamics of the STEM labor market, and what are the employment and wage trends in the IT labor market?

Analysis of these issues provides the basis for assessing the extent of demand for STEM workers and the impact of guestworker flows on the STEM and IT workforces.

Our examination of the IT labor market, guestworker flows, and the STEM education pipeline finds consistent and clear trends suggesting that the United States has more than a sufficient supply of workers available to work in STEM occupations:

The flow of U.S. students (citizens and permanent residents) into STEM fields has been strong over the past decade, and the number of U.S. graduates with STEM majors appears to be responsive to changes in employment levels and wages.

For every two students that U.S. colleges graduate with STEM degrees, only one is hired into a STEM job.

In computer and information science and in engineering, U.S. colleges graduate 50 percent more students than are hired into those fields each year; of the computer science graduates not entering the IT workforce, 32 percent say it is because IT jobs are unavailable, and 53 percent say they found better job opportunities outside of IT occupations. These responses suggest that the supply of graduates is substantially larger than the demand for them in industry.

Analyzing new data, drawing on a number of our prior analyses, and reviewing other studies of wages and employment in the STEM and IT industries, we find that industry trends are strikingly consistent:

Over the past decade IT employment has gradually increased, but it only recovered to its 2000–2001 peak level by the end of the decade.

Wages have remained flat, with real wages hovering around their late 1990s levels.

We also find that, while there were strong increases in the number of computer science graduates and entrants from other fields that supply the IT industry during the late 1990s, after the dot-com bubble burst in 2001 a declining number of both guestworkers and U.S. students entered the IT pipeline. But since then, the number of IT college graduates has recovered modestly, while the number of guestworkers has increased sharply, suggesting a fundamental change in this labor market.

Our review of the data finds that guestworkers make up a large and increasing portion of the IT labor market:

The flow of guestworkers has increased over the past decade and continues to rise (the rate of increase dropped briefly with the economic collapse of 2008, but the flow of guestworkers has since continued its rapid upward pace).

The annual inflows of guestworkers amount to one-third to one-half the number of all new IT job holders.
It could appear to casual observers that the striking increase in guestworkers might be a response to increased labor demand in the IT field. But employment and wage levels in IT jobs have been weak, trends that are not consistent with strong demand. The data also show that there are multiple routes into IT employment, most of which do not require a STEM degree:

Only about a third of the IT workforce has an IT-related college degree.

36 percent of IT workers do not hold a college degree at all.

Only 24 percent of IT workers have a four-year computer science or math degree.

The data also strongly suggest that there is a robust supply of domestic workers available for the IT industry:

The number of domestic STEM graduates has grown strongly, and many of these graduates could qualify for IT jobs.

The annual number of computer science graduates doubled between 1998 and 2004, and is currently over 50 percent higher than its 1998 level.

At the same time, current U.S. high-skill immigration policy, which includes the granting of work permits to foreign students and the issuance of a variety of nonimmigrant guestworker visas, provides employers with large numbers of STEM guestworkers, most of whom are in IT occupations.

Until about 2001, when the dot-com bubble burst, the IT labor market performed in the way that economic fundamentals suggest it should, with the supply of IT graduates and workers responding to strong wage increases and reflected in growing employment. Since then, however, the IT field appears to be functioning with two distinct labor market patterns:

The domestic supply of IT workers exhibits increasing but slow growth in line with market signals.

The supply of IT guestworkers appears to be growing dramatically, despite stagnant or even declining wages.

The immigration debate is complicated and polarizing, but the implications of the data for enacting high-skill guestworker policy are clear: Immigration policies that facilitate large flows of guestworkers will supply labor at wages that are too low to induce significant increases in supply from the domestic workforce.