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Massachusetts Summit on the Science, Engineering and Technology Work Force
April 2001

I am delighted to be here today to participate in this vitally important discussion about how Massachusetts can develop a world class digital work force. I commend you for bringing together leaders in business, academia and labor to address this challenge for your state and the nation.

I was privileged to serve in the previous Administration for several years working to promote the competitiveness of American technology companies. We spent a great deal of time working to understand the causes of the digital work force shortage and craft policies to address it. I am very happy to share with you some lessons learned from that experience.

In 1998 and 1999, the Department of Commerce conducted a dialogue with thousands of leaders in business, academia, government and employee groups about the root causes of the shortage, and about innovative programs and ideas for addressing it. We traveled all over the country participating in town meetings, and reviewed a wide range of data and literature, including academic reports, commentary and expert testimony before Congress. We published a report, The Digital Work Force: Building Infotech Skills at the Speed of Innovation, describing our findings from this research.

I believe there are two principal causes of the high tech work force shortage. The first is the critical role information technologies now play in our economy. Over the past four years, IT-producing industries have contributed to more than one-third of our real economic growth. In 1996 and 1997, falling prices in IT-producing industries brought down overall inflation by an average of 0.7 percentage points. This made a significant contribution to the nation’s ability to keep interest rates low in a period of historically low unemployment. In addition, the IT industries have achieved extraordinary productivity gains.

The second factor is the explosive growth in Internet usage. The Internet’s pace of adoption eclipses all other technologies. For example, radio was in existence 38 years before 50 million people tuned in; TV took 13 years to reach that benchmark. Sixteen years after the first PC came out, 50 million people were using one. But, once it was opened to the general public, the Internet attracted 50 million users in just four years. It continues to grow at a meteoric pace. In 1994, only three million people used the Internet. In March 1999, 171 million people had Internet access. By March 2000, 304 million were logging on-an increase of 78 percent in just one year. 720 million people are expected to use the Internet by the year 2005, and business to business commerce over the Internet is expected to grow to $1.3 trillion by 2003.

The Demand for Digital Workers

When you consider these statistics, it really should be no surprise that the growth in demand for highly skilled information technology workers has outpaced the nation’s ability to produce them. For more than 15 years, jobs for computer scientists and engineers, systems analysts, and computer programmers have grown six times faster than the overall U.S. job growth rate. Strong demand is expected to continue.

From 1998 to 2008, it is projected that the United States will require more than 2 million new skilled IT workers—computer support specialists, database administrators, computer scientists and engineers, systems analysts, and computer programmers—to fill newly created jobs and to replace IT workers leaving the field. That is an annual average demand of about 200,000 skilled IT workers. About three-quarters of these jobs are projected to be in IT occupations normally requiring at least a bachelor’s degree, and one quarter are projected to be in IT occupations requiring an associate degree.

To put this in perspective, consider that from the time of the introduction of the first computer—the ENIAC—in the late 1940’s, through 1996, the U.S. IT work force grew to be about 1.6 million people. So the nation is going to need to produce more highly skilled IT workers in the next ten years than we produced in the last 40 years.

The effect of the digital work force challenge varies from industry to industry. Today the computer and data processing services industry is a prominent player in the IT labor market. These are software producers, IT service providers, and IT consultants, which employ more than one-quarter of all high-end IT workers. By 2006, this industry will employ 40 percent of these workers.

Some regions of the country will be affected more than others. By 2006, California, Texas and Virginia are projected to have the largest numbers of high-end IT workers. Oregon, Georgia, and Colorado top the list of states with the fastest growing cadre of highly skilled IT workers between 1996 and 2006. Massachusetts also has much at stake—its work force has the third highest concentration of IT workers in the country. And the demand for these workers is expected to grow in Massachusetts.

Characteristics of IT Labor Markets

Looking beyond these numbers, there are important qualitative factors at work in this labor market. First, rapid innovation and time-based competition are affecting the IT labor market. Time is one of the most critical competitive factors for IT-related industries, such as software, IT hardware and telecommunications companies. These companies confront product life cycles or project deadlines that are measured in months. A failure to reach the market in time or meet customer deadlines poses a serious risk that a company will lose to more nimble competitors. In these industries, there is a high rate of creative destruction, and jobs and companies change rapidly. The element of time argues for hiring workers who already possess the needed technical skills and experience, who can do a job immediately.

In addition, a proliferation of products and services is affecting the IT labor market. A rapidly growing array of products and services creates the need for IT workers specialized in particular technical skills and applications. Taken together, the pressures of time, and product and service proliferation produce the demand for “the right worker, with the right skills, at the right time.” The mix of knowledge and skills required varies significantly from one IT job to another-in terms of the specific technical skills needed, industry knowledge, and experience. Employers may also seek qualifications in areas such as project management, communications, and organizational skills.

This business and labor market environment undermines private sector incentives to invest in worker IT training. It is a lot like the old “make vs. buy” decision. As time has become a critical factor of competitiveness, many companies have concluded that they cannot afford the time penalty and the uncertainty associated with “making” the employees they need (through training), and are, instead, pursuing a “buy” strategy—looking to the open market for the exact skills and experience they need and paying a premium for them.

Employers may also pursue a buy strategy because in the rapidly changing world of IT, it is difficult to project future skill needs. There are also risks that returns on investment in training will be cut short. By upgrading the skills of their IT workers, employers create an attractive target for poaching by other companies.

While the “buy” strategy generally means paying a premium for the needed skills, companies are able to reduce the risks of the uncertainty about future skill needs. They can eliminate the cost of training. They can be reasonably assured that new hires are able to hit the ground running. And they minimize their losses if employees are lured away to other employers.

Education and Training Options – The Supply Side

We also learned that there is no single path to prepare a worker for a high-end IT job. Most get their education from four-year colleges. But other paths include two-year community colleges, private sector certifications programs, and in-house company training. Two-thirds of all workers in high-end IT occupations hold a bachelor’s degree or higher. Of those with degrees, 46 percent have IT degrees, minors, or second majors. And all told 86 percent of degreed workers in these occupations have a degree in a science or engineering discipline. This has significant implications for how we might design programs to increase the number of high end IT workers. It will not be sufficient merely to push more people through IT certification programs, but rather, we actually will need to graduate more scientists and engineers.

Market Response

The need for highly skilled IT workers has been highly publicized and, as a result, markets are responding. For example, after a 40 percent drop in bachelor’s degrees awarded in computer science between 1986 and 1994, in the past three years, bachelor-level enrollments in leading U.S computer science and computer engineering programs more than doubled. Community colleges, proprietary training institutions, and IT vendor certification programs have responded to the demand, with many individuals enrolling in these programs which would qualify them for technician and support-level IT jobs. For example, in 1999, Microsoft reported that it trained 1.2 million people around the world through 1,900 commercial training companies and 900 U.S academic institutions.

In addition, the private sector, and state and local governments, have dramatically stepped up their efforts to grow the nation’s IT work force. As we traveled around the country, we saw wonderful, innovative programs springing up which are really making a difference. We developed a web site—Go4IT.gov—that describes many of these programs in detail, and gives the names and contact information for the program sponsors. I encourage you to visit the web site to see whether or not this provides you with any additional ideas that may work for you here in Massachusetts.

Recommendations

A resounding conclusion from our nationwide dialogue and research is that there is no single “silver bullet” solution to ensuring we have the IT skills we need to promote competitiveness. This is a very complex problem that must be addressed on many fronts.

First, we need to improve the negative “nerdy” image of the technical professions, so more young people will be attracted to these fields. I will tell you a story that illustrates this point. We asked a group of students in the 6th and 9th grades in Missouri to draw pictures of an IT worker. You should have seen what they produced! The images included bow ties, pocket protectors, and short pants, and most of the IT workers were drawn with glasses. And perhaps even more interesting, of 160 pictures submitted by students, only 16 pictures portrayed women. Clearly, we have much work to do in this area.

Suggested approaches for casting a new image include: one or more national media campaigns to highlight positive images of technical workers, and communicate what they do, and what skills are needed. In fact, while I was at the Department of Commerce, we launched just such a campaign. It’s called GetTech, and it features television and radio public service advertisements, an interactive web site, and fun and interesting information that we distributed to all 14,000 public U.S. middle schools. You can find more information about GetTech at www.gettech.org. We also worked with the Warner Brothers Network to develop a series of high impact public service announcements targeting its teenaged audience. The ads feature some of Warner Brother’s popular young television stars.

Second, many students need more and better career information. This is especially important in the middle school years, when students form strong opinions about careers. Strategies here include: job shadowing and mentoring programs; field trips to high-tech facilities; internships and summer work experiences; and more engaging career information for students, their parents, teachers and guidance counselors.

Third, students must be well grounded in math and science to qualify for college-level technical instruction programs. Yet too many students are taught math and science by teachers who are not fully prepared to teach in these fields. Studies at the primary and secondary school level show a correlation between higher student test scores and teachers who have had more advanced courses in math and science. Well prepared teachers more often encourage student questions and discussions; spend less time on unrelated topics; permit discussion to move in new directions on the basis of student interests; and generally present topics in a more coherent, organized fashion.

The quality of math and science teaching is a priority now as school systems around the country struggle to fill their teaching positions. Strategies for improving K-12 math and science education focus on: supporting rigorous math and science curriculum taught by qualified teachers for all students. We can make more stipends and scholarships available for teacher training in math and science. Companies could also send technical professionals into the class room to speak, or work on science and technology projects with students.

Fourth, we have challenges at the college level. For example, keeping college-level technical curricula relevant and up-to-date is a serious problem. For universities, it can take three years, maybe even longer, to develop a new curriculum and get it approved. This is just too slow for today’s pace of technical change. Also, post-secondary students need greater knowledge of the work environments to which they will move after graduation.

There is also the tricky question of balance. Our IT education and training programs need to provide IT workers with marketable skills—which are often proprietary in nature, in high demand today, but obsolete tomorrow—and with more generic knowledge and skills that will allow IT workers to navigate shifts in technology.

Strategies to help ensure technical workers have timely and relevant knowledge and skills include: developing student opportunities for work-study, internships, mentoring, and joint projects—all with potential employers. College faculty would benefit from exposure to high-tech companies through internships, summer jobs, sabbaticals, rotation and exchange programs. I would like to see more one-on-one relationships between faculty and their counterparts in high-tech industry, so educators can get advice on employer needs, technological trends and curriculum design. Companies can sit on college advisory boards, and lend their technical professionals to teach a class. To help retain technically trained faculty when the lure of lucrative private sector jobs is strong, educational institutions should consider rewarding faculty who acquire contemporary IT skills.

Due to the increased use of IT in nearly all fields of work, the academic community should consider adding some technical training as a component of non-technical education programs such as those in health care, business, education, or marketing. Students in technical programs need to know about non-technical aspects of their jobs—in areas such as project management, entrepreneurship, human resources management and more.

Fifth, there is a strong need to encourage more women and minorities to pursue technical careers. Businesses could offer math, science, or engineering scholarships, and form alliances with women’s and minority colleges and professional associations. Using these alliances for recruitment, internships and mentoring will help bring these under represented groups into the high tech work force.

Finally, we must keep the skills of our incumbent workers up to date. One promising model that we observed is the training consortia model, in which employers cooperate to reduce the cost and risk of training workers and to build up regional training infrastructure. The skills consortium model is emerging as a best practice, and there are some outstanding industry led consortia, such as the Global Wireless Education Consortium. This was established by the leading telecommunications companies to increase the quality and quantity of technicians, engineers and IT specialists in wireless communications.

These are just a few examples of the innovative ideas and programs that people are working on all over the country to ensure the U.S. has a world class digital work force. There are many more steps, large and small, described in the Department of Commerce report, The Digital Work Force: Building Infotech Skills at the Speed of Innovation. I urge you to read it and determine which of the recommended practices and programs work best for Massachusetts.

Thank you.