The IT law of supply and demand

I don’t know if there are any economists reading The Recruiter, but if you’re out there, I think you’ll enjoy this article from Techdirt.

In a nutshell, author Tim Lee says basing IT shortage figures only on the number of available jobs is misguided. Rather, the focus should be on jobs at a particular price range. Here’s his Econ 101 summary:

“If the number of jobs exceeds the number of workers at a given wage, wages will get bid up and some employers will choose to let some non-essential jobs go unfilled. Conversely, if there are more workers than jobs, wages will fall, causing some firms to expand more aggressively than they would have at the higher wage. The number of jobs isn't fixed, it varies depending on how high salaries are.”

The real-world data supports his point—just look out for the Q3 2007 Yoh Index of Technology Wages which will be released next week.

So, if we’re following Tim’s analysis, rising wages means available jobs outnumber available workers. The result is the industry talent shortage, something we’ve often discussed here.

For extra credit, read the original BusinessWeek piece that fired up Tim’s brain cells. We’ll tackle the immigration debate in another post, once everyone recovers from having to remember basic economics!

Posted by Anna M.