UC Berkeley News
Press Release

UC Berkeley Press Release

Study shows promise of entry-level IT jobs for low-wage workers

– Never mind the headlines about offshore outsourcing. A University of California, Berkeley, professor says some regions in the United States offer a solid future for information technology jobs, particularly for low-wage workers entering the field.

Karen Chapple, an assistant professor of city and regional planning who teaches courses on economic development, poverty and metropolitan planning, says her research shows that an increasing simplification of information technology skills, transformation of the IT workplace from a concentrated high-tech industry to virtually every business in America, and an increase in training services, are vastly increasing opportunities and rewards for jobseekers with minimal education.

"The major finding," said Chapple in an interview, "is that if you can get in the IT door, you're going to have incredible wage gains - up to a 56 percent increase in wages over just three years. I think it's the key to upward mobility."

Training program graduates Chapple talked to found their wages increase from about $13 an hour in retail, service and construction jobs to $20 an hour in IT. Those who moved into IT with only a high school diploma or general equivalency degree (GED) saw wages increase by 74 percent, Chapple said, while those with a college degree reported salary boosts averaging 60 percent, and those with an associate's degree experienced wage gains of 36 percent. This suggests, she said, that if someone can't earn a four-year college degree, they would be better off attending a short training program than going to community college.

AnnaLee Saxenian, dean of UC Berkeley's School of Information Management & Systems, has studied information technology and regional economic development from Silicon Valley to India. She said American IT workers have been affected by waves of outsourcing of their jobs in recent years while simultaneously being hurt by the recession.

Today, said Saxenian, the country is emerging from the recession and witnessing a steady growth of IT jobs in previously atypical fields, such as health care, agriculture and biotechnology. She predicted that the spread of IT to non-traditional areas will be the source of increased job opportunities.

Chapple spent four years assessing the IT scene with the use of Web-based and personal interviews with city and suburban IT employers, job hunters, workers, trainers and policymakers in the field of workforce development. She asked questions related to educational background, job placement, job duties, length of employment, pay, career goals and more.

She also did a regression analysis to account for changes in IT jobs in different regions, finding that the metropolitan areas most vulnerable to substantial entry-level IT job losses tend to be large cities with a disproportionate share of entry-level occupations.

On another positive note, Chapple found that, generally, only the large IT and IT services companies she interviewed were interested in offshoring more of their information technology jobs.

"Many companies fear that shifting jobs offshore will interfere with how they do business," she wrote in an appendix to the report. "Face-to-face contact is critical not only in stimulating creativity but also in preserving what companies call 'tribal' knowledge.of the business."

What becomes of these training program graduates when their jobs are outsourced?

Chapple told the story of a Laotian immigrant she interviewed. Armed with just his GED and a training program certificate, he landed an entry-level IT job at a large banking operation. Then he was laid off a year ago when the institution outsourced its 800-employee IT division.

"His options?" Chapple asked. "He could go to any number of small businesses that just need one (computer) help desk person. He'll make less money and benefits, but he'll survive. The manufacturing person who loses his or her job will not. Those jobs are gone and aren't being replaced. That's the nice thing about getting an IT skill set, the world is open to you."

With more than 1 million entry-level IT jobs currently in the U.S. and a predicted growth of over 5 percent per year for the next eight years, employers cannot fill all the new positions with workers from four-year colleges or from abroad, she concluded. That is, in part, because the moderate-skill jobs pay less than college-educated workers are willing to accept, about $15 an hour for an entry-level position, Chapple said.

The report, prepared for UC Berkeley's Institute for Urban and Regional Development, explains how this has happened, beginning with the evolution of IT jobs from the early days of programming, which required computer science degrees or close to it, to today's simpler, support jobs requiring skills that can be learned in short-term training programs.

"Where yesterday's computer support specialist repaired IBM 486s, today's installs home computer networks for the cable company," writes Chapple in "Promising Futures: Workforce Development and Upward Mobility in Information Technology."

In her report, funded by the National Science Foundation and the UC Institute for Labor & Employment, she found that just 30 percent of IT jobs are within specific information technology companies, with the rest dispersed across hundreds of other industries.

Training program graduates may initially be able to fix printers, but on-the-job learning can teach them more and more about software and networking, increasing their earning and advancement abilities, Chapple says. Once they get their foot in the door of the IT industry through a training program, they can also return to school to advance further, she said.

As the labor market becomes increasingly "deinstitutionalized" by moves to more part-time, contract and temporary jobs, as well as by a declining minimum wage, shrinking unions, layoffs, baby-boomer retirements and deregulation, Chapple said, training programs play an ever larger role and should be examined closely.

Chapple noted that the federal government implemented the Workforce Investment Act in 2000, with funding of $6 billion, to develop a network of training providers. That's a far cry, she said, from the $24 billion available in 1978 (in current dollars).

The result is a trend toward privatization of job training programs, with the nonprofit programs servicing the most disadvantaged workers stuck in the inner city, even though people with training needs are increasingly found throughout the metropolitan area.

Chapple said she found the nonprofit and public programs to be better connected with employers and real job market demands, more focused on a hands on, classroom approach demanding student commitment, and determined to teach the "soft skills" that many disadvantaged workers need to know to move successfully from a low-paying job in a burger joint or janitorial service.

"This is a thoughtful analysis that employment and training professionals will find useful as they grapple with addressing issues of long-term employment sustainability and program development," said Lorraine Giordano, executive director of the San Francisco-based Information Technology Consortium.

The study relied on repeated interviews with 93 nonprofit IT training program graduates from 2000 and 2001. Compared to the overall U.S. IT workforce, Chapple said, they were disproportionately minority, female and uneducated. But she found that three to four years after finishing the training, 79 percent of the 63 graduates who could still be located were still working in IT and reported significant wage gains.

"This is a field where there's tremendous opportunity to move up," Chapple said.

The full report is online at:
http://www-iurd.ced.berkeley.edu/pub/abstract_mg200501.htm.