Can occupational labor shortages be identified using available data?

Carolyn M. Veneri is an economist in the Office of Employment Projections, Bureau of Labor Statistics. The Nation’s economy has enjoyed more than 7 years of expansion, during which the national unemployment rate declined from 7.5 percent in 1992 to 4.5 percent in 1998, the lowest level since 1969. The 1998 unemployment rate dipped below 2 percent in some States. As the labor market tightened over this period, shortages in certain occupations were widely reported in the media, led by stories of unmet needs for workers skilled in information technology. Groups such as the Information Technology Association of America and the U. S. Department of Commerce’s Office of Technology Policy identified what they considered “substantial evidence that the United States is having trouble keeping up with the demand for new information technology workers.” Shortages also were reported for construction laborers and craftworkers. According to the National Center for Construction Education and Research, “Sixty-five percent of the contractors responding to its third annual survey in 1997 reported shortages in one or more crafts.” Related stories in papers across the country proclaimed the resurgence of a shortfall of registered nurses, a need for qualified teachers, and even shortages of workers such as roustabouts and nannies. No specific sources of data exist that provide a measure of occupational shortages. In the absence of any definitive measure, analysts generally rely on labor market data to corroborate anecdotal reports of employers’ difficulties in filling jobs. Such data include trends in employment and earnings, as well as the unemployment rate for a particular occupation. This article discusses the meaning of shortages and analyzes the adequacy of available data in identifying, quantifying, and evaluating occupational shortages.