While the committee believes that employers are accurately reporting their difficulties in hiring, these reports must be framed against a number of important contextual factors. In particular, high turnover rates and long times to fill positions requiring particular skills mean that significant vacancies will occur even if the supply of qualified workers is equal to the demand for them.
Perhaps the most important consideration is the definition of a vacancy. The number of vacancies is sometimes used as a measure of the difference between supply and demand. But vacancy counts suffer from a number of problems. For example, data sources are not reliable. IT employers are increasingly turning to advertising job openings on the Internet. To the extent that vacancy counts are based on the amount of help-wanted advertising done in print (and if each help-wanted print ad represents one real open job), vacancy counts will understate the actual number of vacancies. Conversely, the lack of a posted vacancy may not indicate the lack of a position. Many IT employers have stated that they would be willing to hire an outstandingly talented individual even if no opening were immediately available, because s/he would be regarded as a strategic asset. Furthermore, advertised positions may not reflect immediate hiring needs, but may rather be posted in order to speed up hiring anticipated in the future (so-called “evergreen” positions for which IT employers are always recruiting).2 Or, advertising may reflect positions with particularly high turnover. Posted ads may reflect jobs that are contingent upon funding, for example, or on the presumed outcome of certain decisions that are out of the control of the immediate hiring manager.
Large vacancy rates are not surprising given the low levels of unemployment in the IT sector. As a rule, vacancy rates tend to move in inverse relation to the unemployment rate and positively with the employment and population rate. See, for example, Katz, Lawrence F., and Alan B. Krueger. 1999. “The High-Pressure U.S. Labor Market of the 1990s. ” Brookings Papers on Economic Activity, Vol. 0, No. 1). Available online at <http://www.irs.princeton.edu/pubs/working_papers.html>.
In some cases, vacancy counts may also reflect multiple countings of single openings. For example, consider N companies bidding on a large government contract. For planning purposes, it is prudent for each company to anticipate winning the contract —and it is a small step from that anticipation to anticipating the need to staff the project. But if all companies act in this way, and only one company can win the contract, then the number of anticipated openings is N times the number of openings that will actually be realized with the contract award.