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HR Magazine - September 2000: Robbing the Cradle

By Robert J. Grossman  9/1/2000
 
HR Magazine, 
July 2000 Vol. 45, No. 9

High demand and low supply for IT workers are giving college students an incentive to enter the workforce early. Is this a bad thing?

Before Alex Hronis, 24, graduated from Pennsylvania State University in June, he fantasized about leaving school early. "If you have some initiative, you can make it in the business world without a degree," he says. "Bill Gates didn’t graduate from college."

In fact, if an e-commerce heavy hitter had offered Hronis a hefty salary, signing bonus and stock options, he would have left school before his junior year. "I would consider I was hitting the lottery," he says without hesitation.

But leaving college early can be risky. Just ask Anu Jain, 22, who majored in industrial and systems engineering at Georgia Institute of Technology in Atlanta. One of Jain’s friends dropped out of school three years ago to work as an Internet consultant. Today, that friend has hit a dead end, Jain says. "His skill ran out and he’s got nothing to fall back on. So now he’s going back to school to get his degree."

Leaving college early in pursuit of high-tech wealth is like leaving a college basketball program for the pros, says Michaela Platzer, vice president for research at the American Electronics Association (AEA) in Washington, D.C. "Thousands of young people imagine they’ll be the next Michael Jordan, but how many actually make it? In high tech, it’s just like pro basketball; the press reports on the one or two guys who make it—but the vast majority don’t."

The reports Platzer refers to have dominated the news recently. In particular, articles have focused on students in the San Francisco area—and from technology universities, such as the Massachusetts Institute of Technology and Georgia Tech—who abandoned their degrees for big money dreams in information technology (IT).

But such occurrences aren’t as common as they may appear, says Camille Luckenbaugh, employment information manager at the National Association of Colleges and Employers (NACE) in Bethlehem, Pa. Luckenbaugh says there’s no hard data available on the number of four-year students who leave college early for IT careers, but she estimates that, despite the high-profile anecdotes, only a few percent of college students overall drop out for IT jobs.

"I talk to career services people on campuses throughout the United States," she says. "If they were losing a lot of students to IT companies before graduation, that’s what I’d be hearing, but I’m not. It’s the exception rather than the rule." NACE has roughly 3,500 members—1,397 four-year colleges, 344 two-year colleges and 1,800 employers.

"I haven’t noticed a great deal of students leaving early," agrees Cathy Dufour, associate director for placement and programming at Penn State in University Park, Pa. "A few students always drop out, but there’s been no real change [and] no overwhelming exodus."

Luckenbaugh and Dufour may be right, but perhaps not for long. While it’s hard to pin down specific figures for current college defectors, it is clear that the incentive for students to enter the workforce early will not only remain, it will get stronger.

What is unclear, however, is the long-term fate of those who jump ship early. Some experts say that those who leave college early, like Jain’s friend, limit their advancement opportunities. Others say there is no reason for alarm because these students either will complete their four-year degrees while they work or will get continuing education to support their skills. And, experts say, some workers may have little or no desire for the advancement opportunities a four-year degree can offer.

Graph 3

Recipe for Temptation

The potential for an exodus of high-tech college students is driven by a simple economic reality: The demand for IT workers has greatly outstripped the supply coming from the nation’s universities. And that trend should continue for the next several years.

The U.S. Bureau of Labor Statistics (BLS) projects an explosion of IT jobs from 1998 to 2008. While the economy overall will grow 15 percent during that period, technical jobs are expected to grow at a rate of 32 percent.

In particular, demand for several high-tech positions that require four-year degrees is expected to more than double. For example, the number of computer engineers needed between 1998 and 2008 will soar from 299,000 to 622,000. The same is true for computer support specialists, projected to expand two-fold from nearly 429,000 in 1998 to 869,000 in 2008. Systems analyst positions will soar from 617,000 to 1.2 million over the same period.

The supply of future talent, however, may not keep pace with that demand; student interest in the technical fields appears to have declined in the last decade. In 1986, almost 42,000 students graduated with bachelor of science (B.S.) degrees in computer science. From 1992 to 1997, the last year figures are available, the number dropped to 24,000 annually, according to the U.S. Department of Education.

The lack of supply, combined with increased demand, is already pushing salaries up for starting IT workers. Salaries for this year’s computer science graduates are averaging $48,000. By comparison, graduates in accounting average $37,200, and liberal arts graduates average $29,100, according to NACE.

Even IT workers who do not hold four-year degrees are earning between $35,000 and $40,000 on average, according to experts interviewed for this article.

What’s more, demand for positions that do not require a four-year university degree will increase dramatically, although not as dramatically as demand for those jobs that require a B.S. Examples include data processing equipment repairers (demand is expected to grow 48 percent for this position from 1998 to 2008), electronic semiconductor processors (46 percent growth), engineering technicians (16 percent growth) and telecommunications mechanics (10 percent growth). Applicants can qualify for these jobs with a two-year community or technical college degree, shorter technical certification programs or on-the-job training, according to BLS.

"Students don’t even need to complete a two-year degree to get a job [in IT]," confirms Ron Bleed, vice chancellor for information technology at Maricopa Community Colleges, which is the largest community college system in the United States and is based in Tempe, Ariz. "They can exit into the workforce after several courses, so long as they’ve demonstrated competencies in the skill sets that are in demand."

At Intel, Fred Melkey, acting manager of corporate college recruiting in Sacramento, Calif., estimates that only 20 percent of the IT jobs he’s looking to fill require a bachelor of science degree or higher. "We’re finding that you don’t necessarily need a four-year college degree to work in the IT field," he says. "The BLS statistics show that many of the IT jobs are service-related, doing repairs or manning a help desk. You don’t need a B.S. to do the work."

As a result, this year Intel expects to hire half of its new college hires from the community college pool.

The chip maker is not alone. Increasingly, employers are looking to community colleges to supply workers. Case in point: Six years ago the staff at Minneapolis Community and Technical College had to struggle to attract employers to campus. No more. "In April, we had 80 of the major employers in Minnesota on campus" looking primarily to fill IT jobs, says Lucy Kennedy, career placement director at Minneapolis Community and Technical College.

The demand for non-degreed IT jobs could be further affected by a bill making its way through Congress. Backed by high-tech companies—such as Dell and Microsoft, whose founders never completed college—the bill would change a rule requiring IT workers who handle government projects to have four-year college degrees. The bill is expected to pass Congress by the end of the year.

A Debate on the Downsides

Of course, there may be downsides for those who choose not to get a four-year degree, point out some observers. "With a two-year degree, they can be help desk technicians and command good salaries, but promotion opportunities will be limited," cautions Daniel Hecker, an economist at BLS. "To advance higher, you need at least a four-year degree. Except for exceptional people who pick up the skills and experience somewhere else, you start out higher and your promotion opportunities are greater [with a four-year degree]."

"The difference between the community college degree or college dropout and degree holder is in long-term opportunities," agrees Tony Carnevale, vice president for public leadership at the Educational Testing Service (ETS), a nonprofit educational measurement and research institution in Washington, D.C. "A four-year degree is the primary qualification for managerial and professional jobs. People without them can cross over, but few do. Today three of four managers have the degree; in 1969 it was two of four. The community college degree won’t cut it if you want to get to the top. It will get you to the mid-level technical but probably no further."

Graph 1

But Robert Atkinson, director of the Technology and New Economy Project at The Progressive Policy Institute in Washington, D.C., argues that an extended career ladder is not necessarily the goal of every worker. "IT jobs are the computer age’s answer to good-paying blue collar jobs," he says. "They’re good jobs and you don’t have to go through college to get them. Someone who gets a two-year degree or who drops out—overall 40 percent of [students] drop out—can do very well provided they acquire good skills and don’t get stuck in a dead end."

And such positions may offer a good alternative to those looking for a job while they settle on a career. "If I were talking to someone in high school who doesn’t know what they want to do, pursuing a community college degree and some certification along the way is a sure ticket to a job," Melkey says.

In addition, many community college students are in their 30s or older and might never have completed a four-year degree in the first place.

Even BLS’ Hecker offers a dose of reality about reaching the career ladder’s top managerial rungs with a four-year degree: "People who jump into the pure IT service jobs start high and tend to plateau in their 30s or 40s. In business, though the opportunities may be greater, many managers also plateau at the same place. Which would you rather do? Make big bucks when you’re 23 or not make big bucks when you’re 23?"

Left Behind?

Carnevale contends that workers who fail to earn degrees risk more than long-term advancement—they risk becoming unemployable. "Technology changes at a relentless pace, eventually rendering the technician’s skills obsolete," he says. "In the short term, the jobs pay high; in the long-term they disappear."

"If the economy slows down, and there are more job applicants than jobs, you’ll need something to differentiate yourself," says recent graduate Jain. "The college degree is proof of purchase that shows that I can learn fast enough to be helpful to an organization."

Graph 2But Atkinson says technology doesn’t change as rapidly as Carnevale suggests. "It’s an evolutionary process, one technicians can keep up with," he says. "One of the defining characteristics of IT is that it’s relatively easy for people to update their skills online."

Others point out that those who choose high-tech careers generally know they are boarding a long-term learning treadmill. "They have to spend a lot of time recycling themselves," says Bleed at Maricopa Colleges. "Continuous learning is not a luxury for them; they’re going to be attending classes for every year of their life from now on."

To help in these efforts, best practices organizations—large and small—are taking on the responsibility to encourage continuous learning. When these companies determine a prospect possesses raw ability on the technical side, they commit to developing intellectual capital through in-house training or by bankrolling further formal education.

Booz-Allen & Hamilton in McLean, Va., allots $5,000 annually to each worker for continuing education, an amount matched by most of its competitors. Intel’s in-house training center, Intel University, offers extensive technical and non-technical training.

"At Hewlett-Packard, we push continuing education, have a strong tuition reimbursement program and provide time and encouragement for our employees to pursue advanced degrees," says Jim Powell, the company’s U.S. college relations manager.

A Stepping Stone

Not all IT employees who enter the workforce without a bachelor’s degree stay at that educational level. Experts say most techies view community colleges as a stepping stone; they intend to—and many do—complete their B.S. degrees while they work full-time.

Of 200 new IT recruits at Hewlett-Packard this year, 75 percent will enter the company with a bachelor’s degree, estimates Powell. He adds that most community college graduates will begin working for their degrees almost immediately. "We expect that all our recruits who don’t have a bachelor’s degree when they come in will end up with one while they’re here."

But such plans don’t always end in success, says Penn State’s Dufour. "It’s not as easy as you think it will be to go back and complete your degree. Other life commitments have a habit of getting in the way. It definitely helps to have the degree to move up in management, and, if you have a choice, sooner is better."

One of the commitments that may get in the way of earning a degree is the need to keep up with technology. Even techies who hold four-year degrees in information systems (IS) or computer science are popping up at community colleges. Loaded to the brim with theory and foundational knowledge, they are looking to acquire the practical skills that employers demand.

"I have a lot of college seniors and graduates coming to take our certificate programs so they can get jobs," says Henry Estrada, professor of computer science at Evergreen Valley College in San Jose, Calif. "In some of our Oracle courses, half of the students are either recent grads or about to graduate from a university."

Having Their Cake

For some employers, the best option has been to let college students have the best of both worlds—practical experience, an immediate salary and a bachelor’s degree. To that end, some companies are using co-ops and internship programs to keep students in school while filling critical IT jobs.

From the company’s perspective, these experiential programs are ideal screening and recruitment tools. And students get cutting-edge experience, earn college credit, build up their resumes and earn money.

The last part is a huge difference from just five years ago, when these opportunities would have been unpaid. Today, companies pay good salaries to attract students and keep them in the fold until they graduate. College seniors working as interns are paid at hourly rates ranging from $18 to $26 per hour depending on their experience and level of technical skills, according to Whitney Halfpenny, university relations team leader at Booz-Allen.

In its annual survey of employers, NACE found 43 percent of new hires stepped up to full-time from an internship or co-op. More than 80 percent of the employers say they offer some kind of experiential work/study program and virtually all use them to recruit entry-level personnel.

At Booz-Allen, the company’s paid internship program is a primary generator of talent. "This summer, we’ll have 130 interns," says Halfpenny. "We’ll assess their skills, see how they do working with teams. Seventy-five will be seniors this fall, the rest are younger. We look for a conversion rate of 85 percent."

Vernicka Tyson, director of career services and placement at Michigan State University in East Lansing, Mich., has 20 years experience in career services. She says companies today offer students internships and co-ops earlier. Five years ago, a company would recruit interns between their junior and senior years. Now it’s between the freshman and sophomore years.

"Years ago we catered to students who completed the sophomore year," agrees HP’s Powell. "Now, with competition so intense, we recruit college students for co-ops after their freshman year. We also go out into the community and hire high school students."

Powell says he doesn’t have figures on how many high school students Hewlett-Packard hires but says the percentage is low. However, if talented high school graduates are intent on working, or show interest in internship-type employment, Hewlett- Packard will give them a chance rather than lose them to a competitor.

Robert J. Grossman, a contributing editor of HR Magazine , is a lawyer and a professor of management studies at Marist College in Poughkeepsie, N.Y.

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