A computer programmer labor shortage at Microsoft and in the US?

A recent article in the Seattle Post-Intelligencer reported that Microsoft is feeling a shortage of qualified information labor, and blames declining enrollments in US university computer science programs:

Microsoft isn't able to hire enough computer scientists in the United States to fill its available positions, Bill Gates said yesterday, citing decreasing interest in the field and fierce competition for qualified talent.

Gates, speaking to an international audience of computer science faculty members on the company's Redmond campus, said Microsoft's inability to meet its employment needs is affecting 'the speed at which we do things.'

The Microsoft chairman said he was perplexed by the declining enrollment in computer science programs at the nation's universities. [...]

Gates made the comments yesterday to more than 350 university faculty members from 20 countries at the Microsoft Research Faculty Summit.

Does Microsoft's hiring difficulty mean economic ruin for the "new economy" in the US? The report cites a UCLA study which "found a 60 percent decline between 2000 and 2004 in the number of college freshmen who planned to major in computer science," and cites a consulting study which found "Enrollment in computer science programs at North American universities has dropped by 7 percent in each of the past two years." But at the same time, "The U.S. unemployment rate for computer occupations was 4.3 percent in 2004, noticeably worse than the 2.8 percent unemployment for all professional occupations in the same year, according to an analysis of federal employment data by the U.S. division of the Institute of Electrical and Electronics Engineers." Might this not mean that we actually have a glut of programming labor available in the US as a whole, and that students are making a rational choice to avoid a crowded field?

There's another angle to this question which the Seattle Post-Intelligencer story neglects to report. As succintly described by the management-friendly National Public Employer Labor Relations Association in this summary, Microsoft has been involved in litigation over its use and classification of part-time, contingent information labor all through the 1990s:

The seminal case examining whether contingent workers are "employees" for certain benefits purposes is Vizcaino v. Microsoft. Vizcaino involved a group of independent contractors who were hired to work on special projects and who signed agreements acknowledging they would not receive benefits. Microsoft did not withhold the workers' federal income tax or allow them to participate in the company pension and welfare plans, which included a 401(k) plan and an Employee Stock Purchase Plan. The independent contractors were paid from accounts receivable and not payroll.

However, the workers were treated similarly to company employees in most other manners. They worked with company employees on projects, had the same supervisors as those employees, worked the same hours as company employees, and were provided with supplies by Microsoft. In 1990, the IRS examined Microsoft's records and determined that based on a "right to control" test, the workers were "employees" for tax purposes.

This and related cases dragged on at least until 2000, when the Surpreme Court denied to review a previous ruling from the Ninth Circuit Court of Appeals on the matter, resulting in an ambiguous case where "employers are [...] left without guidance from the Supreme Court regarding the classification of contingent workers who are employees of third party staffing agencies" while "the Microsoft litigation has opened the door for such employees to bring costly litigation if they are denied certain benefits."

If Microsoft is truly concerned about growing IT laborers in the US through university education, versus simply trying to secure the cheapest and most pliable IT labor force it can -- through tapping saturated labor markets, using third-party contingent workers, or importing and offshoring of IT labor -- then maybe besides leading the IT industry in lobbying for the Central American Free Trade Agreement (CAFTA) in order to find cheaper labor markets, or requesting the single greatest number of H-1B visas and permanent guest status for workers it wants to bring to the US, Microsoft should lobby the federal government to increase aid to states, where public higher education has faced serious budget cuts for years.