Wall $treet Week with FORTUNE's Geoff Colvin recently sat down with Paul Kaihla of Business 2.0 magazine to talk about what Kaihla views as a surging job market, at least in certain industries and areas. Excerpts of their conversation will air on our March 11, 2005 program. Meanwhile, here are portions that won't be aired:

GEOFF COLVIN: Paul, I was amazed by some of these salary increases. Now in technology, I would have thought that the hottest job market still was someplace in northern California. You say no. Actually Washington, D.C., which you say in fact has the most intense worker shortage in America. How come?

PAUL KAIHLA: Yes, almost in any category, and Washington never really had a recession. And right now in Fairfax County the unemployment rate is 1.8 percent. There's a million people living there, so that's how hot that economy is. But the confluence of IT services growth, defense spending, the homeland security industry, has created this incredible demand for IT workers, especially after you have a security clearance or if you have technical knowledge and project management experience. I mean those salaries are exploding by double digits.

COLVIN: We're talking here about, yeah, a huge increase. We're talking about technology jobs, but we're not talking about people designing microchips or things like that. These are job titles like senior technical trainer. Pay has gone from $67,600 to $83,200 in one year, or senior program manager, from $127,500 to $150,000 in one year. What kind of jobs are those?

KAIHLA: Those people are working for federal contractors like SAIC or CACI or Titan. And they're in incredibly short supply because the pool of those people who have that kind of experience and even the clearance tickets is so small. And so you've got that extra layer of demand on an already hot general economy in that region, and that provides this tipping point for a spot shortage where you get that explosive wage momentum. It's even all the more startling because when you look at the average for all American workers in 2004, according to the National Compensation Survey, it was 2.4 percent the raise we enjoyed on average.

COLVIN: Now you have made the point that there isn't a national labor market. We have a lot of local labor markets. And we've identified and talked about those where labor is really tight, but there are some also where we do have the opposite situation. Where are the places where there still aren't that many jobs, where the labor market is from tight?

KAIHLA: I think as this expansion matures what we're really going to see is a bifurcation between have cities and have-not cities, and the have cities are ones like San Francisco, San Jose, Atlanta, Raleigh-Durham, San Diego, where a huge percentage of the workforce has degrees, work in these skilled, so-called creative class jobs, as opposed to places like Detroit or Flint or Gary, or even Las Vegas, which is often put forward as a have city, because on an absolute raw number basis they have very high job growth, but it's low-cost, low-skilled growth.

You know, between 1980 and 2000, the prime age workforce in the U.S. grew by more than 50 percent. That growth is basically flat-lining this decade and the next. And even if we settle back to 2.5 or 3 percent GDP growth, econometric models forecast a so-called worker gap of 5 million skilled workers by 2010. That puts workers with skills in a seller's position for the rest of this decade.

I think offshoring was completely misunderstood and exaggerated. I happen to know from economists who were actually advisors to Democratic presidential candidates that they very deliberately planned to try to pave the road to the White House, so to speak, on the offshoring issue. They were extremely successful in planting that as a message in late 2003 and throughout last year. But in fact the studies show that the effect of offshoring was very marginal, and what really displaced the demand for hiring in the down economy was what I like to call the productivity recovery. So when you look at the long-running historical average from the early '70s to the early '90s of 1.3 percent annual productivity growth, it's astounding that over the past three years it went above 4 percent, the first time ever in U.S. history where you had three years in a row where productivity growth was above 4 percent.

Therefore, if we're really going to have this 4 percent GDP growth this year, companies are going to be hiring in significant numbers, and we saw an indicator of that in the monster jobs report we had on Friday.