More Evidence that High-Skill Labor is in Low Demand in Maine

AS noted here previously, there is no evidence of a skills gap in Maine.  Wages are not accelerating in STEM fields, Maine’s workforce is more educated now than it is has ever been.

A new report from the Boston Fed comports with the wage and labor market indicators that demand for labor in Maine is low.*  The report looked at the demand for H1-B visas in each state and metro area in the nation, focusing on that demand in New England.  The report notes the role of H1-B visas in economies:

The H1-B visa serves as an entry route for many high skilled guest workers into the U.S. labor market by allowing employers to temporarily employ foreign workers in “specialty occupations.”

If an economy, such as Maine’s were facing a labor/skills shortage either economy wide in specific high skill industries, then we should see a rise in demand for H1-B visas.  However, the results of the Boston Fed report comport with the other evidence that the demand for high skilled labor is low in Maine.

Nationally, Maine ranks 40th in the nation (including DC), and last in New England for H1-B visas request per 1,000 workers.  More importantly, while demand for H1-B visas has increased nationally and elsewhere in New England, Maine and its three metro areas have experienced a slight decline from 2008-2012:

Bangor

L-A

P=SP=B

The three metro areas all lag relative to the rest of New England’s metro areas in terms of H1-B demand:

H1b Demand

 

Moreover, demand for visas in STEM related fields is even lower in Maine’s metro areas:

H1b Demand STEM

STEM

Policymakers are constantly discussing ways of increasing STEM and other high skill field workers, either through Maine’s colleges and institutions, or by attracting workers from outside of the state.  However, again, the data doesn’t comport with the notion that Maine is facing a short-term shortage in those workers.

* I’ve had a few comments made that suggest I am trying to argue the demand for skilled-labor is low solely based on H1-B visas.  I’m not.  I’m not relying H1-B visas solely, nor am I relying on any single data point.  As I note above and have noted in numerous other posts, there are other data points and arguments to suggest that skilled labor is not in high demand in Maine.  Succinctly, here those points:

  • Huge disemployment during the recession.  It’s curious that firms are unable to find labor when unemployment swelled;
  • Skill erosion does not occur that quickly.  Some might argue that the skills of the unemployed eroded.  The problem with that argument is that most of the disemployment following the recession occurred through 2010.  Almost immediately thereafter there were calls that workers lacked the skills necessary for the available jobs.  It’s unlikely that structural unemployment occurred that quickly;
  • Wages are not accelerating.  Assuming that structural unemployment is real (and I am not conceding that), then employers will need to increase wages to attract workers.  However, wages are not accelerating in STEM fields, and more specifically, at the higher end of the wage spectrum as we would expect;
  • Slack in the labor market is across education levels and for prime age workers.  While the economy has recovered, labor market indicators for college grads and prime age workers are still below pre-recession levels.  Moreover, under-employment in Maine is up;
  • Regarding education, the number of BAs and Associate degrees in the workforce has grown over the years, with the younger demographics (prime age workers) representing a large percentage of those degrees;
  • Some might then argue that wages are not rising because workers are not being hired because they lack those skills.  In that case, if labor constraints were true, then we might expect to see a rise in demand for H1-B visas.  We’re not.

Individually none of the above is dispositive, and even while taken as a whole it is not entirely conclusive (because we are talking about social sciences where we cannot control for every variable in the economy), there is little evidence that Maine is labor constrained regarding skilled workers and more evidence that points to slack in all parts of the economy.  As a result, there is little reason to believe that the policy path suggested by some that we only need to increase STEM grads in Maine to boost the economy seems flawed.

 

John Haskell

About John Haskell

John graduated from the University of Southern Maine with a degree in Political Science, and from the University of Maine School of Law. He has worked in both the public and private sectors, and currently, works with a small business services company in the Mid-Coast area.