It is no generally conceded that the current economic environment is qualitatively different from that which prevailed little more than a decade ago. That is, we are in the midst of a “new economy” . . .
. . .
Clearly Maine has a significant challenge in amassing the highly skilled human resources that are critical to a knowledge-based economy. It cannot act too quickly.
The above comes from a paper examining how the changing economy will increase demand for skilled workers, and how Maine must address those projected demands. It comports with many stories one reads today, about how the changing economy will place a greater burden on Maine’s education system to churn out skilled workers. Moreover, it suggests that failure to meet these demands will have negative impacts on the state’s economic growth prospects. Lastly, it was written in 1998.
Since that time, the number of college grads, both STEM and non-STEM related grads, has risen. Despite that rise in the supply, some continue to ring the alarm bell that Maine has a dearth of college grads/STEM grads/skilled workers.
NELL Gluckman wrote a piece for the BDN a few days ago on a report released by Educate Maine. Educate Maine “was created in 2011 to increase the number of Mainers who earn a college degree and attain the skills necessary to enter the workforce.” The report, Education Indicators for Maine 2014, is said to show “little progress has been made to improve the education landscape in Maine in the past year.” Why is this a problem?:
[Chris Hall, CEO of the Portland Regional Chamber of Commerce] said students who do not attain those skills will be disenfranchised, which will have an adverse affect on the economy in Maine.
“I can’t think of anything that’s more important to our economic future than to get the education puzzle right,” he said.
In short, the report and the folks at Educate Maine are sounding the alarm bells that Maine’s economic growth is constrained by an uneducated/unskilled workforce. One often cited set of occupations that are or will be facing shortages are the STEM fields.
These alarm bells ringing about an impending STEM shortage are not new. A cycle exists where the public is warned of workers shortages in these fields, there is an increase in the supply, and finally an oversupply that results in a bust labor market for those fields. Often this oversupply is the result of an overestimation of the demand for certain workers and skills. As we see below, this too appears to be the case in Maine.
“If you torture the data long enough, it will confess to anything.”– Ronald Coase
Proponents of the skills gap argument often put forth lots of data, and most of the time, it’s correct. However, this does not mean a lack of fallibility; or at least presenting the data is a less than clear manner. For instance, from the Educate Maine Report (EMR):
[I]n the next 10 years, 90% of high-growth jobs will require education beyond high school.
To some, this might justify the alarm bells. However, there’s a lot of inference and innuendo built into the presentation of this data. For instance, one might read that sentence and conclude something along the lines that 90% of all new jobs will require education beyond high school, or at the very least, most new jobs will require that level of education. But what does it mean?
“High-growth” is typically defined as an industry or field that will experience a large percentage increase in total employment. For instance, an industry with, say, a projected increase of 40% employment would probably be considered high-growth–although the percentage that makes an industry high-growth is not well defined in general, is subjective to some level. So, as noted by the EMR, 90% of industries that will experience a high percentage of job growth.
The problem lies with using percentages when employment within industries varies greatly. For instance, assume that jobs A requires just a high school diploma, while jobs B, “high-growth” jobs, requires a college degree. Jobs B is projected to grow 40%, while jobs A is expected to grow at just 5%. One might assume that job growth will be 8 times greater in jobs B than A. In terms of percentages, yes. But what if jobs A, the 5% growth industry, currently has 10,000 employees, while jobs B has 100? The latter will had 40 jobs, the former will add 500. All “high-growth” jobs require a college degree, but the percentage of total job growth requiring a college degree is just 7.4%.
To use actual data, according to the Center for Workforce Research and Information’s 2022 Job Outlook report, computer and mathematics occupations have a projected growth rate of 8.8%, while food service/prep occupations have slower growth rate of 3.7%. However, in actual numbers, the former is expecting net job gains of 833, and the latter expecting 1,977. Similarly, of the 10 jobs projected to have the largest rate of job growth, 9 require education/training beyond high-school, and of the top 25, 20 require education/training beyond high-school. In terms of actual job growth, only 2 require education/training beyond high-school, and of the top 25, only 7 require education/training beyond high-school.
In a paper examining job growth in Maine over the 10 year period from 2010 to 2020, John Doerr finds that that in 2010, that 70.1% (449,577 total) of Maine’s 641,551 occupations required nothing more than a high school degree, with 17.1% (110,060) requiring a Bachelor’s degree or higher. Come 2020, those percentages will be 69.5 and 17.5, and in raw number, 469,561 and 118,158.
The point is to suggest Maine’s economy is not changing, only that it is not changing nearly as rapidly as the data (as presented) might suggest. This is important for when we look at the supply side of the labor equation.
If demand relative to supply falls, and it makes a sound, will people hear it?
Of course, just because in nominal numbers are relatively low, that doesn’t mean there might not be a shortage of college degree holders/skilled workers. The EMR, as well as some of the reports it cites, suggests that Maine has dearth of such holders/workers. Again, the presentation of the data infers that might be the case. For instance, you often read that Maine trails all other New England states and the nation in terms of college degree holders, STEM degree holders, and so forth. Again, the problem is that there are some built in assumptions–namely that the demand for college/STEM/etc. degree holders/skilled workers is the same for each state/region.
One such report the EMR cites that makes the case Maine is short of STEM related workers is Keeping Maine Competitive: Reducing our skills gap through innovative education models and rigorous standards (KMCR). The KMCR states:
Positions in science, technology, engineering and math (STEM) are also growing in Maine, and 87 percent of these jobs will require post-secondary education by 2018. Yet today, only 37 percent of working-age adults in the state have an associate’s degree or higher.
Again, more inference and assumptions, and, again, the need to look at the nominal data to thresh-out exactly where Maine might have a labor shortage. Using the Science and Engineering Indicators 2014 from the National Science Foundation can help us with that.
To get an understanding of the education of the workforce generally, according to the SEI, the percentage of Maine’s workforce with a bachelor’s has increased from 26.3% in 2001 to 33.6% in 2011. In total, the number of bachelor’s degree holders in the workforce has increased 46,826 (27.3%). Meanwhile, the number of degrees conferred per 1,000 18 – 24 year olds has increased from 50.7 to 63.2 from 2001 to 2011 (5,429 to 7,347 in total).
As for science and engineering degrees* specifically, they too are on the rise. S&E degrees as a percentage of all degrees conferred has increased from 2001 to 2011, has remained relatively constant, from 33.6 to 33.8%. However, as the number of total degrees conferred has increased, so too has the number of S&E degrees conferred, up from the 2,236 conferred in 2001 to 3,103 in 2011. That’s the supply side of the equation. As for demand . . .
Individuals working in an S&E occupation as a percentage of all occupations was 2.54% in 2001, and increased to 3.08% in 2011. In nominal terms, that was an increase of 2,890, from 15,020 to 17,910. In other words, the 10 year increase of the number of individuals working in an S&E occupation was smaller than the number of S&E degrees conferred in 2011.
Similarly, in 2006 STEM related jobs accounted for 3.3% of all occupations, and in 2010 represented 3.29% of total occupations in the state’s economy at that time. That percentage is suppose to increase to just 3.31% by 2020 (representing a nominal increase of 2,260 job openings). While nominal job growth is occurring, it is not doing so at an accelerated rate that would comport with the concerns given the supply of S&E and STEM related degree holders. Most importantly, it doesn’t appear to be accelerating beyond supply.
One argument to counter the slower growth in STEM fields is that without adequate applicants to fill those positions, the positions remain unfilled and the employment numbers remain lower than they would with an adequate supply. For instance, it’s often noted that STEM field graduates pursue non-STEM fields after graduation (with some research on the national level suggesting roughly three-fourths of STEM grads work in non-STEM fields, and other research supports the notion that the nation is not seeing a dearth of STEM field workers).
If STEM field grads are nor pursuing STEM field jobs, then the issue is not necessarily one of supply, but one of demand. If the same phenomena is occurring in Maine where STEM grads are leaving Maine, then the issue lies on the demand side of the labor equation.
Westward Ho the Wagons!
If there is a problem with college grads in Maine, it’s that don’t appear to stick around. Brain drain has long been noted in Maine, including STEM related graduates who leave the state after receiving their degree. There are several possible explanations for this. One argument is that a large portion of students who receive their degrees from Maine’s schools are from out-of-state, and return to their home state after graduation. However, the majority of freshmen at Maine’s schools (particularly state schools) are from in-state, and there has not been much of a change in that fact from 1994 to 2010. Despite this, Maine, and the rest of the northeast, is experiencing a negative net change in college grads.
The issue of migration is one that needs to be better examined regarding the issue of supply and demand of college/STEM grads. If Maine is producing adequate numbers of college grads, then the issue is not one of supply, and presumably it’s on the demand side. In that case, what would increasing the number of college/STEM grads accomplish? The issue to tackle is why are grads leaving.
One likely reason is college grads are migrating for job opportunities, as Maine has a low number of STEM related job opportunities relative to the rest of New England and the Nation. As noted above, John Doerr projects Maine’s STEM occupations will comprise roughly 3.3% of the state’s overall employment come 2020. Georgetown University projects that STEM employment will comprise 3.4% of the state’s overall employment come 2018. That 3.4% figure puts Maine last in New England, and 42nd in the nation. Similarly, wages in neighboring states and elsewhere are higher, and could be a pull for Maine’s grads.
Supply, Demand, and Wages
Of course, simply looking at trends in supply and demand are not enough to discern whether the labor market is at equilibrium, and if not, where the imbalance lies. For instance, simply having more supply or demand now than 20 years ago does not settle the issue of whether there is a shortage or oversupply. If there were a labor shortage in some areas, then we should expect to see wage increases as Maine companies compete with the rest of the region for talent. However, as noted previously, we don’t have a clear indication of that occurring in Maine.** Nationally, however, STEM wages have stagnated and do not suggest a STEM labor shortage.
Alarm, Boom, Bust
In a recently published book, Falling Behind?: Boom, Bust, and the Global Race for Scientific Talent, Michael Teitelbaum examines the claims that the U.S. is facing a STEM labor shortage, and finds little evidence of one.
Perhaps the most salient issue raised by the book is that the economy fluctuates–there’s an alarm about the shortage of workers, in response government policy over increases the supply of those workers, and subsequently there’s an over-supply of those workers who find themselves under-employed.
For instance, in the 1980s reports were published suggesting that the nation faced a shortage of engineers going from the mid-1980s through 2010. The projections were overstated, and by the 1990s the labor market for engineers turned south.
Simlarly, there were concerns that with the growth of the tech industry in the 1990s, the country would face a shortage of computer/IT workers. There was a rise in the supply of these workers, and when the dot-com bubble burst, several thousand computer/IT were suddenly in a saturated market. This phenomena reached Maine as well. From a 2008 Maine Department of Labor paper on the issue of Maine STEM jobs:
However, there has been a decline in the number of computer-related degrees conferred (323 in 2002 and 157 in 2006). This phenomena is not unique to Maine; it is a national trend. The number of students increased dramatically in the late 1990s, but the spike in enrollment and degrees conferred decreased after the dot-com collapse.
Finally . . .
The alarm bells about adequate college/STEM grads/skilled workers have been ringing for several years at least in Maine, and for even longer nationally. Despite little evidence in support, the alarm bells of a shortage continue to ring. As a result of this, more students could be thrust into assuming student loan debt only to enter a saturated labor market with stagnant wages and limited job opportunities.
As Teitelbaum wrote in the Atlantic earlier this year:
Ironically the vigorous claims of shortages concern occupations in science and engineering, yet manage to ignore or reject most of the science-based evidence on the subject. The repeated past cycles of “alarm/boom/bust” have misallocated public and private resources by periodically expanding higher education in science and engineering beyond levels for which there were attractive career opportunities. In so doing they produced large unintended costs for those talented students who devoted many years of advanced education to prepare for careers that turned out to be unattractive by the time they graduated, or who later experienced massive layoffs in mid-career with few prospects to be rehired.
Recent forecasts of looming shortages of scientists and engineers may prove to be self-fulfilling prophecies if they result in further declines in the attractiveness of science and engineering careers for talented American students.
*The NSF considers the following sub-fields to be in science and engineering field: life sciences, psychology, physical sciences, environment sciences, engineering, and social sciences. There is a lot of overlap between what the NSF considers to be in the S&E fields, and what it considers to be in the STEM fields. There is subjectivity in determining what is S&E/STEM/etc., but the SEI serve as a good indicator of Maine’s STEM supply and demand.
**Mind you this data is limited, but there is little to indicate a labor shortage in what data is available.