CliffNotes Version: The Talent Shortage Debate for Economic Developers

July 30, 2013

As an economic development professional, you’ve no doubt heard companies talking for years about America’s shortage of skilled workers – people with science, technology, engineering and math (STEM) degrees – and beyond. But a recent viral study by the Economic Policy Institute now says that’s all a myth – that in fact there is no skilled worker or tech talent shortage in America. A recent ManpowerGroup “Talent Shortage Survey,” however, reports that companies are still struggling to hire. Now, plenty of publications are covering both sides of the argument.

So as this national debate rages, how do you talk intelligently with your investors, your board and your community about the talent shortage that you hear about every day from companies, executives and the site selection community, who continue to say that skilled labor availability is the number one factor driving business location decisions?

In this blog, we’ll bring you up to speed on the arguments from both sides and share with you the coverage of this debate in national media outlets. Then, in an upcoming blog, we’ll give you some suggestions for engaging your business community in this conversation surrounding the talent shortage and talent attraction.

Here’s a quick breakdown of the talent shortage “real or myth” debate. To learn more, keep reading below.

The Talent Shortage is a MythAre You Crazy?! We Can’t Find Any Talent
• The Economic Policy Institute says immigration reform is unnecessary because a talent shortage doesn’t exist.

• Guest-worker programs have brought more people in for tech jobs, leading to more competition, and reducing wages, thus forcing American graduates into other fields.

• Since wages haven’t increased – they've remained stagnant or are rising more slowly than the rest of the economy for STEM jobs – there can’t be a shortage of workers.

• Only half of STEM grads in the U.S. find jobs in their respective fields.

• Companies are being too picky in their hiring processes or not uncovering the right talent.
• ManpowerGroup’s “Talent Shortage Survey” shows that U.S. employers are having more difficulty finding staff with the right skills – more so than the rest of the world.

• The Kauffman Foundation says the number of native-born STEM grads has fallen and immigration reform is necessary.

• IEDC’s recent report says bringing in STEM talent from the rest of the world has major economic impacts and fuels industries in the U.S. through innovation and high-tech entrepreneurship.

• As long as America seeks to be a world leader in innovation, a STEM talent shortage will exist.

For starters, the Economic Policy Institute study says that it’s unnecessary for Congress to grant more visas to high-skilled workers, because a talent shortage does not exist. The EPI suggests guest-worker programs have brought more people in for tech jobs, which led to more competition, and reduced wages, thus forcing American graduates into other fields. This Wall Street Journal story goes into more detail.

The EPI study shows only half of students graduating in STEM fields from U.S. universities find jobs in their respective fields, and nearly a third of computer science grads who did not enter the industry said jobs were not available, according to the Washington Post story.

Others – including some economists – argue that if there was a true shortage, wages would increase, and since that hasn’t happened, no shortage exists. Wages for STEM and skilled trades have remained fairly stagnant, according to this story in the Atlantic. A Reuters story points out that wages in the tech industry are rising more slowly than the rest of the economy. For example, wages for applications software developers have risen 8.9 percent in five years through mid-2012, compared with a 12.5 percent increase for all occupations in the U.S. economy. On the other hand, some say that wage growth can be stifled when industries grow fast because of an influx of relatively inexperienced and lower-paid workers.

But the eighth annual ManpowerGroup “Talent Shortage Survey” released in May shows that 39 percent of U.S. employers are having difficulty finding staff with the right skills. Although that number is down from 49 percent in 2012, it’s still higher than the rest of the world, where 35 percent of employers report difficulty in finding the right people to fill jobs. The survey also shows that almost half of U.S. employers say talent shortages affect their ability to serve clients and customers. Of the 1,000 U.S. employers surveyed, 48 percent said it’s difficult to fill positions because candidates lack technical competencies or hard skills, 33 percent said candidates lack workplace competencies/soft skills, and 32 percent said it was because a lack of/no available candidates.

Forbes outlines the ManpowerGroup study and says that skilled trades – such as welders, electricians and machinists prevalent in manufacturing and construction – are hardest to find, and it’s only going to get tougher as current workers age. Most of these workers are older than 45, and the jobs are more demanding than other fields, so workers can’t put off retirement.

Some argue America’s talent shortage is partly due to American high schools pushing colleges rather than vocational school, and thus, young people are not pursuing the necessary skilled trades like becoming a welder or electrician, as Forbes reports. The Kauffman Foundation said during a congressional hearing that the number of native-born STEM grads has fallen, and immigration overhaul is needed to fill the void, according to this story in the Washington Post.

A TechCrunch story simply says that as long as America’s “goal is to be the most innovative country on the planet, we’ll have a tech talent ‘shortage’ until every single trailblazing founder, and their hyper-passionate friends, works in the U.S. America can never get enough brilliant innovators.”

So for companies that say they’re struggling, what’s the answer? A Bloomberg Businessweek story suggests “broken recruiting processes” are driving away the real talent, and bringing in only the workers who are “the most docile and compliant … not the most talented.” The story states that recruiting reform is needed – and says putting spark into help-wanted ads is the first step.

Written by Erin Bodine

Erin Bodine is an account director at DCI, overseeing the firm’s talent attraction services. She has worked on behalf of nearly 20 communities, ranging from Carrollton, Texas, and San Diego, Calif., to the country of Colombia, and the Canadian province of Saskatchewan. Her work in the area of talent attraction includes campaigns for the Wyoming Business Council and Wake County Economic Development’s “Work in the Triangle” initiative.

View more posts by

Leave a Reply