The Labor Shortage Myth

6 min read · 7 years ago


The Labor Shortage Myth @zenithtalentCrisis or confusion: is there really a shortage of skilled talent?

Some business leaders, attempting to rationalize the difficulty to fill languishing job openings, have placed the blame on a supposed deficit of available talent with relevant skills — particularly those versed in science, technology, engineering and math (STEM). The situation has become so dire, according to governments and organizations around the world, that nearly every developed country is pouring billions of dollars each year into cultivating a more robust crop of talent with STEM skills. However, new data suggest that this perceived shortage might be a myth.

Since 2000, population growth has far outpaced job creation. Over the last 10 years, U.S. employers created about 68,000 new jobs per month. However, during that same time, the population increased by more than 200,000 people per month. Labor analysts also discovered that jobs requiring advanced skill sets were filled two times more than others.

A new National Bureau of Economic Research paper argues that there’s another long-term trend at play here, related to the labor force participation rate — the number of people seeking work. The problem, they conclude, is that there’s been a shocking decline in the number of people who want to work. Using datasets from the U.S. Bureau of Labor Statistics’ Current Population Survey, the study authors and members of the Federal Reserve Board divided labor force non-participants into two groups — those actively seeking employment and those not pursuing jobs. They found a sharp rise in the number of people who don’t want to work at all.

Why? No single research group has been able to offer a concrete explanation, yet the consensus seems to be that there are actually more STEM workers than suitable jobs. The situation is further exacerbated by the recession-era layoffs and downsizing, hobbled recovery, stagnation in wage growth and emotional disengagement. When you study the data, though, one interesting element shines through: these stumbling blocks seem positioned almost entirely toward full-time workers. For MSPs fighting to help their clients fill critical STEM positions, savvy staffing curators may have the solution.

The labor shortage myth

In tandem with the dismal forecasts, you’ll also discover conflicting reports that suggest a starkly opposite reality. One company that helped promote and solidify the idea of a STEM skills shortage is Microsoft. Yet in 2012, the Economic Policy Institute (EPI) found that Microsoft had distorted its position by using cherry-picked data and then manipulating the conclusions. Why would a company in need of STEM talent intentionally skew the results of its research to present a scenario that seems to clash with its objectives? One likely answer is to mask an unfavorable image of the company’s operations and compensation packages.

The EPI points out that wages for these STEM workers have withered and flattened since 2000. In his 2013 expose on the labor shortage myth, IEEE Spectrum’s Robert Charette noted that “STEM workers at every stage of the career pipeline, from freshly minted grads to mid- and late-career Ph.D.s, still struggle to find employment as many companies, including Boeing, IBM, and Symantec, continue to lay off thousands of STEM workers.” His comprehensive analysis also reveals other surprising truths. Of the 277,000 STEM vacancies per year in the United States:

  • There are 252,000 qualified professionals with at least a bachelor’s degree in a STEM discipline.
  • There are 80,000 qualified professionals with a master’s degree in a STEM discipline.
  • There are 20,000 qualified professionals with a Ph.D. in a STEM discipline.
  • There are 40,000 qualified professionals with an associate’s degree in a STEM discipline.

By this tally, there are 392,000 educated STEM professionals available to fill 277,000 openings annually. Yet 11.4 million degree-holding STEM professionals today currently work outside of STEM roles. Beyond that, there’s the BLS’ revelation of a stark non-participation rate; so we’re still left without a completely accurate view of how many qualified STEM workers have simply dropped out of the labor force altogether.

The buildup has been gradual and ongoing. In 2008, the National Science Foundation (NSF) observed that two out of ten STEM professionals were working in non-core fields. By 2015, 58 percent of STEM talent had left the field. Despite the continued and anticipated growth in IT sectors, the EPI estimates that only one-third of computer science graduates are working in their chosen major.

What’s keeping STEM talent from seeking STEM positions?

Virtually all the research on this topic points to some universal themes, predominantly unstable careers and slow-growing or stagnant wages.

  • Despite historical precedents showing that high-skilled professionals usually experience low jobless rates, unemployment among engineers and scientists is higher than other occupations that include attorneys, nurses and physicians.
  • Employers today seldom offer the same comprehensive learning, educational and skills development programs as in decades past.
  • During previous economic downturns, engineers who were laid off could expect to be re-hired during the recovery; that hasn’t been the case today.
  • As Michael Teitelbaum writes in The Atlantic, “In engineering, for instance, your job is no longer linked to a company but to a funded project.”

It’s Teitelbaum’s point that’s most intriguing. To some extent, perhaps not as sweepingly as he portrays it, long-term employment with a single company has given way to contingent assignments and project-based Statement of Work (SOW) contracting for certain STEM positions. What’s not mentioned is that the talent today are spending significantly less time at any given job, and that many are choosing contingent work.

Based on BLS figures, the average tenure for Millennials is three times shorter than for Boomers. And more companies this year — 46 percent over last year’s 42 percent — will enlist temporary and contract workers. That’s happening because more talent are throwing off the shackles of full-time arrangements in favor of elastic assignments that provide them with more time, flexible scheduling, new skills and experiences, and even more money from having multiple clients and greater influence in negotiating rates.

It would seem, then, that the perceived STEM talent shortage could very well be a problem of perception and ineffectively marketing opportunities — because we keep discussing it in the context of full-time, traditional employment. Think about it:

  • Companies in need of STEM talent are still struggling through economic downturns.
  • They’re reluctant to raise wages and risk further hardship from the overhead expenditures associated with maintaining full-time workers.
  • They don’t necessarily have ongoing needs; rather, they’re focused on specific projects.

The majority of corporate recruiters have fallen into the trap of describing the limitations of full-time STEM positions. As a result, qualified talent have taken roles outside their scope of expertise and training, or dropped out of the workforce in frustration. This is where staffing curators can play an instrumental part in creating fundamental and positive change for workers, MSPs and the organizations they support.

Engaging STEM talent

As we’ve discussed in past posts, workers who’ve turned to contingent work are happier: 81-percent of those who abandoned full-time employment were found to be pleased with their new roles. MBO Partners’ 2012 report on the state of independence in America discovered that 57 percent of freelancers had chosen to operate on a contingent basis. Only 13 percent said they would consider returning to a traditional employment relationship.

In a lot of ways, it makes sense. They have more freedom. They have greater work-life balance. They have more authority in charting their own career paths. Many have realized higher earning potential. And with the right staffing curators engaged, discouraged STEM professionals can be educated about the opportunities that abound in the blended workforce, rather than focusing on the instability of full-time positions.

  • Successful assignments or contracts generally lead to ongoing engagements. When staffing curators actively participate in MSP programs, contingent talent have even greater access to new work opportunities with new clients or industries.
  • Exposure to dynamic assignments allows talent to innovate and discover new career directions.
  • Today’s talent don’t harbor expectations that employers will take care of them; yet under a staffing curator, STEM professionals are being supported and given opportunities to contribute their expertise to the growth and success of the organizations they support.
  • Contingent talent enjoy flexibility they may never have known before, which puts them in control of their schedules, assignments and family responsibilities.
  • They have more leverage in negotiating their rates. Contractors actually have the ability to earn more money because their rates are negotiated (by themselves or a staffing curator facilitating the placement process) and they’re paid hourly, including overtime. For example, STEM talent who provide IT expertise to the healthcare industry can make double the typical direct-hire rate as contractors or contingent workers.
  • As contractors, STEM talent serve a variety of clients, which provides them with consistent and full-time work.
  • While working for various organizations and industries, contingent professionals learn new skills, making them more valuable, qualified and marketable with each new experience.

As we illustrated in our last article, today’s staffing curators possess unrivaled expertise in identifying, engaging and converting passive talent. They know how to bring STEM talent back into their fields of specialization for MSPs and clients. They also have a greater likelihood of recapturing the interest of STEM professionals who abandoned the workforce, which provides MSPs with a wider talent tool and helps the long-term unemployed get back into the market to overcome the gaps in their resumes.

So while qualified STEM candidates may not be applying to lackluster job openings, they’re out there in surprisingly large numbers. Drawing them from hiding requires the dramatic shift in approach, mindset and marketing at which staffing curators excel – a pitch that accentuates new ways for talent to think about their roles, seize entrepreneurial opportunities and turn their passions into labors of love, not just labor.


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