Indiana may not be facing the science, technology, engineering and mathematics worker shortage feared by many state and business leaders. A study from Ball State University's Center for Business and Economic Research suggests there may actually be an excess supply of those workers. Director Michael Hicks says businesses reporting STEM worker shortages may be “ineffectively engaging” the labor market.

May 21, 2014

News Release

Muncie, Ind. — While state politicians and business leaders publicly lament over a shortage of science, technology, engineering and mathematics — or STEM —workers, there actually may be an excess supply of such employees, says a new policy brief from Ball State University.

“How Real Is the STEM Shortage in Indiana? Evidence from Workforce Data,” a report by Ball State's Center for Business and Economic Research (CBER), examined employment data from the U.S. Bureau of Labor Statistics to find that labor markets appear to be shrinking in STEM-related career fields, with the impact felt exclusively in clinical, health care-related occupations.

“Our research found that unemployment rates for STEM employees rose significantly in the last few years and still haven't dropped to the extremely low levels of a decade ago,” said Michael Hicks, CBER director. “We also found that concerns over a lingering lack of instability in labor markets for skilled STEM workers can be traced to every decade of the last century. The latest concerns appear to be yet another unsubstantiated worry.”

By examining the unemployment rates of Hoosiers holding bachelor's degrees in any of the four STEM-related categories from January 2000 to October 2013, Hicks found that the unemployment rates among science and technical occupations and life, physical and social science occupations are higher than those holding bachelor's degrees overall.

However, the unemployment rates for computer, math, architecture and engineering occupations were lower than those holding bachelor's degrees overall.

The unemployment rate in 4th quarter 2013 for all STEM-related occupations is between 60 percent and 475 percent higher than the minimum point since 2000.

“In all instances, the unemployment rate of these occupations is much greater than the lengthy period of the low 2-percent levels of unemployment in the mid-2000s,” Hicks said. “From the occupational evidence, the clear conclusion is that this market has not cleared, and there cannot be excess demand nationally for STEM workers despite public perception.”

Hicks explained that for a shortage of STEM workers to exist, wages for these workers must be increasing and his research finds this not to be the case.

“Our analysis found 92 occupations with growing real wages out of 792 occupations in Indiana,” he said. “Of those occupations growing, 64 are STEM-related, but represent a very small share of workers in Indiana. This indicates that an excess demand for STEM workers is not generally felt.”

Among STEM fields with wage growth of more than 5 percent over the past year, the study found only information security analysts; power plant operators; power distributors and dispatchers; and geoscientists (except hydrologists), were in non-clinical medical fields. Those four fields accounted for 2,090 jobs (0.074 percent of the workforce) in Indiana in 2012.

The study also found:

• wages for STEM occupations are typically higher than those of non-STEM occupations, at any given level of education.

• non-STEM degree holders with experience and advanced degrees typically receive higher salaries than newly minted STEM degree holders with bachelor's degrees or lower levels of education.

• Indiana's fastest-growing field is in the mortuary industry, with an 88-percent job growth increase from 2008 to 2012. These jobs include funeral service managers, directors, morticians, and undertakers.

Hicks said his research found that businesses reporting STEM shortages are likely ineffectively engaging labor markets.

“Either they have inappropriately advertised the descriptions of the positions they need to fill, or they are offering a combination of salary, benefits, work, and location options that are not attractive to STEM workers,” he said. “Focusing on more effective human resources efforts and offering job placements in desirable communities will ease talent acquisition concerns.”

Public policy geared toward broadly stimulating the number of STEM graduates will have no direct effect on the overall economic performance of Indiana, Hicks said. It also risks suppressing the wages of current STEM works or increasing the outmigration of future STEM graduates.

“While it is appropriate for individual colleges and universities to determine the optimal level of STEM education offered, those schools proposing broad action regarding public policy to stimulate STEM graduates at the state level should re-evaluate their policies using actual data and analysis of occupation employment and wage growth,” he said. “Communities that wish to see growth in the number of STEM employees enjoying higher-than-average wages should focus on improving the quality of their communities, emphasizing the value of their K-12 education system and recreational and housing amenities available.”

Source: Ball State University

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