Wages And The Supposed STEM Shortage

If you’re the kind of person who believes markets provide reasonably good signals, then it’s safe to say there really isn’t a shortage of STEM workers. And the market for STEM workers is good–if you’re hiring (boldface mine):

Like other supposed labor shortages, if there were a real shortage, wages would be expected to grow. This is because employers would compete over a small number of workers, and they would need to raise wages to attract those workers.

The Bureau of Labor Statistics Occupational Employment Statistics program tracks the average wage of STEM occupations dividing them into four subdomains. These consist of a Health subdomain, a Social Science subdomain, an Architecture subdomain, and a Life and Physical Science, Engineering, Mathematics, and Information Technology subdomain (this last subdomain is where most technology workers would fall)…

Wage growth for all of these subdomains fell after the Great Recession and none have recovered. All are under 2.0 percent, with wage growth in the Social Science Subdomain close to zero. It’s important to note that this is nominal wage growth, so we would expect real wage growth to be even lower.

There is also data for major STEM occupational groups….

The general trend is that nominal wage growth is lower now than it was in 2009, with the exception of Computer Programmers, who saw low wage growth in 2009. Wage growth is low-to-moderate, under 3.0 percent for all groups.

This wage data suggest that there is not a shortage of STEM workers broadly, or for commonly discussed computer occupations. (Data on all detailed STEM occupations is available here.) One reason employers might think they can’t find workers is that they may have inflexible requirements for vacant positions. For example, a company might require that workers work for low wages and long hours, or that they have particular certifications or unreasonably specific skills, or vague cultural attributes that favor certain types of people. There might also be an unwillingness to train new workers on-the-job, which was very common in the past.

So when employers complain about not being able to find workers, what they really mean is that they can’t find workers who meet their requirements at the wage they are willing to offer. With the cost of living rapidly rising in areas like San Francisco, where there are many STEM employers, it makes sense that workers would not apply for positions that offer wages they find to be too low.

The story is then not that there are too few STEM workers, but that employers will say they can’t find workers in order to increase the bargaining power that they have and hopefully lower their labor costs.

Same as it ever was. Same old shit.

If there were only a market-based solution to this….

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