Time and time again, activists assert that there is a shortage of workers in science, technology, engineering, and mathematics (STEM). A new National Academies report released yesterday, entitled “International Talent Programs in the Changing Global Environment”, is the latest to argue that the U.S. needs to recruit and retain more immigrants to work in STEM fields. Below we harness new data to help explain why STEM workers are actually not in short supply.
Listen to "New Wage Data Shows No Skilled Worker Shortage" on Spreaker.
Authors Steven Camarota and Jason Richwine discuss this this report in our Parsing immigration Policy podcast.
No Upward Trend in Compensation for STEM Workers
If the demand for STEM workers exceeds the supply, then we should see U.S. firms offering increasingly generous compensation to recruit and retain these allegedly scarce workers. We do not. Figure 1 shows trends in real (inflation-adjusted) wages, benefits, and total compensation for STEM workers between 2008 and 2023. No significant increases are evident. In fact, compensation grew at a rate of just 0.15 percent per year. Furthermore, compensation for STEM workers was 7.1 percent lower in 2023 than in 2019 before the pandemic, with wages down 7.6 percent and benefits down 6.2 percent. How could a shortage exist without upward pressure on compensation?
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The data for Figure 1 comes from the Employer Costs for Employee Compensation (ECEC) dataset, which is produced by the Bureau of Labor Statistics (BLS). Although the BLS does not generally publish ECEC data on STEM workers specifically, we obtained the data from BLS through a custom request. The ECEC data have a high level of accuracy and comprehensiveness because they are collected directly from employers. The data are especially helpful in analyzing employee benefits, which are almost impossible to measure in large surveys of individual workers.
When we do look at wages reported by individual workers in the American Community Survey, we again see little or no evidence of rising demand. Figure 2 report average annual wages for specific categories of STEM workers.
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In ignoring the evidence on STEM compensation, the National Academies report follows an ignoble tradition. As Howard University Professor Ron Hira has observed, “Unsubstantiated claims that there is a significant shortage of STEM talent have been a running feature of STEM workforce policy discussions” for decades. He added that “wage growth, the most direct measure of a mismatch between labor demand and supply, is often left out of the discussion entirely.” So it is again here.
Adverse Impacts of Immigration
The report assumes that the prevalence of immigrants in science and engineering means that the U.S. “needs” more immigrants to compete in those fields. However, the labor market could adjust in their absence to attract natives or immigrants already here. In fact, there is research that when wages in science and engineering occupations became relatively less competitive around the turn of the millennium, native interest in pursuing doctoral studies in these fields dropped. The availability of immigrants then prevented wages from increasing, which might have otherwise lured natives back in these fields.
In addition to holding down wages, immigration may also crowd out natives from STEM jobs. Doran, Gelber, and Isen offer one of the best papers on this topic. If H-1B workers are truly exceptional talents for whom there are few American substitutes, then firms that won the lottery for H-1B visas should increase their employment relative to the lottery losers. But the authors found that the firms that won the H-1B lottery ended up employing fewer workers than the firms that lost. For every two H-1B visas the firms won, three other workers were crowded out. Furthermore, the authors find little evidence that lottery-winning firms are any more innovative than the losing firms. This paper appears nowhere in the National Academies report.
Many STEM Graduates Do Not Have STEM Jobs
Figure 3 and Figure 4 show the large number of individuals with undergraduate STEM degrees employed in non-STEM jobs. To the extent there is a problem in filling STEM jobs, it reflects, at least in part, the inability of STEM employers to attract and retain STEM-trained individuals already in the country. The simplest way to induce more STEM degree holders to return to STEM fields is to allow wages to rise. Bringing in more foreign labor may slow wage growth and hinder this process. Keeping wages down may be in the interests of employers, but doing so is likely to create a self-fulfilling prophecy that there are no Americans to do such jobs. At the very least, the report should have addressed the question of why so many Americans with STEM degrees end up not working in STEM fields. The related matter of significant layoffs in tech fields also should have been discussed.
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Immigrant Presence in Skilled Jobs Already High and Growing
Figure 5 shows the steady increase in the total number of foreign-born STEM workers in the United States from 2000 to 2023 and their share of the STEM workforce. The 29 percent in 2023 is roughly double the foreign-born share of the total U.S. population. Moreover, the number of foreign-born STEM workers has grown 104 percent since 2010. Clearly, the current immigration system already allows a very large number of skilled workers into the country. If bringing in ever more foreign workers is critically important to the country, as the National Academies report argues, the current system certainly does so. Moreover, the foreign-born share of STEM workers is approaching one in three. Is there no point when the U.S. becomes too dependent on foreign labor?
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