The New STEM Labor Market Segmentation Implications for

The New STEM Labor Market Segmentation: Implications for Meeting Workforce Needs of Do. D and the Industrial Base Hal Salzman Rutgers University E. J. Bloustein School of Planning & Public Policy J. J. Heldrich Center for Workforce Development Presented at: “Science Technology Engineering & Mathematics (STEM) workforce needs for the U. S. Department of Defense (Do. D) and the defense industrial base” National Academy of Engineering and National Research Council Rosslyn, Virginia August 1, 2011 The research was supported through grants from the Alfred P. Sloan Foundation (with Lindsay Lowell) and the National Science Foundation (Human and Social Dynamics Program, #SES-0527584; Social Dimensions of Engineering, Science and Technology #0431755), with Leonard Lynn. Research assistance was provided by Daniel Kuehn (for analysis of the IPEDS data) and Purba Ruda.

STEM Workers Wanted: Is there a market failure? The Do. D S&E Problem: Not enough? v Overall size of the STEM pool relative to demand? v Defense/security clearance eligible? v Interested in defense-related work? Ø Why? v Lack of student interest? v Lack of student ability? v Weak market demand? The Solution: Ø A “New Sputnik Moment” …. . or Markets? Ø A new STEM workforce segmentation – limitation or opportunity for Do. D? Ø

Size & Trends of the STEM-Qualified Pool DRAFT--Please do not circulate or cite.

U. S. trends in student mathematics performance National Assessment of Educational Progress (NAEP 2008) Changes since 1973 Age Group White Black Hispanic Age 9 ∆ 25 points ∆ 34 points ∆ 32 points Age 13 ∆ 16 points ∆ 34 points ∆ 29 points Source: NCES The Nation's Report Card: Trends in Academic Progress in Reading and Mathematics 2008 http: //nces. ed. gov/nationsreportcard/pubs/main 2008/2009479. asp Age 17 ∆ 4 points ∆ 17 points ∆ 16 points

U. S. share of all OECD high-performing students: Science, math and reading Science Math Source: These figures are reproduced from: Salzman and Lowell, 2008; “Making the Grade” Nature 453, 28 -30]. DRAFT--Please do not circulate or cite. Reading

Transition Rates & “Yield” DRAFT--Please do not circulate or cite.

Transition Rates & Yield DRAFT--Please do not circulate or cite.

Intersection of highest degree in science & engineering and S&E occupation: 2006

What is changing? “Workforce Segmentation” (I) Who stays in the pipeline DRAFT--Please do not circulate or cite.

STEM Retention at three transition points by school performance Ø Track individuals from: (1) High school to college completion (2) College to first job (3) College to mid-career job Ø Track individual transitions x performance: High school SAT/ACT score, and v College GPA, v by performance quintile v

High school graduates and college outcomes (five years later)

College graduates and their “mid-career” job outcomes (ten years later)

Notably, STEM graduates far exceed number of STEM jobs each year Ø Most students remain interested in STEM studies v Percent of High School students studying STEM in college generally constant since the 1970 s. Ø <50% of STEM graduates STEM job Ø However, starting in the 1990 s many of the top performing HS students dropped out of the STEM college pipeline Ø And, in the mid-1990 s fewer of the top STEM performers stay in STEM jobs at mid-career

What is changing? “Workforce Segmentation” (II) Who gets a STEM degree DRAFT--Please do not circulate or cite.

Education Segmentation (II) Demographic Trends in Graduate (M. S. & Ph. D. ) Science & Engineering Completions: 1985 -2006 30, 000 25, 000 Completions 20, 000 Blk, Hisp. , Othr Asian White Male 15, 000 White Female Temp. Visa 10, 000 5, 000 0 06 20 05 20 04 20 03 20 02 20 01 20 00 20 99 19 98 19 97 19 96 19 95 19 94 19 93 19 92 19 91 19 90 19 89 19 99 19 87 19 99 19 85 19 DRAFT--Please do not circulate or cite.

Education Segmentation (II) DRAFT--Please do not circulate or cite.

What is changing? “Workforce Segmentation” (III) STEM job & career type DRAFT--Please do not circulate or cite.

Workforce Segmentation (III) Figure 1. STEM Graduates, 2003: In STEM Job White Foreign Black Hispanic 100 80 80 Percent Employed 100 60 40 20 Asian 60 40 20 Figure 1. STEM Graduates, 2003: In STEM, Med, Mgr or Related Job 0 1 to 10 100 11 to 20 Figure 1. STEM Graduates, 2003: Med, Mgr or 20 Related Job 21 to 35 11 to 0 STEM, 1 In to 10 21 to 35 Years after Graduation 100 80 Percent Employed Native 60 40 20 Years after Graduation 80 60 40 20 0 1 to 10 11 to 20 21 to 35 Years after Graduation DRAFT--Please do not circulate or cite. 0 1 to 10 11 to 20 Years after Graduation 21 to 35

Is supply-side strategy needed? Government intervention or the market? DRAFT--Please do not circulate or cite.

Do Labor Markets Work (I)?

Do Labor Markets Work (II)? Engineers in the Petroleum Industry: A Case of a Responsive Market? DRAFT--Please do not circulate or cite.

Why the increase in demand? Ø Exploration Ø New pipelines/Natural Gas Ø Demographics – aging workforce Ø Retirements and company policies Ø Recruitment barriers in U. S. /AK

Petroleum Engineering Starting Salaries Source: IPEDS; Tabulations: Kuehn & Salzman, 2010 Source: IPEDS; Salary data from BLS & NACE Tabulations: Kuehn & Salzman, 2010 Salary data from BLS & NACE

Petroleum engineering graduates Total graduates 800 700 600 500 400 300 Total BS 200 100 09 20 08 20 07 20 06 20 05 20 04 20 03 20 02 20 01 DRAFT--Please do not circulate or cite. 20 00 20 98 19 97 19 96 19 95 19 Source: IPEDS; Tabulations: Kuehn & Salzman, 2010 Salary data from BLS & NACE

Petroleum engineering graduates Total and U. S. [citizen & perm. resident] grads 800 700 600 500 400 300 Total BS US BS 200 100 09 20 08 20 07 20 06 20 05 20 04 20 03 20 02 20 01 DRAFT--Please do not circulate or cite. 20 00 20 98 19 97 19 96 19 95 19 Source: IPEDS; Tabulations: Kuehn & Salzman, 2010 Salary data from BLS & NACE

DRAFT--Please do not circulate or cite.

Implications for Do. D/Defense Industry Supply? Opportunities & Challenges of the New STEM Segmentation DRAFT--Please do not circulate or cite.

The New STEM Labor Market Segmentation Ø (1) Segmentation/degradation narrows market for high quality/domestic supply (and also supply) Ø (2) Challenges/limitations – advantage if not counter cyclical to IT industry (~40% of STEM workforce) v Ø but creating oversupply could be a larger “threat” than cyclical or lagged tight labor markets (cf. life sciences, disequilibria analysis) (3) Need to better understand demand – be cautious about interference in markets and oversupply

Questions? Hal Salzman Rutgers University E. J. Bloustein School of Planning & Public Policy J. J. Heldrich Center for Workforce Development Hsalzman@Rutgers. edu

Immigration yield for Top 10 H-1 B employers FY 07 -09 H-1 B Rank 5 3 2 10 1 9 8 6 7 4 Company Tata Satyam Wipro Accenture Infosys Intel IBM Deloitte Cognizant Microsoft H-1 Bs FY 07 -09 2, 368 3, 557 7, 216 1, 396 9, 625 1, 454 1, 550 1, 896 1, 669 3, 318 Greencard Apps FY 07 -09 0 37 125 28 476 163 382 588 702 2, 214 Source: DHS USCIS: Initial H-1 B I-129 Petitions FY 07 -09 & PERM Data FY 07 -09/ Ron Hira RIT, 2011. Immigration Yield 0% 1% 2% 2% 5% 11% 25% 31% 42% 67%

The Global Engineering Race? Growth of infrastructure between 1997 to 2007 Length, Miles Interstate/Expressway Navigable Channels Rail United States 1 China 2 608 30, 519 (680) 8, 510 (4, 030) 7, 436 (From: Lynn and Salzman, 2010) Sources: 1. National Transport Statistics, 2009. Bureau of Transport Statistics, U. S. Department of Transportation. 2. China Statistical Yearbook, 2008. National Bureau of Statistics of China. DRAFT--Please do not circulate or cite.

The Global Engineering Race? DRAFT--Please do not circulate or cite.

Solving the S&E “Shortage”: Are Markets “the Problem”? Is government market intervention the response to the price of a free-market solution? Source: IPEDS; Tabulations: Kuehn & Salzman, 2010 Source: IPEDS; Salary data from BLS & NACE Tabulations: Kuehn & Salzman, 2010 Salary data from BLS & NACE

Non-STEM college degree holders in STEM jobs College/Job Transition – Non-STEM majors entering STEM jobs: 1977/80 = 2. 5% 1997/00 = 7 % Of total STEM workforce – Non-STEM majors in STEM jobs 1987/90 =16% 1993/96 = 35% 1997/00 = 40% = significant share of STEM growth from non-STEM & immigrant workers