It is very easy to get people to agree that we are facing a talent shortage issue these days. I was stressed over trying to recruit good engineers as a hiring manager for over a decade. However, it is also very interesting to read articles recently about millennial being the most educated generation but also the most overqualified workforce. Isn’t that a great puzzle, that we can’t find candidates for the high-skilled jobs when we have the most educated generation? At the same time, they are taking jobs that they are overqualified for. So, what is going on regarding our talent pipeline?
The first question to be discussed is do we have a real talent shortage? According to studies done by Korn Ferry’s Future of Work program, by 2020, the United States will have a high-skilled labor shortage. They estimate that the unrealized revenue caused by this shortage could be as high as $1.748 trillion, or 6% of the entire US economy. This trend matches with my hiring experience. The study also supports the existence of a talent shortage issue, at least in some areas. It is safe to say that this trend is likely caused by, and/or accelerated by, adoption of artificial intelligence (AI) and automation. Humans are still the most flexible asset in many applications, but they are just not as reliable as machines or robots. There is no better way to improve quality than by adoption of machines and robots to meet the ever increasing consumers’ expectation.
This trend of adopting machines and robots also improves productivity and lowers the need for low-skilled labor naturally. At the same time, it increases the demand of high-skilled labor to keep these machines and robots running. It is a fact that most STEM jobs prefer candidates with some college education (associate degree or higher). However, there is also a sign that businesses are settling for less than preferred candidates. This indication is based on two sets of data from Pew Research Center. First, there is a substantial share (~35%) of the STEM workforce that does not have a bachelor’s degree, including 7% with high school or less education. Even if businesses are willing to search for more workers with college education, the second set of data indicates that only about one in three (~33%) workers, age 25 and older, hold a bachelor’s degree. My hypothesis is that when businesses run out of ideal candidates, they have no choice but to settle.
A similarly interesting situation is that among STEM-trained college graduates, only 52% of them are employed in STEM related fields. A significant amount of them (~17%) are in management related occupations, typically with better salaries. Another related statistic, from NLSY (National Longitudinal Survey of Youth) by US Bureau of Labor Statistics (BLS), is that 36.1% of the workforce has a bachelor’s degree or higher but only 19% of jobs require a bachelor’s degree or higher. To sum it up, we have high-skilled labor needs in STEM fields, but qualified STEM workers are moving toward more attractive occupations that may not require STEM skills. This creates a demand for backfills, but the talent pools with college educated candidates have mismatched skills. In other words, the quantity of candidates is greater than the demand, but the problem is their skill sets do not match with the requirements of these job openings. Therefore, many of them are settling for jobs that they are overqualified for from the standpoint of education level.
For individuals, what does this mean? Considering if you plan to enhance your resume by getting more education, keep in mind that not every major would be a wise investment. Of course, I strongly encourage everyone to pursue their personal interest regardless of whether or not it is in STEM. But I also encourage putting a higher priority on considering a STEM related major as it strengthens your earning potential. The logical conclusion is that non-STEM jobs have been saturated with college educated employees. It is without a doubt that a bachelor’s degree would increase the chance of higher pay but targeting a STEM related degree would have even higher benefits.