A recent report by American Action Forum (AAF) examined current labor force trends and projected occupational growth rates in an attempt to shed light on the potential labor shortage in Science, Technology, Engineering, and Math (STEM) occupations. They concluded, if current trends continue, in 2024:

  • The U.S. will be short 1.1 million STEM workers overall,
  • Approximately one million of the unmet STEM worker demand will be for U.S. citizens, and
  • The health care industry is among the fastest growing in the economy and will face the greatest shortage of STEM workers.

The major response they proposed to this shortage was for policymakers to increase legal immigration by expanding the H-1B program for high-skilled foreign labor, which we recently reported on. They also suggested an extension to the Optional Practical Training program to give international students sufficient time to contribute to the U.S. economy after graduation and match with an H-1B employer.

Introduction

Programs that allow foreign workers to temporarily come to the United States, like the H-1B visa program for highly skilled migrants, are very controversial. Critics believe they enable immigrants to take jobs that would otherwise be filled by qualified American workers. Recently, several presidential candidates have warned against the H-1B program’s negative labor market impacts, vowing to suspend or eliminate it altogether.

Last month the Senate Subcommittee on Immigration held a hearing to debate this exact issue. Some participants suggested that the H-1B program is a beneficial tool for employers to fill the current shortage of American talent in STEM occupations. Others warned that access to cheaper, foreign labor incentivizes employers to displace native workers even though no STEM shortage exists.

This debate is nothing new; groups on both sides have presented empirical evidence both proving and disproving the existence of an American STEM worker shortage. In their research the AAF took a rigorous approach to investigating the supply of native-born STEM workers in the United States, and to evaluate the merits of the H-1B program.

Results

AAF found that if current trends continue the U.S. will likely be short 1.1 million STEM workers in 2024 as shown in this table:

Projected STEM Openings Annual Growth Rate of STEM Workers Total Projected Growth Shortage
6,170,400 2.5% 5,069,773 1,100,627

However, it is important to note that this shortage is not consistent across all STEM occupations. The shortage of U.S. citizens working in health care, architecture, and engineering STEM occupations is expected to reach over 1.2 million by 2024. Conversely, AAF projects a surplus of almost 400,000 U.S. citizen STEM workers in occupations related to computer, mathematics, and life, physical, and social science.

Health care occupations have experienced rapid, sustained growth in recent years and are a driving force behind the STEM shortage. Growth in nurse practitioners alone is projected by BLS to reach 35.2 percent from 2014 to 2024. Similarly, the number of physical therapists and physician’s assistants are projected to rise by over 30 percent each. This may help to explain the expected shortage of almost 700,000 U.S. citizens in STEM healthcare occupations by 2024.  Some STEM occupations with projected surpluses, like sociologists and related workers, are expected to contract over the next decade.

Implications

Ironically, the study was ostensibly produced to generate support for the H-1B program, yet one of its conclusions was that the citizenship status of STEM workers helps to explain inconsistencies across occupational groups. For example, 12.6 percent of Computer and Mathematical workers in 2014 were not U.S. citizens, while only 4.2 percent of health care workers were the same. Given that this category actually has an excess of workers it helps support the argument from critics of the H-1B program who contend it steals jobs from US workers and gives them to lower-cost foreign workers.

The native STEM worker shortage also has direct implications on U.S. immigration policy, especially for foreign students entering the H-1B program. The U.S. higher education system has a large number of international students; almost one million were enrolled during the 2014-15 academic year. Furthermore, the Optional Practical Training (OPT) program gives these students an opportunity to stay in the U.S. for up to one year after graduation. OPT allows foreign graduates to work or intern at a U.S. company for a limited time to gain experience related to their field of study.

Until recently, international students with STEM degrees were eligible for an additional 17 months of OPT providing them with more time to contribute their valuable skills to our economy and find an employer willing to sponsor them as H-1B workers. This month the Department of Homeland Security increased the OPT extension to 24 months so that international STEM students can stay, train, and look for employment in the U.S. for up to three years after graduation.

The AAF contends that the additional extension for STEM graduates is a positive update to the OPT program. Currently, the process by which employers hire H-1B workers is very costly, involving enormous paperwork burdens and thousands of dollars in fees. By extending the amount of time recent STEM graduates have to stay in the U.S. it will give them a better opportunity to match with a willing employer and positively contribute to American business.

Conclusion

Critics of the H-1B and OPT programs contend that they undermine the US economy by taking jobs from qualified Americans and giving them to lower cost foreigners, current legislation proposed by Senators Ted Cruz and Jeff Sessions would eliminate the OPT program and make it significantly more difficult for employers to hire H-1B workers.

As a supporter of H-1B and OPT, the AAF contends that eliminating OPT would mean that U.S. academic resources would be devoted to developing international students without giving those students an opportunity to enrich the American workforce. Given the value of STEM workers in today’s economy and the projected native STEM shortage, the AAF is advocating that both OPT and the H-1B program are worth preserving.

There is solid evidence of a growing STEM worker shortage in the United States, and with their vast numbers the value of foreign workers certainly can’t be easily dismissed. With birth rates that are unable to replace the population, long-term demographic trends clearly show America will not be able to sustain its current workforce without immigration. The general consensus of researchers (and the extended history of the United States!) suggest that increased immigration levels also boost economic activity and raise native wages. In addition, as the Baby Boomer generation retires from the workforce in greater numbers we are losing many of our most experienced and knowledgeable STEM workers.

All of this suggests that we need to find a balance between legislation that expands legal immigration for categories (like STEM) where we need workers, without jeopardizing work opportunities for US citizens. This is one of the significant trends TalentWave is monitoring in the workplace, and much like the growth of the independent workforce it will have dramatic long-term impacts on our clients.

To download the PDF of the AAF research.