Sci-tech blog: US has no option but to fall back on immigrants

While Donald Trump has made a section of the US citizens believe that offshoring is taking away US jobs and by curbing H-1B visas, he can turn the situation around, ironically, the US is actually facing a skill shortage in computing jobs and for quite a few other skills as well.

There will be an estimated more computing jobs than applicants who can fill them by 2020, based on estimates from the US Bureau of Labor Statistics on job creation and from estimates of college graduation rates by the National Science Foundation.

There are more than 5,00,000 open computing jobs across the US, but less than 43,000 computer science students graduated into the workforce last year, according to Code.org, a non-profit backed by the tech industry that's dedicated to expanding access to computer science. Last year, the White House claimed the federal government alone needed an additional 10,000 IT and cyber-security professionals.

US-based independent research organisation Pew Research Center punches a huge hole in Trump’s argument that immigrants are taking away US jobs by offering to work at much lower wages.

The research organisation points out that as the Baby Boom generation heads toward retirement, growth in the US working-age population (those aged 25 to 64) will be driven by immigrants and the US-born children of immigrants, at least through 2035.

Without immigrants, there would be an estimated 1.8 crore fewer working-age adults in the country in 2035 because of the dearth of US-born children with US-born parents.

However, immigrants do not form a majority of workers in any industry or occupational group, though, they form a large share of private household workers (45%) and in farming, fishing, and forestry occupations (46%). It further states that public opinion has turned more positive when it comes to immigrants’ impact on the US workforce. The share of Americans saying that the growing number of immigrants working in the country helps American workers increased by 14% in the last 10 years, from 28% in 2006 to 42% in 2016.

In response to mounting concern about the shortage of US workers with skills needed by electronics manufacturers, IPC, a trade association for the printed boards and electronics assembly industry, conducted a “fast-facts” study to learn more about the skills gap as it affects US electronics assembly manufacturers. The results indicate that most companies are having a hard time recruiting qualified production workers, and an even harder time finding qualified engineers and other technical professionals.

Unfilled jobs

There are currently 70 lakh unemployed people in the United States, equaling an unemployment rate of 4.4% (that’s actually pretty low), according to the US Department of Labor. But here’s the rub – there were 57 lakh unfilled job openings in the US in March, according to the Department of Labor. To put that in perspective, there were only 50 lakh people hired in March, meaning there were seven lakh more open positions out there than actual jobs filled. If those 57 lakh job openings were filled, there would be a mere 13 lakh people unemployed in the US. That would mean an unemployment rate of less than 1%, the lowest in recorded history.

So, why do so many jobs in the US go unfilled? Two words – skill gap. There aren’t enough people in America with the skills needed to fill all the jobs that are out there. Conversely, we are seeing people, who do have desired skills, increasingly having more flexibility. That’s creating a world of have and have-nots: people with desirable skills are highly in demand and have economic freedom, whereas people who don’t have those skills are in real trouble.

Not enough doctors, nurses or administrators: So where are the biggest skill gaps in the US? Well, the two industries with more than 10 lakh job openings each are professional and business services, and healthcare services. With an aging population and expanded healthcare services, there aren’t enough doctors, nurses, physician assistants and administrators to fill the need. That scarcity in healthcare talent is leading to high pay, as a LinkedIn analysis shows healthcare jobs dominate the list of highest paying jobs in America.

On the professional and business services front, that’s an awfully vague category. But another LinkedIn analysis shows the top skills needed by businesses today – namely cloud computing, data mining, web architecture, networking security and SEO/SEM marketing—generally revolve around tech. Again, much like healthcare, these are high paying jobs. That’s what makes America’s skill gap so frustrating—it isn’t just that people aren’t filling needed roles, but that those roles are good jobs with good salaries.

Here’s the opposite end of the coin. For people who have the right skills, the statistics show their life is pretty good. Specifically, the quit rate in America is as high as it’s been since 2001. This is a sign of a great economy—people (usually) quit their job if they get another or are confident they can get another. So why are so many people quitting their jobs? Because, people who have desirable skills are highly attractive to employers; hence, they are highly confident they can get a new job, giving them the economic freedom to quit their current one.

Seeing all of this, there are two realities for individuals and organisations. For individuals, it’s clear today that skills are at a premium. Yes, soft skills are critically important for advancing a career, but to get hired in the first place the best route is learning highly desirable hard skills. For organisations, this problem isn’t going to be fixed tomorrow. The skill gap has persisted and will continue to persist for some time. Now, more than ever, organisations need talent in increasingly critical areas like digital technology and data science, the conventional wisdom holds, and US colleges and universities aren’t producing enough graduates with the right skill sets.

The wage paradox: But there’s another side to the story—US is not paying enough for skilled workers. The US hasn’t experienced the massive wage growth you’d expect from a shortage of workers, although wages did start rising last year. Many economists say that if there were a shortage of workers, wages would be going up more. They say the lack of wage growth proves the US has a demand problem—not enough good jobs—rather than a supply problem—not enough skilled workers.

A labour market survey found that only 16% of US jobs paid enough to keep up with the rising cost of living between 2012 and 2015. In addition, one economist has theorized that the main reason the US faces a shortage of Science, Technology, Engineering and Mathematics (STEM) talent is that employers are paying below-market salaries for employees with these valuable skills. It seems that someone out there is peddling alternate facts to push a particular political agenda, while stifling the talent pipeline for US organizations, which in the long run will only erode the country’s competitive advantage.

Abhijit Roy writes on technology issues. He is based out of Kolkata.