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December 16, 2017
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STEM and the supply chain

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Employers worry about a shortage of workers with training in science, technology, engineering, and math. Yet a number of economists say the nation actually doesn't have enough jobs for the graduates we're producing.

On several occasions in the past couple of years, I've had conversations with executives from material handling equipment makers and integrators during which they've mentioned the number of openings their companies have for engineers. I often hear of large companies having 100 or more open slots.

Their comments are in line with press reports that the United States is producing far too few engineers to meet future demand. Observers point to China and India, nations that purport to graduate by an order of magnitude many times more engineers than the United States does. That those numbers are highly suspect is a topic for another time. The issue here is the widespread worry that we don't have enough students pursuing degrees in the STEM fields—science, technology, engineering, and math—to ensure our future competitiveness in a global economy.

Yet a number of economists now argue that while many employers see a dearth of STEM professionals, the nation actually doesn't have enough jobs for the graduates we are producing. Paul Beaudry, an economist from the University of British Columbia, argued in a paper he and colleagues published in January that the demand for skilled workers in the United States began to decline in about the year 2000—not coincidentally at the time of the dot-com bust.

Why the contradiction? If Beaudry and his co-authors are correct, the decline has been hidden from view by the peculiar way it has played out. In their paper, **ital{The Great Reversal in the Demand for Skill and Cognitive Tasks,} they wrote, "In response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers' pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force altogether." Or, as he said during an interview on the superb radio program **italic{Marketplace,} "I wouldn't want to exaggerate—it's not like everyone is getting a barista job, but that's exactly the feeling." So the lack of good jobs for the mostly highly trained STEM professionals plays out in under- or unemployment for those with the fewest skills.

This is important to material handling, logistics, and supply chain management. Jobs in these professions are becoming increasingly technical, and the tools that support them are becoming increasingly complex. Certainly, supply chain analysts need a good understanding of math and statistics as well as the ability to work software tools to solve operational problems. If the next generation of potential STEM graduates perceives—accurately or not—that job prospects in those areas aren't promising and they turn to management consulting or, heaven forfend, Wall Street, we have a problem.

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