What is Causing the Engineering Talent Shortage?
If you’re searching for one definitive cause to the talent shortage, you’ll be disappointed. There is not a singular cause of the talent shortage, but instead a number of interconnected contributors. Here are some of the major causes for the current labor situations in the engineering industry.
The September jobs report revealed a 3.7% national unemployment rate, the lowest figure in decades. When applied only to engineers, the rate is a mere 1.7%. With so few engineers being out of work, naturally there are fewer engineers actively pursuing jobs.
The effect that low unemployment is having on engineering firms is a struggle for leverage while hiring. In a healthy market with unemployment around 5%, employers carry a considerable amount of leverage during the hiring process, as they can choose from several qualified and interested candidates. However, when applicant pools are shrunken, and options are limited, the leverage shifts to the candidates. With that leverage, candidates fetch more attractive compensations packages, as they have multiple firms bidding for their services.
Diminishing STEM Graduation Rates
Another reason finding engineering talent is so hard in today’s labor market is the downward trend of STEM graduates in recent years. What’s causing the lack of enthusiasm towards obtaining a STEM degree? The question has perplexed experts for some time, as STEM degree graduates earn more money than those with degrees in other fields. Naturally, one would assume that students would be drawn towards the higher paying fields.
There isn’t a consensus answer to why STEM fields are being pursued less in recent years. Some studies have shown that the perception that STEM degrees are too difficult has contributed to the drop in graduates, while others cite a failure in communicating the value and appeal of STEM degrees to younger students. Other suggestions are education doesn’t prepare youth to exceed well enough in math and science, which creates a lack of confidence in the subjects by time students become college-aged.
The Fallout of 2008 Recession
While we’re almost a decade removed from the curtain falling on the Great Recession, we’re not done experiencing the ripple effect. Across all industries, the fallout of the economic crisis continues to present challenges. With unemployment near 11% in the peak of the Recession, many professionals had to leave their industries to find work elsewhere. How does that impact today’s labor market? Many of the engineers who left the field in 2008 and 2009 never returned.
The engineers that never returned to the industry left a dent overall workforce, but also disrupted succession planning. Firms are experiencing a tremendous amount of difficulty when hiring mid-to-senior level roles. Had engineers not left the industry during the recession, they’d now have the experience and tenure to fill those roles.
Baby Boomer Retirement
Baby boomers are retiring at an advanced rate, and engineering firms are struggling to fill their roles. The disproportionate number of baby boomers compared to other generations has led to more people retiring from the industry than joining, causing a problematic supply challenge for employers.
Due to their experience, baby boomers are leaving behind hard-to-fill roles. In many cases, firms have no choice but to promote faster than they would traditionally or aggressively pursue qualified candidates.
Smith & Wilkinson Engineering Recruitment
With a pronounced talent shortage facing engineering firms, finding help in today’s market can be a challenge. When your firm needs to add talent to your team, partner with our expert engineering recruiters at Smith & Wilkinson. Contact us today to learn more about our approach to recruiting engineers.