New Wage Figures Reveal Trends of the Past Two Years

The BLS has just released the May 2013 estimates for wages in 800+ occupations. I thought it would be interesting to see which occupations showed the greatest and smallest increases in pay compared to previous years.

I decided that the best way to smooth out errors and focus on large trends would be to look at groups of occupations rather than detailed occupations and to look at the difference over two years rather than one year.

Here’s what I found:

Occupational Group	May 2011	May  2013	Change
Healthcare Support Occupations	$25,140	$26,080	3.7%
Computer and Mathematical Occupations	$75,080	$77,860	3.7%
Architecture and Engineering Occupations	$72,070	$74,530	3.4%
Business and Financial Operations Occupations	$61,700	$63,800	3.4%
Management Occupations	$92,880	$95,600	2.9%
Healthcare Practitioners and Technical Occupations	$59,570	$61,120	2.6%
Life, Physical, and Social Science Occupations	$59,330	$60,860	2.6%
Office and Administrative Support Occupations	$31,250	$32,010	2.4%
Community and Social Service Occupations	$39,880	$40,810	2.3%
Arts, Design, Entertainment, Sports, and Media Occupations	$43,640	$44,610	2.2%
Construction and Extraction Occupations	$39,820	$40,670	2.1%
Installation, Maintenance, and Repair Occupations	$40,600	$41,440	2.1%
Production Occupations	$30,670	$31,250	1.9%
All Occupations	$34,460	$35,080	1.8%
Building and Grounds Cleaning and Maintenance Occupations	$22,620	$22,970	1.5%
Personal Care and Service Occupations	$20,730	$21,010	1.4%
Sales and Related Occupations	$24,840	$25,160	1.3%
Transportation and Material Moving Occupations	$28,760	$29,100	1.2%
Legal Occupations	$75,470	$76,100	0.8%
Food Preparation and Serving Related Occupations	$18,900	$19,020	0.6%
Education, Training, and Library Occupations	$46,060	$46,140	0.2%
Protective Service Occupations	$36,740	$36,770	0.1%
Farming, Fishing, and Forestry Occupations	$19,460	$19,380	-0.4%
Teachers, Postsecondary	$64,592	$62,920	-2.6%

Perhaps the most powerful takeaway from this table is that wages are growing fastest among the STEM occupations—science, technology, engineering, and math.

Some occupations that will account for numerous job openings—notably the Building and Grounds Cleaning and Maintenance Occupations; the Personal Care and Service Occupations; and the Food Preparation and Serving Related Occupations—have experience slower-than-average wage growth. Yesterday’s Senate defeat of the bill to raise the minimum wage—a disgraceful defiance of overwhelming popular support—only reinforces this trend.

It’s interesting to note that three groups of blue-collar occupations have experienced slightly faster-than-average wage growth: Construction and Extraction Occupations; Installation, Maintenance, and Repair Occupations; and Production Occupations. These occupations require higher levels of skill than the wage-stagnant occupations in the previous paragraph. Production Occupations, in particular, have seen increased skill requirements as the low-skill workers in this field have been replaced by either robots or offshore workers.

Yes, but what about Postsecondary Teachers? Surely they require high levels of skill, not to mention high-level educational credentials, yet their wages actually lost ground over this two-year period. This downturn in annual wages reflects the fact that colleges and universities are increasingly using adjunct teachers. These temporary or part-time workers are paid on a different scale from tenured or permanent faculty.

Employment Trends for Engineers

As the “E” in “STEM,” engineering is an important field of knowledge that is vital to the American economy. I thought it would be interesting to see how employment in this field was affected during recent years of recession and recovery, so I created the following graph (from BLS figures):

My main takeaway from this chart is that employment in engineering occupations tends to be reasonably stable. Apart from the 2007–2008 employment decline of 26 percent for aerospace engineers, only one occupation saw a double-digit decline between any two years: the 12 percent 2008–2009 decline for computer hardware engineers. On the other hand, these occupations did not show great growth over this period either—with the exception of petroleum engineers, which grew by 127 percent. Their average growth over the 2007–2012 period is only 3 percent, if you remove petroleum engineers.

Although employment in the occupations changed within relatively modest boundaries, the fluctuations show quite distinct paths. Employment for most of them bottomed out in 2010, evidently the delayed result of the recession as employers ran out of rainy-day funds and needed to lay off workers.

Here’s another chart, with the same set of occupations, showing projected employment growth between 2012 and 2022:

Petroleum engineers is the standout occupation here, again. The recent upward slope of civil engineers resembles that of many of the other specializations, but the growth of this occupation really takes off in the decade ahead. The Occupational Outlook Handbook reports, “As infrastructure continues to age, civil engineers will be needed to manage projects to rebuild bridges, repair roads, and upgrade levees and dams. Moreover, a growing population means that new water systems will be required while the aging, existing water systems must be maintained to reduce or eliminate leaks of drinkable water.” By comparison, the projected growth for mechanical and industrial engineers is modest.

Over the course of a career, engineers tend to find advancement by going into management (for example, project management) rather than by becoming increasingly specialized. Employers often are reluctant to increase the pay of seasoned engineers when they can hire young graduates of engineering schools who are conversant with the latest technologies. Sales engineering is another potential route for career development, especially for those who have good people skills and are not averse to frequent travel. Technical writing is another possibility, but it is much less lucrative.

STEM Careers--and STEM Skills in Other Careers

One indication that an idea is catching on is that the President of the United States refers to it frequently. In recent remarks by President Obama, I’ve been pleased to hear mentions of STEM careers and STEM education (Science, Technology, Engineering, Mathematics). Two recent articles have pointed out the rewards of STEM careers and the barriers to them.

Last month, my former ETS colleague Anthony Carnevale and his research team at Georgetown University released a report about the career experiences of people who majored in STEM subjects. Analyzing Census data, they found that, on average, 65 percent of those holding a bachelor’s degree in a STEM subject out-earn those with a master’s degree in a non-STEM subject. And an associate degree in a STEM subject brings in a higher income than a non-STEM bachelor’s for 63 percent of those surveyed.

The Georgetown researchers also found that STEM degrees are excellent on-ramps for careers in medicine and in management, career changes that can lead to higher income than staying in a STEM work role. They note that although the traditional STEM career fields employ only 5 percent of the workforce, the need for STEM competencies keeps increasing in other fields. For example, along with the rapid growth in the number of technology products, there’s a growing need for an appropriately skilled sales workforce. So, even though the STEM career field is growing at a pace exceeded only by health-care careers, the careers that are competing for STEM-competent workers (including many health-care occupations) are among the fastest-growing and highest-paid in the economy.

Given this growing need for STEM-skilled workers in a broad range of occupations, it is not necessarily alarming that (as Carnevale et al. found) 43 percent of STEM grads immediately go off to work in non-STEM careers. To be sure, I’d rather see engineering graduates go on to engineer bridges instead of financial derivatives. Nevertheless, market forces will divert STEM talent to many non-STEM work roles, and many of those roles will benefit our economy.

What is alarming, however, is how many young people don’t even get as far as the initial STEM degree. Carnevale and his team estimate that our K–12 educational system turns out enough students with initial STEM skills to fill the labor market’s need for STEM-skilled workers, but more than 75 percent of them do not go on to develop their potential by majoring in STEM subjects. Furthermore, of those who do major in STEM subjects, 38 percent switch to another subject or drop out of college. This is twice the combined attrition rate for all other subjects.

An article last week in The New York Times investigated the reasons for this massive leak in the collegiate STEM pipeline. The main reason seems to be the inherent difficulty of the STEM curriculums. This is not helped by the high level of competition often found there. It’s significant that the highly selective colleges, which get the best students, also have higher STEM attrition rates. Evidently, the problem is not that the students are poorly prepared or lack good work habits.

GPAs tend to be lower in the STEM majors, and grade inflation in the non-STEM majors may be part of the reason. Another factor discouraging STEM majors may be the emphasis on theory, especially in the lower-division courses. Some STEM faculty members are experimenting with using project-centered curriculums to sustain the interest of the students. The traditional engineering major leads to a senior design thesis, but for many students this opportunity to turn STEM skills to practical applications comes too late.

It’s important to understand that a specific college degree, while it provides useful quantitative evidence for researchers, does not tell the whole story about the skills a young person acquires. A friend of mine dropped out of the engineering curriculum at a highly competitive engineering school and graduated with a degree in a humanities field. He would be considered a STEM dropout, but the STEM skills he acquired in high school and during the two years of engineering curriculum that he completed served as the foundation for a very successful career in technical sales.

You may also consider me a STEM dropout. Although I gave up on a STEM career goal well before entering college, I have had a lifelong interest in science and managed to acquire enough STEM skills to hold my present job, in which I spend a lot of time (sometimes days on end) working in databases and spreadsheets, even occasionally writing programs.

As Carnevale and his team found, the need for STEM skills in non-STEM occupations (even writing!) keeps growing. Educational policymakers need to do more than just encourage students to get STEM degrees. They need to ensure that the curriculum of everyone in high school and college includes STEM subjects and imparts STEM skills.

Steve Jobs and American Jobs (part II)

Last week I used the iPod as an example of how innovation creates jobs, some of them offshore, but many of them--especially those that pay well--here in the United States. Steve Jobs, who died last week, was one of America’s greatest innovators, and we may well wonder where the next innovator of his caliber will come from. But another question is how and where that person’s skills for innovation will be refined and implemented.

We hear a lot of talk these days that the key to job creation is getting out of the way of the private sector. Tax it less, regulate it less, and it will nourish innovation and create the jobs that our economy so desperately needs right now. Let the marketplace discover and reward breakthrough technologies.

But there’s also a case to be made for the role of the public sector, especially at a time when the private sector is unwilling to invest in jobs and in basic research. I was impressed by the video of Senate candidate Elizabeth Warren that recently went viral, in which she says, “There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you, but I want to be clear: You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.” It’s useful to remember that Steve Jobs was the product of a public school education.

Political demonstrators who invoke an earlier era by wearing three-cornered hats seem to forget that this country has a long legacy of innovation that was fostered by the public sector. Samuel Morse developed the electric telegraph in response to a prize that Congress offered for a better form of long-distance communication than the semaphore signals that were in use at that time. His first demonstration of long-distance telegraph transmission, from Baltimore to Washington, was financed by a federal grant.

At last night’s Republican debate, one of the questioners asked, “From the Erie Canal to the Internet, . . . innovation is what’s always fueled economic recovery.  So shouldn’t the focus now be on trying to create the innovative jobs of tomorrow?” None of the candidates present commented that the Erie Canal, which transformed New York City into the paramount port on the East Coast, was financed entirely by the public sector. So was the development of the Internet, by what’s now the Defense Advanced Research Projects Agency.

The integrated circuit, which made all of Steve Jobs’s products possible, was invented by Jack Kilby, also the product of a public school education. He was working at Texas Instruments, a private-sector company, but TI morphed from a company that served the oil industry to an electronics powerhouse because of contracts from the Signal Corps and the Navy. Development of the computer chip got a massive boost from the space program.

In fact, the Cold War and the space race that grew out of it were responsible for a wide range of innovations that continue to shape our economy. This push also resulted in federally funded improvements to the infrastructure, notably the interstate highway system (which is officially called the Dwight D. Eisenhower National System of Interstate and Defense Highways), along which Steve Jobs’s products were shipped to your door. This effort also expanded federal funding of education through the National Defense Education Act. The accelerated academic program that I was enrolled in while in (public) junior high school was initiated in direct response to Sputnik. And the fathers of many of my classmates had gone to college on the GI Bill and were working at a federally funded New Jersey laboratory that supported the work of the Signal Corps.

The recent collapse of the Solyndra company, recipient of a half-billion-dollar federal loan guarantee, has been used by some as evidence that government support of innovation is misguided at best and corrupt at worst. But when private-sector investment is focused on complex derivatives and arbitrage rather than on basic research and infrastructure, the government becomes the innovation investor of last resort. The money that the treasury lost on Solyndra is miniscule compared to the funds that the private sector lost investing in subprime mortgages.

It will never be cheaper to borrow money than now. We can find workers more easily and hire them for less money than in normal times. What are we waiting for?

Steve Jobs and American Jobs

As the nation mourns the death of Steve Jobs, it’s interesting to look at the role that his company plays in job creation, because Apple is one of the highest-achieving firms in one of the outstanding American industries: high tech. I came upon a fascinating analysis of the employment impact of just one Apple product, a device that Steve Jobs essentially invented: the iPod. An article in the Journal of International Commerce and Economics (PDF) looks at how many jobs were directly created by the iPod.

It’s well known that the device is assembled offshore, mostly of foreign-made components, and the authors of the study estimate that the number of foreign jobs in the iPod value chain outnumbered domestic jobs in 2006 by 27,000 to 14,000. In fact, they estimate that only 30 production jobs and a similar number of professional jobs are created by the manufacture of a few iPod chips here in the U.S. However, in 2006 the iPod also accounted for “7,789 nonprofessional jobs (primarily in retail and distribution) and 6,101 professional jobs (primarily at Apple’s headquarters), including management, engineering, computer support, and a variety of other categories.”

More important, in their analysis of the earnings of the 41,000 iPod workers, the authors estimate that here the balance tilts decidedly toward the United States, where the workers earned nearly $750 million in 2006, compared to only about $320 million earned by the foreign workers. “Over two-thirds ($525 million) of the earnings in the United States went to professional workers, and an additional $220 million to nonprofessional workers. While most of the nonprofessional jobs were relatively low-paying retail positions, we estimated that nearly $50 million went to administrative jobs at Apple for which we used the national average wage of $38,000 a year; actual Silicon Valley wages were probably even higher.”

In drawing conclusions, they hold up the iPod as an example of the opportunities and risks that globalization has created. “Apple’s tremendous success with the iPod and other innovative products in recent years has driven growth in U.S. employment, even though these products are made offshore. These jobs pay well and employ people with college degrees. They are at the high end of what might be considered middle-class jobs and appear to be less at risk of vanishing from the United States than production jobs.”

However, these high-value jobs require that future workers coming out of U.S. schools get a really good education. In addition, there is the risk that creative jobs, such as engineers and designers, will be taken by overseas workers as foreign governments and even American companies invest offshore in education and in cultivating creative industries.

The authors of this study don’t address the question of how many jobs the iPod indirectly created--or destroyed. The invention of the iPod set off a revolution in the way music is distributed. As people shifted to buying music on the Web in the form of MP3s, many record stores had to close, and as pirated MP3s circulated widely, record companies suffered declining sales even as the amount of music being consumed probably continued to rise. Although the shift to MP3s probably caused a net loss of jobs, the iPod also sparked the invention of the podcast, which created many jobs, not only for podcasters themselves, but also for the sound engineers who are involved in production of the glossier podcasts. Radio broadcasting has been consolidating into a few megacorporations, such as Clear Channel, but podcasting has helped keep many local sound-production businesses afloat.

Of course, the iPod is only one Apple product that sprang from the fertile imagination of Steve Jobs. The iPhone created a whole new platform for which creative programmers could devise new applications. Many of Steve Jobs’s other inventions will continue to create employment for American and foreign workers who are still to be born.

Big Data: The Next Career Field?

Yesterday I completed the manuscript for the next edition of Best Jobs for the 21st Century. The book actually focuses on the next ten years, but I often wonder about longer-term prospects for career growth in the United States. Where will tomorrow’s jobs come from? Here’s one possibility.

Early in the 20th century, geologists discovered a huge pool of oil beneath the ground near Beaumont, Texas. Other petroleum deposits soon were identified in California and Oklahoma, and these natural resources led to thousands of jobs and billions of dollars of revenue. Our economy has exploited many other natural resources, such as timber, fish, and fresh water, sometimes creating shortages when demand exceeds supply. But perhaps the next huge resource that will be exploited is not a natural resource, not even something tangible, but rather massive quantities of data. This is what a recent report (PDF) from McKinsey Global Institute argues, and the report makes a good case.

It’s estimated that the volume of business data doubles roughly every 1.2 years. Every time you order something online, you’re generating data about your purchasing and payment behavior. The logistics process of getting the product to you generates additional data. Postings on Facebook, geotagged photos on Flickr, items on eBay or Craig’s List, media that stream on YouTube or Internet radio, all these and countless other quantities of data are generated every minute of the day, and the way (including the location from which) people respond to each of these items creates more data.

This pool of data, like a pool of oil, can be exploited for economic value, but it has the additional benefit of never running dry. Not only is new data constantly being generated, but consumption of data doesn’t use it up. It can be analyzed and reanalyzed. Any number of users can exploit it simultaneously.

The most successful current users of big data are Google, Bing, Yahoo, and other search providers. They use it two ways: (1) They create an index of Web content that is ranked according to how many links exist to the content, and (2) when you use this index, they sell information about your clicking behavior to advertisers. But these search providers only scratch the surface of all the data that’s out there.

The authors of the report (try as you may, you just can’t avoid calling a bulletin from McKinsey a “McKinsey report”) emphasize that what makes big data a new resource, different from past uses of business data, is its size: We already have business tools that exploit various databases, but the potential for innovative work lies in finding ways to analyze data at larger scales than have ever been attempted before. In fact, the authors make a point of defining “big data” as a kind of moving target rather than as a fixed number of terabytes, because as the volume of data doubles and redoubles, the scale of the analytical task will continuously create new challenges. Success in this field is not a matter of being able to analyze data, but rather being able to analyze bigger data sets than ever before.

Another dimension of the analytical challenge that defines this new resource (and the occupations that it will spawn) is the speed with which the big-data analysis can be done. We’re already gotten used to being able to track the delivery route of a package within a few hours of real time or the actual arrival time of an airline flight within a few minutes. Wall Street has developed ways to react within milliseconds to fluctuations in the value of securities. Some of the innovations that will be developed for use of big data will be methods of accomplishing instant analysis and response--and doing so in ways that have controls to prevent snowballing events such as the “flash crash” of 2010, in which the Dow Jones plunged about 9 percent within minutes, only to rebound just as quickly.

It’s obvious that marketers will have uses for the outputs of this work. So will governments, which can improve services by better segmenting the population. Law enforcement and defense are already reaping the benefits of using large-scale, real-time monitoring of events to trigger and coordinate a rapid response.

This kind of work will be done by teams that are highly creative and have outstanding technical and communications skills. In other words, it is the kind of work that America has always been good at. The major hurdle that needs to be overcome is the projected shortage of skilled workers. As the report notes, we face “a shortage of 140,000 to 190,000 people with analytical expertise and 1.5 million managers and analysts with the skills to understand and make decisions based on the analysis of big data.” So here is another reason why we need to improve STEM education and career development, make higher education more meritocratic, and (if Americans fail to step up to the plate) facilitate immigration of skilled foreigners.

How STEM Career Plans Get Derailed

Careers in STEM (science, technology, engineering, and math) are an interest of mine. I have blogged about them several times, have presented about them at conferences, and have written a book about them (Quick STEM Careers Guide). Next month, JIST will publish my STEM Careers Inventory.

The United States needs a steady supply of STEM-prepared college grads to fill the many technological jobs that our economy has created and will continue to create. In fact, if we fail to meet this need, our economy is threatened.

So I was intrigued to come upon a paper (PDF) by two economists, Todd and Ralph Stinebrickner (brothers?), “Math or Science? Using Longitudinal Expectations Data to Examine the Process of Choosing a College Major.” The researchers used data from a longitudinal study at Berea College to investigate how students go through the process of choosing a college major. They focused on large groups of majors, especially the group that they call “math/science.”

The usual assumption about how students choose a major is that students have a self-concept and a concept of the careers that the major leads to. Students are likely to change their planned major if they feel that one of these has changed so that what previously seemed like a good match now appears to be a bad fit. For example, students’ self-concept may change if they discover that they are no longer interested in the major or if they find that they lack the ability to do well in it. Their concept of the career outcomes may change if they learn that an industry associated with the major is not as promising as they previously thought it was or if an internship experience in a related career reveals work tasks or worksite conditions different from what they previously expected. The researchers sought to discover which of these changes were mainly responsible for students’ abandoning their plans to major in math/science.

The survey instrument at Berea College elicited four attitudes that students held toward their planned major: their percent chance of sticking with the major, their expected GPA, their expected income (in dollars) at age 28, and their interest in the major (on a five-point Likert scale). The research report notes that one unique advantage of this survey instrument as a window on the students’ career decision making was its frequency: “Each student was surveyed approximately 12 times each year while in school, with the first survey taking place immediately before the beginning of the student’s freshman year.”

A change in the first of the survey’s scales (chance of persistence) would indicate a change of heart toward the major. An accompanying change in the second scale (expected GPA) would indicate a change in self-concept, whereas if there were a better correlation with expected earnings or with interest in the major, this would indicate a change in students’ perception of the career.

The researchers found that expectations of persistence in the major changed differently for students planning to major in math/science: Expectations tended to decline precipitously in the freshman year (even though students did not have to formally declare their major that year), whereas students planning other majors, if they scaled back their expectations, did so more gradually over several years. And the decline in expectations for the math/science major showed a stronger correlation to anticipated GPA than to anticipated earnings or current interest. In other words, students’ experiences in their freshman year caused them to revise downward their estimates of their math/science abilities, and that’s why they expected to drift away from a math/science major.

I saw examples of this behavior in my own freshman year at a school with a large proportion of math/science majors (The Johns Hopkins University). Several friends of mine abandoned plans for math/science careers after experiencing the rigorous chemistry and calculus classes that freshman math/science majors at JHU are required to take.

The researchers conclude that we need “policies at younger ages that lead students to enter college better prepared to study math or science.” I agree. It’s not enough to get students interested in STEM careers. We need to be sure that in high school (and probably starting earlier than that) young people learn the skills they will need to succeed in a STEM college major.