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STEM Myth and Shareholder Primacy

September 7, 2013

In an earlier blog post titled “Broken Covenants” I wrote about the changes in the treatment of employees by large corporations in the private sector between the late 1940s, when my father began work, and the early 1970s, when my brother began work. In a later post I wrote about shareholder primacy, asserting that the shareholders’ desire for short-term profit is eroding our countries long run benefits.

“The STEM Crisis is a Myth” a recent post by Robert Charrette in Spectrum, the Institute of Electrical and Electronics Engineers (IEEE) on-line blog, reinforces this notion. Two paragraphs jumped out from this lengthy and detailed analysis that refutes the claim that the US needs more STEM workers. The first, with emphasis added, describes how our economy has shifted away from one where a single employer retains valued staff to one where staff are treated like replaceable parts:

The nature of STEM work has also changed dramatically in the past several decades. In engineering, for instance, your job is no longer linked to a company but to a funded project. Long-term employment with a single company has been replaced by a series of de facto temporary positions that can quickly end when a project ends or the market shifts. To be sure, engineers in the 1950s were sometimes laid off during recessions, but they expected to be hired back when the economy picked up. That rarely happens today. And unlike in decades pastemployers seldom offer generous education and training benefits to engineers to keep them current, so out-of-work engineers find they quickly become technologically obsolete.

Hence, when DuPont decided it would leave the photo products business in the 1990s it jettisoned scores of employees, including my brother. By contrast, my father was reassigned when the product he sold, tetra-ethyl lead, was taken off the market. This kind of treatment by corporations diminishes the attractiveness of STEM jobs, which, as the article notes, are often eliminated due to technological advances or outsourcing.

The second paragraph explains WHY business values a surplus of workers:

Clearly, powerful forces must be at work to perpetuate the cycle (whereby there is periodic hand wringing over STEM shortages). One is obvious: the bottom line. Companies would rather not pay STEM professionals high salaries with lavish benefits, offer them training on the job, or guarantee them decades of stable employment. So having an oversupply of workers, whether domestically educated or imported, is to their benefit. It gives employers a larger pool from which they can pick the “best and the brightest,” and it helps keep wages in check. No less an authority than Alan Greenspan, former chairman of the Federal Reserve, said as much when in 2007 he advocated boosting the number of skilled immigrants entering the United States so as to “suppress” the wages of their U.S. counterparts, which he considered too high.

Ah yes… the bottom line… the figure that shareholders use to determine the salary of their CEO and the value of their stocks.  The connection between the “bottom line” and wages and benefits is explicitly laid out in this article… and the consequence of all of this is that anyone with a STEM degree seeking good wages and benefits and stable employment should look elsewhere… and that, regrettably, seems to be the message to ALL employees in our rush to maximize profits.

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