Does the US Have an Industrial Engineers Shortage?

Last year, EMSI’s analysis revealed industrial engineers to be one of the most in-demand engineering occupations and one of those most heavily staffed with older workers. As of 2015, 26% of the workforce (now in the 55-plus age bracket) will be eligible to retire within the next five to 10 years. The question becomes, does the US have enough industrial engineers to replace them? More urgently, are we even producing the talent necessary to satisfy current demand?While no metric singlehandedly indicates a shortage, historical wage analysis might get us the closest, albeit with limited data. If wages are increasing over time, that’s a good sign of unmet demand in the market. Yet median wages for industrial engineers have remained flat the last five years, staying around $39 per hour on an inflation-adjusted basis, per the BLS’s Occupational Employment Statistics (OES) program.Why is this data limited? The BLS notes OES isn’t ideally set up for comparing wages and employment over time due to how the data is collected and structured. With this in mind, we focus on few different criteria in this article—college completions vs. annual job openings, job postings vs. hires, and the occupational age breakdown—all of which point to a shortage of industrial engineers in a few key areas. Yet they also spell a surplus of industrial engineers in others.Let’s take a look at which is which, and also explore a few options for producing enough talent, helping grads find jobs, and helping businesses recruit talent from over-saturated local job markets.

The Bounceback of Industrial Engineers

Where sheer job growth is concerned, industrial engineers are enjoying a heyday unlike any in the past 15 years. After declining 13% from 2001 to 2008 nationwide, the occupation was hit hard by the recession and tanked another 11% from 2008 to 2010. Then the turnaround: From 2010 to 2014, industrial engineers grew 8.7%, spiking from 219,000 jobs to 238,000 jobs.

As the interactive map below illustrates, industrial engineer jobs have grown significantly from 2010 to 2014 in areas such as Detroit (35%), Houston (19%), and Seattle (17%). However, this occupation has suffered decline in Washington, D.C. (-8%), Durham-Chapel Hill, North Carolina (-7%), and New York (-5%). Keep in mind that declines, especially small ones, can be caused by a lack of available workforce.

Supply and Demand

As we indicated above and have written about before, measuring occupational demand is far from a straightforward task. Two key factors to consider when calculating supply and demand are 1) the difference between college completions and estimated job openings and 2) the difference between job postings and hires. Drastically more postings than hires usually signifies an intense need for talent, which appears to be the case with industrial engineers.

From January to August 2015, there was a monthly average of 55,361 unique job postings and only 7,928 average monthly hires. This high postings-to-hires ratio—approximately one hire for every seven unique job postings—could indicate employers are struggling to find industrial engineers. But there are other factors to consider when looking at job posting data, something we’ll get to later on.

College Completions vs. Job Openings

For now, let’s focus on the difference between completions and job openings. This can shed some light on areas where higher ed institutions might need to expand their programs in order to satisfy regional demand—or, conversely, areas potentially producing more grads than the regional market can handle.

In 2014, US colleges and universities produced 10,000 completions in three programs related to industrial engineers compared to EMSI’s estimate of 13,000 annual openings (which includes new and replacement jobs). Just under 7,000 of the completions came in the main industrial engineering program (CIP 14.3501), with the vast majority of graduates earning a bachelor’s degree (59%) or master’s (33%). That breakdown is similar to the educational attainment of the existing industrial engineering workforce: 50% hold a bachelor’s and 19% hold a master’s.Among all states, Michigan had the greatest disparity of annual openings (1,781) and completions (711). California had 1,019 openings and only 650 completions, and Tennessee—another emerging manufacturing center—had 512 openings and 106 completions. If there is a shortage of industrial engineers anywhere, it would seem to be in these states (see table).

As for the surplus, New York with 296 openings to 655 completions, Kansas with 60 openings and 288 completions, and Pennsylvania with 366 openings and 575 completions  might be flooding the market and could offer rich talent pools for non-regional businesses looking to hire.

The story is similar on the MSA level. Detroit, the automotive hub of the US, had the most critical disparity in 2014: 1,067 openings to a mere 129 completions. The following cities were also heavily unbalanced:

• Houston (458 openings to 70 completions),
• Grand Rapids (290 openings to 0 completions), and
• Minneapolis-St. Paul (310 openings to 55 opening).

A few metros at first glance seem to be glutting the market with grads: Atlanta, Ann Arbor, Michigan, and State College, Pennsylvania. But outside of Atlanta, major universities dominate these cities. Industrial engineering graduates are likely to follow jobs anywhere in the country, thus avoiding local deluges of jobless talent.

See the table below for more details on metros exhibiting signs of a lack of industrial engineers:

Job Postings vs. Hires

Now let’s complete our supply and demand analysis by examining job postings and hires in these metros. Of course, job postings don’t necessarily represent actual job openings; employers may advertise positions online merely as a way to gather applications, so there is certainly no strict one-to-one correlation between postings and openings. However, regions where postings significantly surpass hires could be places where employers are hunting for talent they can’t find. At the least, these regions warrant further examination.

In this case, the job postings data within these metros corroborates our theory on shortage and surplus. The metro areas where job openings significantly outnumber completions are also areas where postings far outstrip hires. Just look at Detroit. From January to August 2015, Detroit had an average of 385 hires each month compared to a staggering 2,655 unique job postings. Houston, too: 236 average monthly hires compared to 1,137 unique postings.

Conclusion

There’s no simple way to indicate a shortage of industrial engineers. But despite flat wages, key indicators point to the US having too few industrial engineers. This is especially true in a few states (most notably Michigan, California, and Tennessee) and metros (most notably Detroit, Houston, Grand Rapids, and Minneapolis-St. Paul).

The localized surfeit of industrial engineers can be both good news and a cautionary word for students, jobseekers, colleges, and businesses alike. As a 2014 survey conducted by CareerBuilder revealed, the most popular degree among high school seniors is engineering, but a strategic move for those students would be to take the temperature of the local job market first. Will they be jockeying other graduates for a scant number of jobs? Or will they be in high demand among employers? Institutions and businesses too: If they’re evaluating programs and seeking talent, knowing their region’s characteristics could help them succeed, and perhaps shift the national scale back to a balance.For more on EMSI data—available at the county, MSA, and ZIP code level—or to see data for your region, contact us. Follow EMSI on Twitter (@DesktopEcon) or check us out on LinkedIn and Facebook.

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