Confronting the coming American worker shortage by Elizabeth G. Olson @FortuneMagazine May 20, 2011, 2:00 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons With the job market inching toward recovery, most of America’s collective attention is set squarely on the here and now. But signs of a coming shortage of skilled American workers have begun to draw concern from leaders in the public and private sectors, and for good reason. So dire are the predictions about the unprepared American worker that a group of executives from major companies appealed directly to state governors earlier this month, urging them to set higher standards for student proficiency in science and mathematics. The group of executives, called Change the Equation, notes that only one fifth of today’s 8th graders are proficient or advanced in math, citing figures from national educational assessments. Late last month, the group gave each state a report card on its science, technology, engineering and math (STEM) education based on various factors including teacher licensing test results and student advanced placement test scores. If states do not set a meaningful bar for assessing these skills, the group warns, they risk contributing to the dilution of America’s global competitiveness. The CEO-driven initiative launched last fall as part of the Obama administration’s “Educate to Innovate” campaign in response to forecasts that the U.S. will be short as many as 3 million high-skills workers by 2018, according to a Georgetown University report issued last year. Two thirds of those jobs will require at least some post-secondary education, says Anthony Carnevale, director of the Georgetown’s Center on Education and the Workforce. So is anything going to happen? Given current state and local budget squeezes, with teacher layoffs and the continued debate over whether education should be tightly tied to test results, it is doubtful that states will take any action — like setting aside financial resources or raising standards for math and science. But they should, maintain many executives, arguing that the United States is frittering away its lead in technology and education. American universities, for example, award about 500,000 bachelor’s degrees in science and engineering each year, only about a third of the total degrees awarded by Asian universities. Worldwide, the United States ranks 17th in the number of science degrees it awards. For decades, companies have been sounding alarms by funding a plethora of projects, studies and surveys, and publicly advocating for more training and higher education standards for American workers. Millions of jobs that underpin the middle class “could go offshore” if the shortage of highly educated and credentialed workers persists, adds Georgetown’s Carnevale. Some dispute this assertion, arguing that baby boomers will merely cut back on work — not retire — and the educated working ranks will remain plentiful. Carnevale disagrees, and stresses the importance of closing the widening skills gap with foreign nations. Even so, the data behind the future of the workforce paints a complicated landscape. For example, the prestigious executive association Business Roundtable released a survey in December 2009 that asserts companies are making only modest efforts to address the “glaring and growing need” for post-high school education. Two thirds of employers surveyed say they require at least an associate’s college degree for most positions. However, almost half of them do not provide — or require — ongoing education or skills training for their employees. It all comes down to costs, according to “The American Workforce,” a survey of 600 executives as part of a Business Roundtable commission called the Springboard Project. Addressing the problem Eighty percent of the 1,000 workers surveyed said that they understand the importance of having up-to-date skills but they are hindered by the cost, lack of convenient choices and absence of reliable information about the type of training they need. Flexible classroom hours, tuition reimbursement and online learning are among the solutions offered by the survey. To tackle the predicted lack of qualified workers, Raytheon Co. RTN , a major defense contractor, has developed software to help state educators, lawmakers and others develop tailored plans to improve math and science education and workforce policies. Like other defense contractors and many government agencies, Raytheon needs homegrown talent because national security guidelines do not allow for easy outsourcing of work or importing workers, notes Brian Fitzgerald, executive director of the Business Higher Education Forum, a group of executives and educators devoted to improving education in math, science and related areas. Raytheon CEO and chairman William Swanson is the chair of the Forum. But recent research from the Forum shows that boosting the educational level of the workforce is a daunting pursuit. Only 16% of American students in their senior year of high school have both math proficiency and an interest in pursuing a career in the STEM disciplines, according to the research. And just under 60% of high school seniors are not proficient in math, so even if they are interested, their chances of landing a job in those fields are slim. ‘It’s important, but not for me… or my kids’ “Many American parents see these disciplines as important,” says Fitzgerald, but “they see them as [being] for someone else.” Raytheon released research last December that underscored that point, revealing that American parents believe they can help their middle school children with math despite admitting that they shy away from algebra and geometry. However, their children score lower than students in other countries who receive outside help, the research found. “We don’t understand the formation of interest in STEM disciplines,” admits Fitzgerald. “It’s been hard to move the needle. Is it that one teacher that makes a difference? “What we know is that few 12th graders are interested in these disciplines, about 50% switch to other majors in college, only 19% graduate with a STEM degree, and only 10% of those go into STEM jobs.” It’s not for lack of trying. There are many corporate-sponsored programs that aim to attract and help students interested in math and science, reaching back more than four decades to when the American Chemical Society started “Project Seed” to encourage interest in the chemical sciences among minority students. Part of the problem has been directing corporate funds to what works, according to Linda Rosen, executive director of Change the Equation. The group lists seven programs, evaluated independently, on its website that they recommend for company philanthropy. One program is Engineering is Elementary, a project of the Museum of Science in Boston that tries to make engineering fun and familiar to grade schoolers. “We are looking at programs that address a well-defined need and can be scaled up to reach more people,” she says. Even so, a group of major Business Roundtable companies warned top Congressional leaders in a letter they sent in March that, “the private sector cannot replace” federal support “for basic science and engineering research and math and science education that undergirds America’s national economic competitiveness.” Many are pleading to retain their federal funds as deficit spending is reduced, the group advised, but “because these investments are the key to future productivity growth, they must remain a top national priority.” Editor’s note: A previous version of this story incorrectly stated the Change the Equation organization was launched as part of the Obama administration’s Race to the Top initiative. In fact, the organization was founded as part of the administration’s “Educate to Innovate” campaign.