With the United States facing a widely acknowledged talent gap in the science, technology, engineering and mathematics (STEM) fields, the huge difference in wages in neighboring Mexico makes it an ideal location to recruit or outsource to.
Such is the gulf in wages among STEM professionals that university graduates in Mexico earn four times less than STEM workers in second-tier U.S. cities who do not even possess a degree. Moreover, Mexico is currently producing a higher proportion of STEM graduates than the United States, meaning there is much less competition between recruiters in the Latin American country.
The Talent Gap
“The United States has become a global leader, in large part, through the genius and hard work of its scientists, engineers and innovators. Yet today, that position is threatened as comparatively few American students pursue expertise in the STEM fields – and by an inadequate pipeline of teachers skilled in those subjects,” the U.S. Department of Education states. “Only 16 percent of American high school seniors are proficient in mathematics and interested in a STEM career. Even among those who do go on to pursue a college major in the STEM fields, only about half choose to work in a related career.”
“Is there a shortage of STEM talent? I’m sure if I said no there would be many people that would completely refute that answer, and if I said yes there are plenty of businesses out there who would agree with me. So the short answer is yes, there is a shortage of STEM talent,” David Williams, Director of Organizational Developmentat Quanta Services and former Global Manager of Talent Acquisition at Houston, Texas-based FMC Technologies, told Nearshore Americas. “But I think the bigger question is ‘what do you do with the talent that is available?’ Because generally speaking when we bring in STEM talent we have to completely retrain them anyway because of the niche services and disciplines that we require.”
In order to increase the number of students and teachers who are proficient in these vital fields, President Barack Obama has included $170 million in new funding for STEM education initiatives in the budget for the fiscal year 2015. However, the talent gap looks set to widen as technological advances create greater demand across almost every industry.
“The need for workers with STEM skills is heightened in today’s global economy,” notes a U.S. Congress Joint Committee report on STEM education from April 2012. “Technological innovation improves the competitive position of U.S. industries, drives export growth, and supports high-quality jobs. Additionally, demand for STEM-capable workers has increased even in traditionally non-STEM fields due to the diffusion of technology across industries and occupations.”
U.S. Bureau of Labor Statistics data show that employment in STEM occupations is expected to have grown by 17% from 2010 to 2020, compared to 14% for non-STEM occupations, noted in the report. And of all the STEM fields, IT is the most in demand. According to the Bureau of Labor, computing will account for 71% of all new STEM jobs in the next four years.
Mexico Outperforms the US
In the Congress Joint Committee report, Senator Bob Casey (D-PA) notes that, “while the U.S. produces by far the greatest number of STEM degree recipients among OECD countries (348,484 in 2008), adjusting for the overall number of degrees and for the population paints a different picture.” As of 2008, Mexico had 1,085 STEM graduates per 100,000 employed 25-34 year olds, in line with the OECD average but fewer than the United States’ 1,472 per 100,000 employed 25-34 year olds. However, 25% of all Mexico’s bachelor-level graduates were in the STEM fields that year, significantly higher than the 15% in the United States.
In 2012, the Washington Post noted that Mexico was graduating 130,000 engineers and technicians a year from universities and specialized high schools, more than Canada, Germany or even Brazil, which has nearly twice the population of Mexico. During the Felipe Calderon administration from 2006 to 2012, the government built 140 schools of higher learning, with 120 of them dedicated to science and engineering, while capacity was expanded at 96 other public campuses. However, given the limited number of jobs available in Mexico, the number of Mexicans employed as engineers grew only slightly in those six years, from 1.1 million to 1.3 million.
STEM Salaries in the US and Mexico
A 2013 study by Mexico’s Department of Labor and Social Welfare showed that, on average, university graduates in aviation and marine transport engineering have the highest starting salaries at 15,944 pesos per month (just US$14,370 a year). Mexican physicists start on 15,609 pesos per month ($14,068 a year), as do ecology and environmental engineering graduates. Those with degrees in biomedicine start on 12,228 pesos per month ($11,021 a year), while math graduates earn just 11,743 pesos a month ($10,584 a year).
In contrast, a 2013 study by the Brookings Institute shows that STEM workers in tier-two U.S. cities who do not have a bachelor’s degree can expect to earn four times as much as graduates in the equivalent fields in Mexico. For example, the average STEM worker without a bachelor’s degree earns $62,092 in Bridgeport, Connecticut; $52,164 a year in Cleveland, Ohio; $48,353 in Wichita, Kansas; and $44,851 in Tulsa, Oklahoma. Across the United States, the average entry-level salary for STEM jobs at sub-bachelor level is $47,856. According to 2013 data from Burning Glass Technologies, this rises to $66,123 for STEM jobs requiring a bachelor’s degree or higher, almost five times the best starting salaries for STEM graduates in Mexico.
While salaries for STEM professionals do vary depending on location within the United States, David Williams told Nearshore Americas that “what city they’re in isn’t going to have nearly as much of a bearing as what industry they’re in. But obviously bringing them to (a tier-one city), depending on where they’re coming from, there might be an expectation (of a higher salary) if there’s a cost of living index increase from whatever city they’re coming from.”
Likewise, if a U.S. company were to import talent from Mexico then they would have to offer a more competitive salary as well as covering visa costs. But the wage gap leaves plenty of room for maneuver, as even Mexico’s best paid STEM jobs start at well below the average in the United States.
In a study of Mexico’s most lucrative careers, Forbes notes that engineers and technicians specialized in design, robotics and mechatronics earn around 30,000 pesos per month ($27,074 a year) upon graduating, with their salaries rising up to 100,000 pesos per month ($90,247 a year) after working 20 years in the industry. Meanwhile, software designers can expect to start on around 25,000 pesos per month ($22,562 a year), rising to 80,000 plus bonuses ($72,197+ a year) after 15 years in the industry.
While such salaries are significant by Mexican standards, they pale in comparison with the United States, where different sources place the average wage for STEM professionals at anywhere from $65,000 to $77,880. Even the average STEM worker without a degree in San Francisco still earns more ($73,467 a year) than a software designer with a degree and 15 years of experience in Mexico.
While outsourcing or importing STEM talent from Mexico can bring additional costs, so can recruiting in the United States due to the shortage of talent and competitive market. “The competition to fill STEM jobs is getting so fierce that big tech companies offer perks such as feeding their employees three meals a day while offering unlimited sick days,” notes Swiss multinational human resource consulting company Adecco.