Preparing Workers for High-Demand Occupations

Concern over a potential skills gap or labor market mismatch in Rhode Island has been building in recent years, fed by some employers' reports that there aren't enough trained Rhode Islanders to meet their demand. Recent research indeed finds an upward trend in out-of-state workers filling RI jobs, especially for jobs requiring an Associate's or Bachelor's degree.1 What do our higher education and workforce data show about RI's production of skilled workers and whether they are filling high-demand occupations?

The Rhode Island Department of Labor and Training's Labor Market Information division (LMI) has identified consistent quarter-over-quarter labor shortages in RI for certain computer, engineering, health care, and business occupations.2 This data story focuses on that disparity by looking at the total number of people who have been formally prepared for these occupations and comparing those figures to the actual number who are working in related industries in the state. These findings may help guide workforce training, including education and policy decisions designed to keep good jobs in the state. In addition, they may help employers recognize areas where in-state workers have the training and skills to fill key positions.

Which occupations have experienced high demand and/or labor shortages in recent years in RI? LMI identified 40 occupations that met one or more criteria for possible labor shortage.3 We focus here on a selection of computer, engineering, and healthcare positions, which tend to pay above the state's median wage4, are growing fast, and generally require some formal training that delimits the labor supply. Shortages in positions that require formal training indicate opportunities for RI students to acquire high-value jobs in-state.

Using a field of study-occupation "crosswalk" developed by LMI and the Rhode Island Office of the Postsecondary Commissioner, we identified programs that are considered formal preparation for these particular occupations, and grouped occupations with overlapping fields of study. The accompanying table displays relevant characteristics of the occupations, like typical education for the entry level and projected demand. Click on "CIP-SOC Detail" below for more information about the linkages.

See CIP-SOC Detail in the Notes section at the end of the story.

Linking records for degree/certificate completion in these fields of study over the last 10 years with records for employment over the last 5 years, we determined the percentage of all graduates that went on to work in RI for each occupation group. The results are displayed in the accompanying chart.

Let's look at Computer Occupations in more detail. This group encompasses 7 high-demand, well-paying occupations with 4 preparatory fields of study offered in RI public institutions. We can see that there were 755 graduates in these programs over the 2005-2015 time period, and that 66.9% of those graduates were retained in-state, working for at least one quarter.

Our in-state retention of graduates falls within the 55-75% retention range for most of the occupation groups targeted in this analysis. Except for Pharmacists, healthcare programs are retaining high percentages of graduates in Rhode Island; about three-quarters of all the people we trained in these programs found work in the state. 

Previous research shows that New England in general does a poor job of retaining its graduates in-state, in part because the region attracts a large proportion of students who grew up out-of-state.5 Graduates are more likely to be retained in-state if they are natives.6 Is this true for the individuals in our dataset, and if so, does retention by native status vary by the type of training?7

We use graduation from an in-state high school as our measure of native status. The accompanying graph compares retention in the RI workforce for RI natives and out-of-state students that we trained. We can see that every program retained more RI natives than non-natives.

Some similarities emerge when we look at the programs that retained their graduates in-state. Business, Finance, and Engineering graduates who were RI natives were much more likely to stay in-state for work than non-natives. In the Computer and Computer Support Occupations, there was relatively less difference in retention between natives and non-natives. LPNs/LVNs showed the least difference in retention, but this was an isolated incidence and not representative of all the healthcare programs analyzed here.

The linked workforce data allows us to look at wages and industry destinations for people that have prepared for certain occupations. Since our workforce earns less on average than workers in neighboring states,8 can we conclude that RI employers of skilled workers are likely to face labor shortages? How do our graduates' wages compare with occupational averages in the state, regional and nation, and are they finding work in appropriate industries? [Note that occupations are not the same as industries: an occupation can be found in many different industries and an industry encompasses many different occupations.]

We looked at fulltime workers at least 18 months out of school and at most 10 years into their careers,9 and compared their wages with entry-level averages for these occupations in Rhode Island, Massachusetts, and nationally. With few exceptions (Marketing Occupations, Electrical Engineers, and Dental Hygienists), the wage record data shows that most of our graduates are earning wages that are on-par or greater than the RI entry-level wage for the occupation to which their training relates.10 RI entry-level wages for nearly all of these in-demand jobs either exceed are on-par with entry-level wages in Massachusetts and the national average entry level wages.

Looking at industry destinations, we found that healthcare graduates were almost entirely working in healthcare settings. Among computer and engineering graduates, there was more heterogeneity but the top industry destinations were appropriate to their training. Business graduates had a less straightforward industry destination, with the top destination for Marketing Occupations being Restaurants and Other Eating Places (11.6%).

Although an economic analysis of the supply-demand mix is beyond the scope of this report, it appears that lower wages might not be the best explanation for these occupational labor shortages.

Certain fields prepare both Associate's and Bachelor'-level graduates for the same occupations, such as Registered Nursing and Computer Occupations. Workforce experts in Rhode Island are unsure whether obtaining the Bachelor's degree in these fields brings a premium in terms of wages or employment conditions.

Our linked longitudinal data analysis suggests that Associate's-level RNs can expect to earn about the same amount as their counterparts with more years of higher education. This is despite the greater number of hours worked, on average, by Bachelor's-level RNs. We did find that RNs at different degree levels were more likely to work in different types of healthcare settings: 27.8% of Associate's-level RNs were employed in Skilled Nursing Facilities compared with 9.7% of Bachelor's-level nurses, who were primarily found at General Medical and Surgical Hospitals.

Graduates who prepared for Computer Occupations with a Bachelor's degree were earning about $6,500 more per year than their Associate's-level counterparts. Their industry destinations did not vary significantly based on degree level.

We've looked at data on retention, wages, and other factors pertaining to occupational labor shortages in RI. Labor shortage can occur for many reasons. Some graduates leave the state after obtaining their credential, seeking work elsewhere. Others may be out of the labor force while obtaining more schooling or for personal reasons. Still others become self-employed or get a job in government (data which are not captured in our analysis). A small number may be unemployed, but we consider this possibility unlikely for the in-demand occupations we study here.

Many of these individual-level factors are out of the control of public policy. One of the main factors we do have control over is the production of trained graduates at our public institutions. Regardless of their destinations, are we producing enough graduates to potentially meet the demand? The accompanying table compares the number of graduates we've been producing in recent years for each occupation with LMI's projected demand for those types of workers.11

We can see that we're significantly underproducing graduates prepared for Finance and Computer Occupations. The pace at which we're graduating new workers in these areas is too slow to meet the growing demand for their specialized skills.

On the other hand, we're overproducing graduates in Logistics, and to a lesser extent in Marketing, Pharmacy, and Registered Nursing. This makes sense in light of our other findings--few Marketing graduates are staying in-state to work. It does not make sense in terms of the shortages LMI has identified for RNs; an average of 1,200 RN positions were posted on EmployRI over the last 4 quarters. It may be that these postings are for jobs with less desirable working conditions, like night shifts or traveling.