Meeting the National Demand for a Skilled Energy Workforce:A Growth Opportunity for Eastern & Central Washington
Prepared by the Office of Senator Maria Cantwell
with assistance from: Alstom ESCA Applied Process Engineering Laboratory Athena Institute Avista Corp. Benton County PUD Bonneville Power Administration Bureau of Labor Statistics Franklin County PUD Gonzaga University Grant County PUD Inland Power & Light Isothermal Systems Research Institute of Electrical and Electronics Engineers INTEC Itron, Inc. National Science Foundation Pacific Northwest National Laboratory Schweitzer Engineering Laboratories Washington State University University of Washington Washington State Workforce Training and Education Coordinating Board
EXECUTIVE SUMMARY
This report documents the opportunity for Washington state to play a critical role in meeting the growing national demand for skilled workforce in energy-related fields.
Across the nation, there is a pronounced "graying of the workforce" underway, in which half of those individuals employed in the fields of science and engineering—of which electrical and power engineering is a small but important subset—will reach retirement age in the next twenty years. While jobs in these areas will continue to grow, the number of students receiving degrees in these fields will continue to fall short of the number in demand.
Meanwhile, the State of Washington is poised to help close this expanding gap. Eastern and Central Washington are already home to an energy workforce more than 7,000 strong, and have a number of strategic assets to expand this advantage—a key to accelerating innovation and economic development in the energy technology sector. According to the Institute of Electrical and Electronics Engineers (IEEE), there are fewer than 15 universities nationwide that offer world-class, PhD-level programs in the area of power engineering. Fortunately, both Washington State University and the University of Washington are among the universities with strong programs. Gonzaga University’s College of Engineering also boasts a strong undergraduate program in this field.
The purpose of this report is to estimate the national demand for a highly skilled energy workforce, to propose ways in which to close the skills gap, and to grow Eastern and Central Washington’s competitive advantage in this area.
Key Findings:
• The energy workforce in Eastern and Central Washington could add more than 1,000 jobs over the next five years. This is based on the conservative assumption that jobs in the energy sector expand at the same rate as other science and engineering-related jobs, and that the rate of expansion remains at the 4.9 percent annual growth rate during the period from 1980-2000.
• Both industry and academia are bracing for a critical shortage of engineers in this area. More than half the nation’s science and engineering workforce will reach retirement age in the next twenty years. Currently, the IEEE reports 360,000 electrical and 23,000 registered power engineers. Yet, today there are only about 500 undergraduate degrees awarded in the area of power engineering (compared to nearly 2,000 in the 1980s) annually, fewer than 200 masters’ degrees and about 20 PhDs conferred per year.
• Washington state has the beginnings of a competitive advantage in the area of energy technology due to both our existing industry and the fact that our universities are leaders in the field of power systems engineering. Washington State University is currently training about 20 undergraduates and 15 graduate students in this area; the University of Washington has 30 undergraduates and 20 graduate students; and Gonzaga University reports that about one-third of its electrical engineering students—about 21, this year—concentrate in power engineering.
Recommendations for Federal Policy:
• The need for reliable operation and innovation of our energy system will increase the national demand for electrical and power engineers, at precisely the time many in the current workforce will retire. Congress should pass and consider expanding important provisions included in the pending Senate energy bill, which provide $60 million annually for grants, traineeships and fellowships in energy-related fields where there is a critical shortage of qualified workers. Similarly, ensuring an adequate workforce in electrical and power engineering should become a part of the mission for the Department of Energy’s new Office of Electricity Transmission and Distribution.
• Congress should provide full funding for the PSERC program and others like it, which will expand the base of qualified power engineers nation-wide, and maintain Washington State University’s leadership in this critical area.
• Congress should provide federal support for a number of selective research assistant professorships in science and engineering at universities. These positions would be available only on a highly competitive basis to experienced and proven postdoctoral scholars who are U.S. citizens or permanent residents.
Eastern and Central Washington’s Energy Workforce: An Engine for Growth
According to a preliminary survey spanning Eastern and Central Washington utilities, related agencies, research consortia and technology companies, there are today approximately 7,000 individuals employed in energy-related occupations. Due to Washington state’s historical electricity rates advantage, there are many more individuals whose employment is tied to the availability of affordable, reliable electricity supply. This report, however, is immediately concerned with those whose jobs are directly linked to the provision of electricity and the development of technologies that will make our nation’s energy system more efficient and reliable.
Given the current state of flux surrounding the energy industry and associated lack of transparent data, this report uses conservative growth estimates based on forecasts provided by the Bureau of Labor Statistics and National Science Foundation.
At this particular moment in time, it is exceedingly difficult to locate projections regarding potential growth in the energy sector as a whole. While many energy companies were flying high throughout the mid- to late-1990s, there has been over the past two to three years an almost unprecedented collapse in market capitalization—the result of the West’s historic energy crisis and an associated loss in both investor and consumer confidence. For example, the Dow Jones Utility Average dropped by 28.7 percent in 2001 and another 26.8 percent in 2002—the steepest declines in utility stock value since 1937.
There is no doubt that this decline has had a marked impact on the energy sector, its willingness to invest in technology development and its ability to attract private capital. Nevertheless, restoring this sector’s financial health remains a priority for both federal and state regulators as for the United States Congress, which is currently contemplating comprehensive legislation that will provide enhanced funding for energy-related research and development and tax incentives for investment in new technologies.
Energy Industry Occupations: Individuals employed within the energy sector have a wide range of job descriptions—from electrical and power engineers (including software specialists), to energy traders, accountants, linemen, hydroelectric project operators and support staff.
This report is primarily interested in fields that require training in the sciences, mathematics and engineering (or, S&E occupations)—those areas in which there is an anticipated, critical shortfall of qualified workforce. According to a preliminary survey, there is quite a bit of variation in the percentage of employees who have S&E backgrounds among utilities, energy technology firms and related agencies in Washington state. It ranges from as low as approximately six percent for a small rural utility dependent on the Bonneville Power Administration to meet most of its power and transmission needs, to about 68 percent for a mid-sized technology development firm. The percentage of employees with S&E-related training across the survey averaged 42 percent.
Growth in S&E Occupations: As previously articulated, no firm estimate of job growth in the energy sector is available today. However, across all industries, the Bureau of Labor Statistics forecasts a 47 percent increase in S&E-related jobs from 2000-2010, compared to 15 percent for all other occupations. This is consistent with a 20-year trend, in which S&E-related jobs grew at more than four times the rate of the general U.S labor force between 1998 and 2000. Specifically, non-academic S&E jobs increased by 159 percent over that period—an average annual growth rate of 4.9 percent, compared with 1.1 percent for the entire U.S. labor force.
Jobs in the Eastern & Central Washington Energy Sector: From this preliminary data, it is possible to extrapolate energy-related job growth in Eastern and Central Washington. If the energy sector keeps pace with other industries in its demand for workers with S&E-related training, the current 2,970 people employed in these fields (42 percent of 7,071 existing energy jobs) within Eastern and Central Washington’s energy industry would grow to 3,773 within 5 years—an increase of 803 jobs.
Non-S&E jobs within the energy sector would grow in tandem. It is safe to assume that, in order to keep pace, associated energy-related workforce would expand at a pace slightly faster than the 1.1 percent rate at which the U.S. labor force grew as a whole from 1980-2000. Nevertheless, using the conservative assumption that the annual growth rate for the 58 percent of energy workers not employed in S&E-related jobs today (4,101) would expand at a rate of 1.1 percent, some 231 jobs would be added in these areas—for a total of 4,332 non-S&E, energy-related jobs in Central and Eastern Washington.
Taken together, the Eastern and Central Washington energy industries could add more than 1,000 jobs in the next five years.
The Present and Future "Skills Gap" in Science & Engineering Fields— Implications for the Energy Industry
The American labor market experienced a tremendous growth during the 1960s through 1980s, as a result of the "baby boom" generation. During this time, the nation saw an increase of nearly 54 percent of workers entering the labor market. Baby boomers were in their prime employment years, and large numbers of women entered the labor force. New workers emerged far more educated than those they replaced and the number of college-educated workers more than doubled. Over the past twenty years, the number of workers entering the labor market has stagnated, but due to the "baby boom generation," the skill and size of America’s labor force has driven the economic growth and prosperity.
As the "baby boom generation" approaches retirement age, the trends that contributed to the growth and strength of the American workforce has ended. More than one third of the nation’s current workforce lack the basic skills needed to succeed in today’s labor market. During the next twenty years, the American workforce is expected to grow by only half of its earlier pace; there will be no growth of native-born workers in their prime working years; the percentage of the labor force composed of four-year college graduates is predicted to stagnate over the next two decades; the number of workers with two-year degrees and skill certificates will fall far short of the economy’s needs. Globalizing competition and accelerating technological requirements in both domestic and export sectors exacerbate these labor force trends.
The global economy has created challenges that require our nation to recognize and respond to the future worker shortage and lack of worker skills. Nowhere are these challenges more prominent than in the science, engineering, and technology fields—precisely those fields on which the energy industry relies for its most highly skilled workers.
"Attracting the Best and the Brightest," a recent article by Dr. William Zumeta from the University of Washington, highlights the impact of the significant decline in United States citizens and permanent residents enrolling in science and engineering fields. According to the National Science Foundation, from 1993 to 2000 the number of American students pursuing these fields declined by more than 14 percent, with the greatest decline in mathematics (32 percent), and engineering (25 percent). Dr. Zumeta concludes that that top U.S. students with potential to become scientists are turning away from science and engineering graduate school (except in biological sciences), toward other career paths. It appears that significant numbers of students are choosing professional schools—notably business and non-MD health professions—which promise careers with good income prospects, without the long years of schooling and apprenticeship that science requires.
Government has a vested interest in ensuring that talented Americans seek careers in scientific research, including energy-related industries: it is widely held that innovation in science depends less on the many "worker bees" in the enterprise than on the decent sprinkling of the very best minds. It is critical to recognize that the research and teaching most scientists do serves an important public good; society as a whole can benefit from the progress and innovation in research and development in the science and engineering fields.
Implications for the Energy Industry: Given the increased competition in our global economy, advances and innovation in the energy industry will depend in large part on the skill and breadth of its U.S. workforce—and in particular, its scientists and engineers. The current trend shows a steady decline in graduates who have at least an undergraduate degree in science or engineering choosing occupations related to their field. According to the 2002 National Science Foundation study (NSF) "Science and Engineering Indicators," approximately 11 million workers with science and engineering college degrees comprised the U.S. workforce in 1999. More importantly, only a third (31 percent) of these workers were employed in respective science and engineering occupations. This low figure is despite the fact that, since 1980, the demand for non-academic science and engineering jobs grew at more than four times the rate of the United States overall labor force. The critical need to address the present and future "skills gap" in the energy sector is exacerbated by the fact that workers with science and technology degrees will soon retire, creating a dramatic vacuum of employees available to satisfy a growing industry. According to the NSF study, the "graying of the workforce" will result in a dramatic increase in the number of retirements over the next 20 years for employees in these science and engineering fields. Presently, more than half of these workers are age 40 or older, but fewer and fewer younger workers have the education and training to replace this aging workforce.
The lack of a "skilled workforce" in these fields has resulted in a dramatic increase and dependence on foreign-born workers to meet the demands of the labor market. The migration of skilled science and engineering workers across national borders is increasingly seen as a major determinant of the quality and flexibility of the labor force in most industrial countries. Because the knowledge of scientists and engineers can be transferred across national borders more easily than other skills, the United States has benefited and continues to benefit greatly from this international flow of knowledge and personnel.
The rise in foreign-born scientists and workers in critical industries underlies the need to examine our government’s role in promoting policies to encourage education and training for a domestic workforce in the energy industry. According to the NSF study, 27 percent of doctorate-holders in science and engineering in the United States in 1999 were foreign born. Moreover, nearly half (47 percent) of doctorate degrees in electrical engineering in 1999 went to foreign-born students.
This statistic is alarming since power engineers—a subset of specialists within electrical engineering—will play a key role as the energy industry redesigns, builds, maintains and improves our regional and national power grids. This essential group of electrical engineers will serve as the backbone for the innovation required to put in place the energy system of the 21st Century, with its incorporation of distributed generation and "smart grid" technologies. The impact of a growing dependence on foreign-born scientists and engineers may mean that our nation’s domestic expertise in this critical area of research and development will lose ground in a globally competitive market.
One option that employers are using to recruit and meet the demand for more workers in this field is applying for various forms of temporary work visas under the Department of Labor’s H1 B labor certification program. The H1-B visa program provides temporary work visas to individuals for up to six years, for work in occupations requiring at least a bachelor’s degree and in fields experiencing chronic worker shortages. An employer requests an H1-B visa when it cannot find qualified American workers to fill its needs.
Initially, the H1-B program was created to meet the demand for information technology workers. However, these visas are issued to hire a wide variety of skilled workers. Recent data show that more than half (53.5 percent) of H1-B labor certifications were issued for computer-related or electrical engineering positions. The graphs below illustrate the gap between domestic and foreign-born graduates in power engineering. Graph A depicts the projected annual decline in undergraduates with a degree in power engineering. According to the Institute for Electrical and Electronics Engineers (IEEE), only about 500 undergraduate degrees will be awarded in the area of power engineering by about 2010, compared to nearly 2,000 degrees in the 1980s.
Power Engineering Degrees from U.S. Universities — Graph A
At the same time, the percentage of foreign-born students getting advanced degrees in power engineering will continue to increase. From 1970 to 1990, the number of foreign-born doctorate degree holders nearly doubled, from approximately 40 percent to 80 percent. In that same period, foreign-born students who obtained a masters degree climbed from 25 percent to over 50 percent in relation to the domestic students who were enrolled in electric power engineering graduate programs in the United States.
Foreign Born Students in Power Engineering – Graph B
In conclusion, available data indicate that American companies continue to rely on foreign-born workers to meet their labor demands. In particular, the current trend demonstrates a widening "skills gap" and worker shortage in the field of electrical power engineering. Unless policies are examined and developed to create incentives for educating and training a domestic workforce for these energy-related occupations, the ability for U.S. companies to compete globally will come to depend on importing workers from overseas with the knowledge to meet the demands of the energy industry—a sector that is critical to our nation’s infrastructure, security and economy.
Preparing the Washington State Workforce to Meet the Demands of a Growing Energy Industry
Washington state is uniquely positioned to prepare a 21st century workforce in the energy- and power-related industries, given the presence of human capital, educational infrastructure and natural resources that can create the right environment to build this sector. However, Washington is not an exception to the disturbing national trend showing the decline in U.S. citizens and permanent residents pursuing degrees in the science and engineering fields. While Washington faces the same "skills gap" and worker shortages in the power engineering fields as other regions, it also has the tools to begin closing this gap.
As previously discussed, Eastern and Central Washington are already home to more than 7,000 workers directly employed by the energy industry. In preparing this report, more than 10 of the companies that employ these workers were surveyed, for the purpose of drawing generalizations regarding the Washington workforce in energy-related industries. These companies voiced an overwhelming shared concern that there is a present (and growing) shortage of skilled workers, and a fear that—if current labor market trends hold—they will not be able to recruit and retain highly-trained and skilled workers.
According to a November 2002 report by the Washington Workforce Training and Education Board, there already exists a shortage of employees possessing technical skills in this state. The report showed that 6,700 jobs went unfilled in 2001, for lack of qualified candidates. The report also concluded that the gap would widen to 8,900 jobs by the year 2010. Washington and other states in the Pacific Northwest lead the nation in high unemployment, yet there are jobs available in industries requiring technical skills. Clearly, there must be an effort to train workers in order to move them into jobs where openings still exist.
Washington Universities are Leading the Way: A significant way to educate and train workers in energy-related fields is to support the existing educational infrastructure. Across the nation, there are fewer than 15 institutions of higher learning that have power engineering degree programs. Washington is home to three of them – the University of Washington (UW), Washington State University (WSU), and Gonzaga University.
Presently, WSU has 20 undergraduates and 15 graduate students studying power engineering. The WSU program is nationally recognized in this field, as it is also a member of the Power Systems Engineering Research Center (PSERC), which is funded through the National Science Foundation. PSERC is a collaborative of 13 universities and more than 40 industry participants, working to plan for the evolving needs of the energy industry. In future years, PSERC may be eligible for funds authorized by the pending Senate energy bill.
The University of Washington also has ten engineering programs with a total enrollment of 1,470 undergraduates and 1,201 graduate students. There are 30 undergraduates majoring in power engineering and 20 graduate students pursuing advanced degrees in this field. UW’s power engineering program also has partnerships with the Grainger Foundation, the Electric Energy Industrial Consortium (EEIC) and the Advanced Power Technologies Center.
While Gonzaga University does not offer graduate degrees in engineering fields, it currently has 63 undergraduate students majoring in electrical engineering—about a third of which are concentrating on power engineering.
This means that approximately 71 students statewide are getting their undergraduate degrees in power engineering and 35 graduate students are pursuing advanced degrees in the field. These numbers underscore the national statistics pointing toward a fast-approaching shortage of qualified workers. However, it also underscores Washington state’s current advantage. Given IEEE estimates that, nation-wide, only 500 undergraduates and about 25 Ph. D. students receive degrees in power engineering each year, Washington state is clearly an important contributor to the workforce in these fields.
It is also important to note that private companies will employ most of these graduates. Presently, private companies employ 74 percent of the scientists and engineers with bachelors or graduate degrees. Washington state’s economic outlook is intricately tied to the success of its energy industry, and many companies with a presence in the state have reported anecdotal evidence of looming worker shortage and skills gap in the industry:
• Of those polled, 100 percent expressed a concern about finding a skilled workforce in the next five to ten years;
• All respondents suggested there is particular difficulty in recruiting qualified engineers; and 60 percent of respondents expressed concern that these shortages will be exacerbated when the overall economy improves;
• Sixty percent indicated that they do the majority of their recruitment in the Pacific Northwest, but 80 percent also suggested that they must recruit nationally and internationally to fill some positions;
• One company listed 50 open positions, about two-thirds of which are for engineers and other technically skilled positions.
According to Dr. Chen-Ching Liu, Chair of the Electrical Engineering Department at University of Washington, the Pacific Northwest is in a "major crisis" regarding the shortage of power engineers, and the national shortage will also reach a crisis point in the next five to ten years as the baby boom generation retires. As Dr. Liu notes, "reliability of the power grid is a central issue" in this workforce debate, because of the importance of "[t]he power infrastructure to our national security." In addition, without highly-trained workers and innovators in the field of power engineering, it is not clear how the nation will be able to usher in the dramatic shift to a more efficient, reliable energy system that relies heavily on distributed generation and smart grid technologies.
In conclusion, the United States, like Canada, China, and many European nations, should take an active role in supporting the professional development of power engineers. It is an issue of national concern since these power engineers serve to protect our national economy as well as our national security, and can help make the smart grid of the 21st century a reality. Washington can play a leading role in developing a skilled workforce in power-related industries—a prerequisite for making the energy sector an engine for economic growth.
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