We focused on the chip industry due to its significant susceptibility to tariffs, stemming from the intricate global supply chains and trade dependencies within the industry. Additionally, this sector has traditionally relied on an international workforce, making it particularly sensitive to shifts in immigration policies and labor market dynamics. Moreover, our dataset allows us to trace the career trajectories of millions of individuals in this sector from their educational accomplishments to their most recent employment developments. Finally, the movement toward domestic chip production offers some benefits for local economies and national security but presents significant challenges, including potential talent shortages.
Our research examines the impact of the 2018 tariffs on the employment landscape for scientists and engineers within US semiconductor firms relative to their impact on other job categories within the same firm and year. Our analysis reveals a notable downturn in employment indicators within these firms following the implementation of the tariffs. Our results suggest that the measures led to a 9 percent reduction in hiring activities between 2019 and 2022, which contributed to a 3 percent decrease in the overall size of the workforce. The decline in hiring was especially acute in entry-level and junior positions, indicating that the tariffs disproportionately affected those new to the workforce.
Specifically, the US chip manufacturing sector lost an average of 2,285 science and engineering positions each year. This is a cumulative reduction of 9,140 jobs within the industry, which employed 66,382 engineers and 9,768 scientists at the end of 2017. While reduced hiring in chip manufacturing does not necessarily lead to job losses for current or prospective engineers, it signifies a notable decline in employment opportunities within this sector. Moreover, there was a similar decrease in the rate at which scientists and engineers left their jobs, resulting in lower turnover of these positions after 2018.
Our research also examines how the global workforce composition of US-based chip manufacturers changed in response to these protectionist policies. Our findings reveal that these manufacturers increased their hiring of experienced workers outside the United States by 3 percent for junior and mid-senior roles. Notably, US chip firms have recently expanded their presence in Canada, which introduced favorable visa policies, and in European countries like the Netherlands, which has an established semiconductor manufacturing industry.
Finally, our research examines the changing interest in chip manufacturing jobs. Our dataset contains employees’ self-reported skills, and the category for chip manufacturing skills includes skills related to electronics, circuit design, semiconductor fabrication, and integrated circuit design, among others. We analyzed the job outcomes of students who shared the same university, program, and graduation year as people who went on to acquire chip manufacturing skills. Our results suggest that the number of these students in the United States who secured engineering or scientist jobs decreased by 15 percent after tariffs began in 2018. Many of these students instead took finance, marketing, or other higher-paying jobs. This change was most widespread among undergraduate students but also affected graduate students, and the trend was similar for students outside the United States. Our findings indicate a waning interest in the chip manufacturing industry, especially in the United States.
