Schaefer, who was born at Schenectady in New York, graduated from the Davey Institute of Tree Surgery in 1928. He was appointed as assistant to Irving Langmuir at the research laboratory of the General Electric Company in 1931 and remained there until 1954, becoming a research associate in 1938. In 1954 he was appointed director of research at the Munitalp Foundation, where he remained until 1959 when he was appointed to a chair of physics at the State University of New York, Albany. He retired in 1976.

In 1946 Schaefer was the first to demonstrate that it was possible to induce rainfall. Tor Bergeron had earlier argued that the presence of ice crystals in the atmosphere was a necessary precondition for the formation of rain. During World War II Schaefer had worked on atmospheric research and, more specifically, the problem of airplane wings icing up, and had discovered that he could produce a snow storm in the laboratory by dropping dry ice (solid carbon dioxide) into a container filled with a supercooled mist. In 1946 he seeded clouds over Massachusetts with dry ice pellets and produced the first man-made precipitation.

Following the success of this experiment the atmospheric research program known as Project Cirrus was established during which Bernard Vonnegut discovered the effectiveness of silver iodide as a cloud-seeding material.