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"Lutz ultimately believes that the U.S. needs more engineering talent. There are just too few engineers and too many MBAs, he says. “We need more nerds! And we need to stop thinking of our nerds as nerds. We need to think of them instead as an endangered population—like gazelles, maybe…More of our universities need to offer programs in manufacturing and industrial management,” he maintains. “We need to put engineers on a pedestal. And your young people need to be taught that there’s something noble about engaging in value-creating activity. Twenty or thirty years from now, when their grandchildren ask them, ‘what did you do in the great economic war?’ they shouldn’t have to answer, ‘I was a bond trader.’”"
<p>But Bob Lutz's comments raise the obvious question: is GM (and the rest of the manufacturing industry) going to then start paying its engineers and offering career opportunities commensurate to what is available in MBA-oriented fields such as finance? If not, then people will rationally continue to leave engineering to obtain MBA's in order to enter those other fields.</p>
<p>The salaries of engineers should not be artificially inflated beyond their market worth. In fact, stagnating salaries may imply that this shortage of engineers is nothing but a myth.</p>
<p>I just don’t see how talking about this subject over and over and over on CC will accomplish anything. Maybe you should be talking to engineering societies or other organized groups.</p>
<p>Then by that very same argument, the salaries of financiers should also not be inflated beyond their market worth. But they surely are, and (sadly) probably always will be: witness the tremendous political power of the finance industry to demand massive taxpayer capital injections and ad-hoc emergency liquidity facilities at below-market rates to fill the gaping capital holes tore open by their failed strategic choices. Retrospective analysis of the crash has definitively demonstrated that the vast majority of the banking system was effectively insolvent in Q4 2008 and would (perhaps should?) have all been bankrupted were it not for government intervention. In contrast, the bailouts of GM and Chrysler were relatively penurious in scale and were accompanied by the removal of much of the top management who steered those firms adrift along with vast reductions in pay amongst the employees. Salaries within the finance industry are therefore heavily inflated by the capture of all of the upside while offloading the downside risk to the taxpayers. One also need only note the disproportionately high percentage of former (or future) financiers who hold high positions in the government. In contrast, how many former auto engineers hold high positions in the government? </p>
<p>But even that analysis is flawed because labor markets are riven with market failures and therefore wages are determined less by notions of economic efficiency and more by sociological/political power and negotiation. Again, the fact that the finance industry can summon a taxpayer bailout of a magnitude that other industries could only dream of obtaining is only explainable by the political power of the finance industry.</p>
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<p>Then by that same argument, the vast majority of CC threads also don’t really “accomplish” anything more than merely being a sounding board for opinions. But I believe that is in fact the value of CC - to serve as a medium of exchange of interesting opinions.</p>
<p>Is it the shortage of engineering graduates, or is it the shortage of engineering jobs available, or most importantly, is it the shortage of qualified engineering graduates in this country?</p>
<p>Here’s an interesting speech (“Make It in America”) at Wharton by Andrew Liveris, CEO of Dow Chemical, in which he states that we need to start making things again in this country and that he hopes some of the students in his audience will consider going into manufacturing and not just into finance:</p>
<p>Chicken or egg, which came first? Without enough (desirable) engineering jobs in this country, fewer talented Americans will want to study engineering…instead preferring other careers (such as finance). Without a sufficiently talented engineering labor force in this country, firms won’t want to invest and create desirable engineering jobs in this country, instead preferring to invest overseas. </p>
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<p>Then I would pose the same question to Liveris that I posed to Lutz above: is Dow Chemical improving the attractiveness of its own engineering jobs? </p>
<p>Otherwise, I don’t know how you escape the conclusion that these business leaders merely want high-talent engineers without having to pay for it.</p>
<p>I’m sick of this line of thinking. The focus needs to be on the demand side of the engineering labor market, not on the supply side. It should be obvious to any member of this forum what an increase in the supply of labor does to a labor market. As sakky alluded to, if you want to attract more engineering talent, then promote policies that raise the demand for engineering labor and/or lower the demand for MBAs, which will in turn increase the salary and opportunities for engineers while having the opposite effect on the MBAs.</p>
<p>This is probably the engineer in me, but I think many (not all) MBA’s don’t have the willpower or determination it takes to survive engineering curricula.
Physics and theoretical mathematics are not economics and business composition.</p>
<p>I’m not saying business people are stupid (most engineers aren’t geniuses), I’m saying they don’t enjoy the hard sciences enough to take a full semesters load of them for 4 years.</p>
<p>If you made them both equal pay and forced everyone in colleges across the nation to take either business or engineering courses of study, more than 50% would take business, not even counting those who would eventually drop out of engineering.</p>
<p>Unless a BS in engineering becomes monumentally more profitable, and an MBA significantly less profitable (or kids in general begin to love physics and chem and math), the engineer labor supply/jobs available ratio will always be lower than in business.</p>
<p>This is simple supply and demand. No matter what they say should happen, they are not going to spend more money on labor than they have to. Barring legislation or other circumstances that would discourage outsourcing, they will go that route rather than raise salaries. Remember that these guys are paid to maximize profits, and that means (among other things) keeping costs down - something that is hard to do if you raise the salaries to where they should be. One thing I have learned is that expecting people to act against their own self-interests is not realistic, especially if they are the type of people who have managed a significant level of self-advancement.</p>
<p>The only exceptions that they will ever make are for people who influence their own salaries - i.e. other management personnel. When some CEO gives his VP’s a raise, it is in no small part because he can then raise his OWN salary proprtionately.</p>
<p>Politicians and labor analysts continue to bemoan the supposed “shortage” of engineers but do nothing to curb the erosion of the profession by H1-B imports and engineering societies have yet to take the steps necessary to protect the integrity of the profession by introducing the equivalent of a BAR exam or require proper licensing to practice engineering. </p>
<p>Furthermore, the labor market tends to reward business majors more over their careers: finance, accounting are considered “core” business functions and by their nature they are more likely to be promoted, on top of having easier curricula in college. Due to the sensitivity of finance and accounting data, they are not likely to be outsourced/offshored. So business tends to be win-win: easier curricula, safer job, better opportunity for advancement. </p>
<p>Engineering work, being technical, can more easily be “commoditized”, done remotely, and offshored. Furthermore, experience on the job in engineering is often replaceable with either new technology or a new college grad willing to work for 1/3 the salary, or an overseas engineer willing to work for 1/15th the salary. So engineering is: harder curricula, less safe job, fewer opporunities for advancement for the pigeon-holed tech guy. </p>
<p>Even worse, engineering grads often wind up subordinate to their b-school counterparts (who received more promotions) who then lay them off just before retirement to avoid having to pay their pensions.</p>
<p>Yes, the above points are cynical and extreme, but their gist often applies. The market simply doesn’t reward engineers consistently enough to make it a solid choice major. There need to be mechanisms in place to make the profession more attractive to students.</p>
<p>well this should be welcome news to all those about-to-be-laidoff engineers at nasa! so they will have no trouble finding new employment, then? </p>
<p>in case there are any actual engineering students reading this, here are some suggestions from a 30+ year chem e: you’ll do better in an industrial company (whose customers are a limited number of other companies) than in a consumer goods company (whose customers are the mass market of consumers). industrial companies’ products depend on technical issues to be sold. consumer goods companies’ products depend mainly on advertising and promotion to be sold. your role is more important in the former than in the latter, where the marketing guys simply assume the product will be made in the required amount, by the required date, at the required cost. in short, your work will be taken for granted. not so in industry, what there is left of it in this country anyway.</p>
<p>you might also try to include some marketing/finance courses in your electives. but don’t think for a minute this will help you if there’s an opening in the marketing department, anymore than you’d consider hiring an mba just because he passed differential equations.</p>
<p>I will suggest some concrete steps (though I doubt they’ll ever be implemented)</p>
<p>1)Require licensing exams (like the BAR) in order for any engineer to practice in the US or to perform services for a US based company. Stop undercutting the profession with H1-Bs who often come with nebulous credentials. In other words, INCREASE THE INCENTIVES to enter the engineering profession: create an environment where engineers have secure, stable jobs with positive outlook and a salary that reflects the fact that engineers play a crucial role society.</p>
<p>2)Reduce the number of make-nothing, non-value added jobs. Let’s face it: the economy is rife with make-nothing jobs that consist of paper-pushing, speculation, compliance, etc and all the make-nothing finance jobs that design risky derivatives and other nefarious investment vehicles full of “clever” loopholes, creative accounting and repacking of debt. </p>
<p>Right now these jobs are plentiful and pay very well so why bother with engineering when you can simply sit in an air conditioned office all day and surf the web while maybe fiddling with a spreadsheet for a couple of hours? </p>
<p>3) Spread awareness in schools of the contribution that science and engineering make to society and once again create tangible reward mechanisms for those who enter and achieve in science and engineering. </p>
<p>But obviously, nothing will change until China cuts us off, we default on our debt and all of a sudden when we need to produce again we realize that we’re a nation of office-dwellers, financiers and lawyers and nobody knows how to produce a widget or tell a screw-driver from a socket wrench.</p>
<p>Most people in these kinds of threads focus on the supply side, as Inmotion12 noted, as well as creating artificial barriers, which I disagree with. </p>
<p>The biggest problem I see is that the general public doesn’t understand the importance of engineering. Just the other day on a different forum, there was a discussion about how the PATH (a subway system in NYC/NJ) can’t operate at a profit and this one person just couldn’t understand why. His line of thinking was that the capital costs for the system were paid off long ago, so it shouldn’t be a problem. He completely overlooked the constant maintenance costs needed to keep the 100 year old infrastructure in good repair. I wouldn’t be surprised if many more people think that once you build something, you can walk away from it and not need to put any more money into it. People don’t want to pay to fix their bridges, roads and other infrastructure system, but expect them not to ever deteriorate. </p>
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That will not work. Companies will just engineer and manufacture everything overseas and then ship the final products here. For those fields where this can’t be done (infrastructure related fields such as civil engineering, power, HVAC, etc), professional engineering licensure is already required.</p>
<p>Bottom line is it’s easier to make money in non-engineering fields. It’s alot easier to major in finance, start a bit lower in salary at the entry level, but get promoted more over the years (compared to the engineer) into safer managerial positions that cannot be offshored.</p>
<p>Furthermore there’s lots of make-nothing jobs out there especially in government where the jobs are easy, uber-safe and have great perks. They can be obtained with ANY university degree as long as the applicant is well-spoken or has no criminal record (Moreso if you’re a woman or minority) It’s easy office work with long lunches and lots of web-surfing, while the engineers are working unpaid overtime in factories, excavation sites and oil rigs.</p>
<p>Oddly enough, many engineering jobs are not easy or stable. People have caught on to all this and as such engineering is generally perceived as an unattractive option. </p>
<p>Don’t get me wrong, engineers can and do make money and can be successful, but the point is there are easier ways to make bank and people naturally don’t want to work harder than they have to.</p>
<p>The “bottom line” is exactly why some people make more money than others. If your position has a great influence on how much your company profits, you will be compensated more than somebody who doesn’t. As noted earlier, companies that sell goods to other businesses will profit moreso from good products, while consumer goods companies depend more on advertising, branding, marketing, etc.</p>
<p>Here’s the question you should be asking yourself if you feel you are underpaid: what am I doing to make my company more profitable than the next guy who wants my position and has a lower salary? If you can’t answer that, you’re in trouble. Its not about how much smarter you are or how hard you worked in school; its about what you’re contributing to your companys owner’s or shareholders bank accounts.</p>
Because although the average business major makes less than an engineer, the best paid business types out-earn the best paid engineers. Everyone interested in business thinks they’ll be in that top 1%, and not be one of the majority who are out-earned by the engineers. Although, I should note that while engineers do on average out-earn the business types, they don’t do as good a job at managing that money…</p>