Engineering Shortage or not?

jma · November 16, 2005, 10:57pm

There has been a lot of discussion recently about whether or not the U.S. is indeed facing a shortage of engineers. Numerous pundits claim that countries such as India and China, which are producing vastly more engineers than the U.S. are going to take over the U.S. in technology. And top technology executives like Bill Gates are stating "There just aren't as many graduates with a computer-science background. That creates a dilemna for us in terms of how we get our work done."

But to those who follow this notion, I would reccommend reading a cover story on the shortage of engineers in today's WSJ. This article seems to back up the claims made by people such as Sakky that there is not necessarily a lack of engineers, but rather a lack of willingness to hire.

What do you guys feel on this issue. I know it has been discussed in great length, but it is an interesting topic.

wrprice · November 17, 2005, 12:19am

Know any skilled computer science graduates in the Houston area or willing to relocate there? My company is still looking/hiring, so demand is certainly not zero.

We interviewed someone who was about to earn his graduate degree in CS the other day, but he really wasn't qualified -- yet I'm employed with only a bachelors. Just because you get a degree won't mean you'll be hired. But just because there may be plenty of people out there doesn't mean that you'll be passed up. As I said, we're still hiring if we can find good people.

If you go into a field only for the money, expect some disappointment because you won't have the "spark" and it'll show. On the other hand, if you have a burning passion for something and love doing it... and it just so happens you can get a degree in that field... GO FOR IT. Or are you going to assume that broad, general statements will always be accurate in your particluar circumstances?

Evaluate the information out there, judge it with respect to your particular situation (and desires), and make an educated decision. Whatever you do, don't blindly follow the WSJ or the advice of random strangers on the Internet. This is YOUR decision, don't let someone else make it for you.

sakky · November 17, 2005, 12:46am

Since economics principles have been bandied around, especially in other threads, I would point out that perfectly free markets that are in equilibrium can never have shortages. Never. What that means is that in such markets, the quantity supplied will always equal the quantity demanded at the market clearing price.

As a corollary, this also means that if labor markets were as free as my detractors think they are, then there should never be such a thing as unemployment, because any excess labor would always be absorbed by just lowering wages until it becomes economical to employ these excess workers.

However, the truth is that, as Nobel laureates Ken Arrow and Gerard Debreau showed, free markets work optimally only under certain highly specific conditions. In particular, free markets rely on perfect and symmetrical information and on rational players, both of which are sorely missing when it comes to labor markets. Higher-than-equilibrium wages (and accompanying unemployment) are often times used to reach a more economically optimal solution as labor markets left to their own devices tend to behave in a highly distorted fashion.

Let's deal with the information problem first. Nobel laureates Akerlof, Spence, and Stiglitz specialized in this issue. Information about just how productive a particular worker will be is usually very difficult to determine. First off, it's often times very difficult to monitor your employees to see whether they are working off. Hence, there is tremendous opportunity for workers to slack off if they choose to. Higher-than-equilibrium wages therefore induces workers to work harder because it increases the 'pain' of losing your high-wage job. If you're not being paid very much and you know there are many other similar jobs available that you could get, then you may not really care if you get fired, but if you are paid much higher than you think you could get elsewhere, then you will probably work very hard becaue you'll fear losing your job. There are also strong adverse selection benefits to high wages. The fact is, not all workers are alike. Some are far more productive than others. By increasing wages you will attract more and better applicants, therefore giving you the chance to hire more productive workers. Let's not also forget that workers productivity is often times based on psychology. If a worker believes that he is not being paid fairly, then he will often times simply become lazy.

Speaking of the psychological component, that gets to the other market distortion - namely that free markets presume that all players are completely rational entities, but human beings tend to be highly emotional and irrational. For example, many people, rather than accept a pay cut or demotion will simply quit their job. That's a completely "irrational" response - as by quitting your job, you are now making zero whereas even with the paycut you will at least be making something. However, the fact is, many people will have great psychological difficulty in knowing that they are making less money than they used to be making, or they are in a less powerful position. Just from a matter of pride, many people would simply prefer unemployment. Psychological pride also plays a strong role in what job you do take. Nobody wants to take a job that they view as 'beneath them'. Whether they are right or wrong in thinking that, it's an inescapable dynamic of labor economics. A guy who graduates from college probably would rather take no job than take a job flipping burgers, because he'll be thinking "I didn't go to college to end up doing this."

The point is, any talk of having labor markets like the engineering labor market be dictated by free market principles is way off mark. Labor markets have NEVER been true free markets, and probably never will be. Hence, there is great opportunity for market players to adjust wages if they want to. To say that wages are set by the market is a huge cop-out.

Like I said, if companies want more engineers, then they can simply pay higher engineering salaries. If companies were to offer 100k starting salaries to their engineers right out of college, people would be coming out of the woodwork to study engineering. Nor am I saying that you have to pay all your engineers such salaries. By offering such salaries, you would attract a higher quality candidate pool, allowing you to pick out the best ones. It's similar to the investment banking strategy. Offer highly paid and highly prestigious positions in order to attract a very strong applicant pool, and then only give job offers to the best ones.

A lot of research, like books like the Mythical Man-Month, have come out regarding labor productivity in engineering, that shows that the best engineers are usually several times more productive than the mediocre engineers, and sometimes more than 10 or 20 times more productive. So why not have a two-tier payscale, one for the 'normal' engineers, and one for the 'superstar' engineers, where the superstars can earn several times more money than the normal engineer, as long as he is several times more productive? I think that's perhaps the biggest problem of all. The average engineer coming out of a no-name school may be perfectly happy with a normal engineering job, because it's probably better than anything else he could be doing. But the superstar engineer coming out of MIT or Stanford may feel better off doing banking or consulting or something else. I would suspect that the percentage of engineers from no-name schools who choose banking/consulting jobs is vastly lower than the percentage of engineers from the elite schools who choose those jobs. Hence, there is a strong "braindrain" of the top engineers to other fields. You have to wonder why the engineering companies are not more willing to improve their offers to entice these top engineers.

workingforblue · November 17, 2005, 1:57am

Since you asked for opinions, here is mine from 22+ years in the computer industry. First, I think Gates is only speaking of computer engineers but I believe anyone that has a job working in front of a computer screen should be concerned. Second, Gates is interested in one thing, making more money for Gates/Microsoft so when he speaks, look for what benefit it might be to Microsoft. Third, any shortage of engineers advertised by U.S. industry is an attempt to force congress to increase the number of foreign visas available for U.S. companies. With these visas they can bring foreign engineers into the U.S. that work for a fraction of what U.S. engineers require. Once they have learned the job in the U.S., sometimes trained by the people that are replacing, they can do it from overseas (India, China) for even less pay because the cost of living is so much lower overseas. Fourth, if there is a shortage of engineers in the U.S. it has been caused by U.S. industry practices. From what I understand, the number of computer sci. majors is way done because students have seen how U.S. industry has treated these skills; laying off and outsourcing at every opportunity. Finally, globalization has increased the supply of labor and is bringing down the cost of labor (and salaries of U.S. workers). In the 70s and 80s manufacturing jobs were moved overseas to cheaper labor pools when the shipping industry could support the inexpensive movement of goods back to the U.S. In the same way. In the 90s, India and others have educated huge numbers of engineers in all fields and with fiber optic comminication reaching around the world, this will freeze/reduce the wages of anyone who does their job while sitting in front of a computer screen.
So, is there an engineering shortage? In my opinion, yes and no. There is/will be a shortage a quality engineers in the U.S. because students know that U.S. companies will hire 3 or 4 mediocre engineers from overseas the first chance they get and are pursuing other majors/careers.
I will now turn the soapbox over to someone else.

redbeard · November 17, 2005, 1:30pm

I read that article in the WSJ, and I felt confronted by a fundamental contradiction: many engineering jobs have a huge applicant pool for a small number of openings (thousands to two, in one case); meanwhile, engineering unemployment in 2004 was around 2.2%. How can both these things be true? I did not find the answer in the WSJ article.

I've already accomplished the balance of my engineering career, and I would offer the following perspective: you will always need to change; when your stop growing, you're headed for trouble.

The IT folks around my local environment are getting forced out of their comfortable dot-net, C# environment into the new lands of Java. Some of them don't want to learn a new language. I don't work directly in IT, but even I've been forced to learn computer languages and applications nearly continuously for over 30 years. My basic tactic is to give up the Law and Order reruns and open a technical "for dummies" book--it's the only way to keep my skillset current.

The other insight I got from the WSJ article is the necessary-but-not-sufficient nature of an engineering education. Engineering degrees are great credentials to have. Later in life, there's really no way to "become" an engineer.

But, once you graduate from engineering school, you have only begun your education, growth, and training. You must be in a constant state of reinventing yourself. The article refers to mechanical engineers who list a slightly obsolescent software package on their resume. They were de-selected infavor of those who put the absolute-latest package in their declared skillset. In this environment, an engineer should adopt the philosophy that he/she takes a job for what it teaches them. If your job doesn't take you where you want to go professionally and educationally, it's time to dust off the resume.

I agree with much of Sakky's post. Particularly: top-value engineers provide ten times what run-of-the-mill engineers do. The implication for outsourcing is huge: you may get engineers for 1/3 the cost in the third world, but what value is an unsuccessful design, regarless of the low cost?

And Wrprice strikes a great note: Do what you LOVE, or your lack of enthusiasm will be obvious to all potential employers. I would add, you can fall in love with a broad range of things that you can do well. Find enjoyment in your accomplishments, and you will discover a broad range of potential career arcs.

Computer, end "soapbox" algorithm...

rtkysg · November 17, 2005, 1:37pm

[quote]
So, is there an engineering shortage? In my opinion, yes and no. There is/will be a shortage a quality engineers in the U.S. because students know that U.S. companies will hire 3 or 4 mediocre engineers from overseas the first chance they get and are pursuing other majors/careers.

[/quote]

I actually agree to most arguments you offered above but this one. The fact that many companies like Microsoft and Oracle outsource their development to India and China while maintaining their competitive edge, i.e. making better software, can only mean that those engineers from overseas are not mediocre at all. On the contrary, I could see many IIT (India) and Tsinghua (China) graduates perform better than their US counterparts, notably, MIT, Caltech, Stanford. With similar intelligence those from overseas maintain the perseverance to work harder and hence may perform better. The tendency for US students to go into non-tech majors roots, I would argue, from the social cultural background that has been established for a long time in the East Coast. Law, medicine, finance are very much looked up such that a hype of ibanking would become very popular. Less so in India or China where intelligence (often associated with engineering/science) is as highly regarded. For instance, it has been a legacy that many Chinese top government positions are filled with engineers which almost never happens in the States. In those countries, where elitist are often associated with tech intelligence, a movie star would unlikely be accepted as a governor for example.

sakky · November 17, 2005, 3:51pm

[quote]
Less so in India or China where intelligence (often associated with engineering/science) is as highly regarded.

[/quote]

Personally, I think this is just a natural progression of political economics. The fact is, India and China are still largely poor countries who see information technology and manufacturing as the key to economic development, and that's why they encourage technical knowledge amongst the masses. However, as social classes develop within the countries, technical knowledge inevitably falls to the wayside. For example, while India touts the importance of engineering, I find it remarkable that much of the Indian political and social elite are not engineers from IIT, but rather are liberal arts graduates from Ox-bridge, including the current Prime Minister, Manmohan Singh who graduated from both Oxford and Cambridge. In fact, I would argue that relatively few of the elites in India want to be engineers. They may want to get engineering degrees, but not necessarily work as engineers. Instead, they'd rather be politicians, bankers, lawyers, business magnates, and the like.

The same will most likely be true of China. The wealthiest part of China, hands down, is Hong Kong, because of its special status as a long-held British colony. Hong Kong has very little manufacturing and technology industries these days. Instead, Hong Kong is a banking and business services center, as well as a cultural center. Many of the youth of Hong Kong would rather become investment bankers, lawyers, salesmen, business consultants, etc. than become engineers. Donald Tsang, the head of Hong Kong, is not an engineer. Rather, his career was in finance and banking.

One might also say that China would never elect a movie actor to political office the way that a US State to elected a movie actor as governor. However, I could definitely see somebody like a Jackie Chan elected to high political office in Hong Kong.

I bring up the example of Hong Kong because I believe that it is more likely that China will evolve into something more like Hong Kong than it is for Hong Kong to become more like China. As China develops its economy, pure manufacturing and engineering prowess will become less important, and business services, finance, entertainment, consulting, and the like will become more prominent. 30 years ago, Hong Kong was a large manufacturing center. Now, there is barely any manufacturing there at all. It has all moved to Shenzhen and nearby Chinese cities in the Pearl River delta. And as those cities develop, manufacturing will move somewhere else. From what I see, from a development standpoint, no country really "wants" to do manufacturing. Manufacturing is just something that you use as a stepping stone to get to higher-margin business activities.

sakky · November 17, 2005, 5:00pm

[quote]
meanwhile, engineering unemployment in 2004 was around 2.2%...

From what I understand, the number of computer sci. majors is way done because students have seen how U.S. industry has treated these skills; laying off and outsourcing at every opportunity.

[/quote]

I still maintain my original stance that engineering (and CS) is actually a quite useful undergrad degree to have, if for nothing else, than for the fact that it can deliver a relatively safe and decent-paying career. Of course it is not a completely safe career, but hey, it's a lot better than what a lot of other people have. For those people who think that majoring in engineering is a bad idea, I would ask, what other major is better? Film Studies? Art History? Parks & Rec? Leisure Studies? Yes, true, your engineering job might be outsourced. But it's better to have a job that might be outsourced than to not have a job at all.

Which is why I question the rationality of people who choose not to major in CS because they say they're scared of outsourcing. Ok, fine, maybe they are scared. But shouldn't all those people who are majoring in Parks & Rec be more scared of simply finding a job at all? Consider this quote:

"In the US, more students are getting degrees in parks and recreation than in electrical engineering."

<a href="http://www.ti.com/corp/docs/press/company/2003/c03033.shtml%5B/url%5D">http://www.ti.com/corp/docs/press/company/2003/c03033.shtml</a>

Like I said, EE degrees might be less valuable because of outsourcing. But it's still gotta be better than what a Parks & Rec degree can get you.

I would furthermore point out that there are a LOT of mediocre no-name colleges out there an a lot of bad jobs. Not every college graduate gets a good or even half-decent job after graduation. A lot of college graduates out there really do end up driving taxis, waiting tables or sweeping floors. When we're talking about the plum engineering jobs, or star consulting or banking jobs, those jobs are generally available only to people at elite colleges. Let's face it. If you are going to a lower-tier no-name college, you're probably not going to get a good job after graduation. In fact, you might not even get a job at all. In that case, getting an engineering degree may be the best way for you to go. At least by doing that, while you'll probably end up with a low-end engineering job, that's still a lot better than what a lot of other people from that college end up with. I'd rather have a low-end engineering job at some low-end company than be mopping floors or washing dishes somewhere. For these people, getting that 45-50k engineering job is a pretty sweet deal. Engineering obviously doesn't guarantee you a job, but it's more of a job guarantee than a lot of other majors are.

I used to live in the Deep South and I've seen people from poor rural backgrounds struggle their way to degrees in Chemical Engineering or Petroleum Engineering at the local colleges. These guys are by their own admission, not superstar engineers. They know they have no chance of ever going to a place like MIT or Stanford, and they know they'll never make it to McKinsey or Goldman Sachs, or a Microsoft or Google. They're not earning top grades in their engineering classes, but at least they're passing their classes. All they want is to complete their engineering degree and get a job at the local oil refinery or natural gas processing plant or drilling platform. To them, making 45-50k a year to start is a fantastic sum of money, as some of were literally raised on welfare checks, and especially considering the low cost of living in those areas. They can use that salary to raise their family out of poverty, buy a house, etc. and that's all they really want. Engineering is obviously a great choice for them, given their circumstances. So I ask - if these people should not major in engineering, what else should they be doing? How else should they be trying to escape poverty?

As a corollary, that's why a lot of people in China and India study engineering. It's not because they really "love" engineering. It's because in those countries, if you're born poor, as most are, then engineering is a ticket out of poverty. I believe I read somewhere how engineering graduates in China can make 5 or even 10 times more than a liberal arts graduate in China does to start. If you're a poor kid in India, then getting into and graduating from IIT is a way to a much better life.

[quote]
Do what you LOVE, or your lack of enthusiasm will be obvious to all potential employers.

[/quote]

[quote]
On the contrary, I could see many IIT (India) and Tsinghua (China) graduates perform better than their US counterparts, notably, MIT, Caltech, Stanford. With similar intelligence those from overseas maintain the perseverance to work harder and hence may perform better.

[/quote]

I would argue that fundamentally, Chinese and Indian engineers are not really "doing what they love". They're doing what pays. Or in other words, they're working hard in engineering for fear of having to return to the poverty-stricken life that they are trying to escape. A poor Indian may work extremely hard to get into and graduate from IIT if, for no other reason, because he doesn't want to be poor anymore. And let's face it. To be poor in India is to live a pretty bleak life.

And so you ask why is it that Americans at MIT, Stanford, etc. may not work as hard as those from IIT or Tsinghua or whatever. And the answer is simple - because they have no incentive to. Economics is all about incentives. The more incentives you give somebody, the more they will work to earn those incentives. I believe I read somewhere that a guy who graduates from IIT can expect to make a $8000-$10,000 starting salary. That's 3 times the per-capita income of India (which is about $3000). But a guy who graduates in engineering from MIT or Stanford cannot expect a starting salary of 3 times the US per-capita income (which is about $40,000).

<a href="http://www.cia.gov/cia/publications/factbook/rankorder/2004rank.html%5B/url%5D">http://www.cia.gov/cia/publications/factbook/rankorder/2004rank.html</a>

If MIT engineers were all getting paid 120k to start, you'd definitely see a lot more Americans working hard to get into MIT engineering. But as it stands now, Americans realize that they can make a good living without busting their butt. American kids say "Why should I go to a difficult school like MIT when I can go to an easier school like an Ivy and still earn a comfortable living?. The MIT engineers may earn more, but not a huge amount more. Because the salary premium is not that large, I'd rather forfeit that premium and have more free time to enjoy myself in college."

The point is, the fewer incentives you give for hard work, the less hard work you will get. People don't work hard just to work hard. They work hard only if they think they will benefit from it. Hence, I wouldn't say American kids are lazy. They're just not properly incentivized.

And by that, again, I mean the Americans who are academic stars. Again, those kids in the Deep South I talked about see engineering as the best way to get out of poverty. That 40-50k engineering salary may be literally 3 times what they could make othewise. But few MIT engineers are making 3 times what the Ivy liberal arts graduates are making.

That's why I support a 2-track salary system. The regular engineers can continue to make that 40-50k to start. But what's so wrong with a superstar engineer getting paid 100-150k to start, especially if he's 3 times more productive than the regular engineer? You do this, and a lot of top MIT engineers would no longer drift over to banking or consulting.

jma · November 17, 2005, 5:48pm

Sakky, you frequently raise this issue up and question why the top engineers do not get paid accordingly.

So what in your opinion is the cause of this situation?

Quentin · November 17, 2005, 9:39pm

I haven't read all of the previous discussion, but I think there's some interesting information in terms of pay and unemployment for different engineering fields. Consider Berkeley's engineers. <a href="http://career.berkeley.edu/Major/Major.stm%5B/url%5D">http://career.berkeley.edu/Major/Major.stm</a>

I arrive at "unemployment rate" by dividing the proportion of students listed as "seeking employment' by the sum of the proportions of stduents listed as "employed" and "seeking employment."

EECS majors at graudation:
unemployment, ~14% in 2004, ~26% last four years
median pay, ~$60,000 in 2004, ~61,000 last four years

ChemE majors at graduation:
unemployment, ~46% in 2004, 32% last four years
median pay, ~$55,000 in 2004, ~$55,000 last four years

MechE majors at graduation:
unemployment, ~22% in 2004, ~23% last four years
median pay, ~$55,000 in 2004, ~$54,000 last four years

CivE majors at graduation:
unemployment, ~22% in 2004, ~18% last four years
median pay, ~$50,000 in 2004, ~$48,000 last four years

IEOR majors at graduation:
unemployment, ~0% in 2004, ~19% last four years
median pay, ~$58,000 in 2004, ~$55,000 last four years

Materials engineers (MSE):
unemployment, ~30% last four years
median pay, ~53,000 last four years

The expected trend given efficient labor markets for the relationship between pay and unemployment (the relationship being more pay associated with lower unemployment) does not seem to hold; ChemEs make about as much money as MechEs and definitely more than CivEs, and yet have the highest unemployment of any of the engineering majors listed above. (Note: this may be due to some sort of specific downturn in the process engineering industry in the past few years; Materials Engineers seem to show the same pattern as ChemEs, and MSE is somewhat closely related to ChemE.) Over the last four years MechEs have had higher unemployment and higher pay than CivEs, but if the labor marker were efficient you'd expect firms to lower the pay; I don't know if the differences are significant, though.

I have only a rudimentary background in economics, so I can't speak too intelligently on this. I would venture that the labor market is inefficient because: 1) firms have fixed costs and all that, and 2) maybe engineering grads have pride and won't take jobs that pay too little. Someone with more background in economics (sakky? Alexandre?), could you perhaps talk about this a little?

A consideration:
Not all of the engineering majors listed above actually feed into the same pool. IEOR grads tend to go into finance a lot; and while there certainly is overlap in the different fields of engineering, you won't see that many ChemEs being hired straight out of college into civil engineering jobs or vice versa (though I'm sure it does happen).

workingforblue · November 18, 2005, 12:22am

rtkysg, I appreciate your comments. First, I did not mean to imply that all engineers from overseas are mediocre. There are many fine engineers in other countries. Second, it is debatable if Microsoft has produced any "better software" over the last few years (ever get the blue screen of death). Look at the late delivery of the last few releases of windows and the maintenance/security problems with windows (I believe their security patchs come out monthly if not more often for critical security flaws). Windows market share is 90% so you just have to accept what they deliver, that is their "competitive advantage" (Microsoft is also providing millions in "licensing" money to SCO in their lawsuit against Linux over Unix licensing rights and Linux is Windows only serious competition). Problems with windows poor performance have been ignored because of exponential growths in processor speed and disk drive capacity and speed. Intel and others hardware providers don't mind, it forces many users to buy new PCs every 2-3 years to run the latest release of Windows. That being said, we do agree that Microsoft, Oracle and others have worked these market conditions to their advantage to make significant profits.
sakky, I agree that engineering is an excellent base degree. You can earn a good living with a BS or you choose to continue your education into many other fields unlike premed or most sciences.

sakky · November 18, 2005, 1:10am

Quentin, your numbers are screwed up. Look at the website that you listed. Notice how the website actually shows you the unemployment rate, hence there is nothing to calculate. And in every case, the unemployment rate is substantially lower than what you are reporting.

For example - Chemical Engineering - 32% in 2004, 23% over the last 4 years (not 46 and 32 as you have reported).

Furthermore, to be fair, I think you need to place the numbers in proper perspective. Like so many other things in life, it's all relative. 
Like I've always said, engineering may not be a perfect major, but is are the other majors really any better? Take a look at the unemployment rates of humanities majors, for example. To all those people who say that engineering is no good, I would ask, would you rather be a Film Studies major?

What I would point out is that these 'unemployment rates' are generally nothing of the sort. The fact is, it is extremely common for people, whether engineers or something else, to not take jobs upon graduation. Many, especially engineers, will have job offers upon graduation, but not take them, usually because they're waiting for something better (i.e. an even better job offer) to come along. Hence, they are technically 'seeking employment', but their situation is pretty good. They have a job waiting for them, they just choose not to take it at that time.

Then of course there are plenty of other people who delay their job search until after graduation. Nothing wrong with that. They figure that once they graduate they can devote all their time and energy to finding a job.

And like I've said before, you should never expect labor markets to be efficient, because they are not and probably never will be precisely because they are so riven with information assymetries and behavorial distortions.

sakky · November 18, 2005, 2:34am

[quote]
Sakky, you frequently raise this issue up and question why the top engineers do not get paid accordingly.

[/quote]

So what in your opinion is the cause of this situation?I think a lot of it has to do with American culture. The sad truth is that Americans don't really respect technical culture. They may say they do, but by and large they do not. Young Americans who are technically savvy have to labor under the 'nerd' image and are often times socially ostracized growing up. Let's face it. Growing up, it's just not 'cool' to be good at science/math, or even to be smart at all. Instead, it's 'cool' (if you're male) to be athletic, or to be good-looking, or to know pop culture, or to be funny. It therefore doesn't surprise me in the least to find young boys who'd rather not study, and especially not study math, but will spend hours upon hours practicing sports. Honestly, what would you rather be, an engineer, or LeBron James?

This sort of cultural bias is often times demonstrated even in tech companies themselves. Let's face it. Even in tech companies, the most powerful divisions tend to be Finance and Sales, often times along with Marketing and HR. Engineering and R/D are often times not politically powerful. Steve Ballmer even once said that the goal of Microsoft is not really to create new software, not really to create better features, not really to create new technology. The goal of Microsoft is to sell product. Period. If they could sell product without writing a single line of code ever again, they would do it.

What that means is that the actual act of developing software is actually subordinate to the task of selling software. Hence, when you look at it that way, Sales is seen to be more important than Engineering. Ballmer is basically saying that if Microsoft could get rid of its Engineering department and have only a Sales department, it would do that. But Microsoft would never even think of getting rid of its Sales department and just have an Engineering department.

I think another corollary factor is the highly reactionary attitude of the engineering departments themselves. A lot of engineering professors still basically want to 'haze' their students by forcing them to take an endless sequence of weeders and seem to actually delight in giving out lots of lots of low grades while demanding tremendous amounts of work. Yet the truth is, getting top grades in engineering courses often times does not correspond to actually being a productive and useful engineer. Plenty of engineering students at the top schools are never going to work as engineers. So why haze them? I am also convinced that a lot of engineering departments actually deliberately give out lots of bad grades to their students in order to REDUCE the chances that these students will do anything else but engineering. By giving students all these bad GPA's, they serve to reduce the number who might otherwise go to a top law or medical school, and I think that's exactly what they want. Furthermore, a lot of students see college as a way to try out various disciplines and sample various academic fare. Engineering departments tend to be unusually hostile towards this, the attitude being that our classes exist only for the engineering students and nobody else.

Now don't get me wrong. I still think there should be an opportunity for the very best engineering students to be given a proving ground to see who really is the best, and see who is worthy of going to a top engineering PhD program. So I definitely see value in keeping some extremely difficult electives available for that purpose. Basically, any engineering student who takes such a class and does well can earn a plum rec letter from the prof that will be useful in getting into engineering graduate school.

On the other hand, I think there should also be a track for those students who aren't trying to get to a top engineering graduate school. Plenty of people just want to get 'regular' engineering jobs. Some other people just see engineering as a backup career on route to their first choice of a job in consulting or banking. And other people just want to study engineering as part of a broader liberal arts education. Why should any of these people need to be put through the ringer?

This is why I support the idea of pseudo-transcripts. I believe engineering schools should basically give every student 2 transcripts. One would show his 'true' engineering grades. But this transcript would only be presented to engineering graduate schools, should that student want to apply to one. And then there is the other transcript, the pseudo-transcript, which has all bad grades removed or changed to "Pass" or something that cleanses the transcript. This is the transcript that the student can present to law schools or med-schools or the Rhodes Scholarship committee or any other GPA-dependent beauty pageant.

Now some might say that this pseudotranscript idea would only encourage engineering students to leave engineering and pursue other opportunities. I'm not sure about that. First of all, those students who want to go to law, medicine, banking, or whatever but can't because their engineering grades are too low are probably going to be pretty bitter engineers and probably won't work as engineers for very long anyway. Secondly, my idea would encourage people who are otherwise scared away from even trying engineering. I know lots of people who have said that they actually liked engineering and might have majored in it, except that they were scared off by the grading. For example, I know one guy who got an outside scholarship that gave him a full ride to Berkeley for as long as he kept some GPA (I think it was a 3.0). He seriously considered majoring in Chemical Engineering because he liked the material, but in the end decided that it was simply too risky. His family was not rich, but not poor enough to qualify for lots of financial aid, so basically if he lost that scholarship, he would have had to drop out. So he felt that he couldn't risk taking a difficult major like engineering. This is precisely the sort of person who the pseudo-transcript idea is designed to protect.

aehmo · November 18, 2005, 2:39am

There is definitely NOT a shortage of engineers.....there is a huge oversupply. Tons of employees in the high-tech field are still looking for jobs in the bay area after the dot-com bust. Many of my relatives have taken up jobs in the post-office or bought grocery stores just to pay the bills after 9 months of unemployment.

What the companies are saying is that there is a huge shortage AT THE PRICE THEY WANT TO PAY! I.e., there are no engineers willing to work for $40k, as that is what the engineers in China and India cost nowadays (once in count the overhead of setting up offices overseas).

Engineers are all being outsourced at alarming rates. Sakky, your comments that all jobs are susceptible to outsourcing is ignorant. For example, you can't outsource doctors jobs (en masse), Union jobs (UPS, truckers, BART drivers who make 102k on average).

Computer jobs are easy to outsource because everybody can read a book on programming and start becoming an engineer. Engineering jobs that require computer use are very susceptible to outsourcing, and companies here are off-shoring like you won't belive -- google, yahoo, amazon, ibm ,microsoft even small-cap companies (less than $30M ) are outsourcing a huge chunk of their staff.

There is NO shortage at decent living wages -- but yes, there is a shortage at 65k....you can't keep a family alive with 2 cars and a mortgage at 65k in the bay area.

Civil, mechanical etc. are all borderline as well...if they're not being outsourced, they're being made redundant by software that replaces them.

IlliniJBravoEcho · November 18, 2005, 4:01am

"On the other hand, I think there should also be a track for those students who aren't trying to get to a top engineering graduate school. Plenty of people just want to get 'regular' engineering jobs. Some other people just see engineering as a backup career on route to their first choice of a job in consulting or banking. And other people just want to study engineering as part of a broader liberal arts education. Why should any of these people need to be put through the ringer?"

Saaky I completely agree with you on this point. I know a lot of very smart people who really want to do chemE and just get frustrated. They aren't going to grad school, they just want a good job when they get out but if they keep failing (it's not like they're dumb, they're just a bit slower [compared to geniuses] and since when has that been a crime). I know people that want to work in food companies and various other engineering jobs that don't require this type of rigor. Yet they just can't pass the classes so they are denied that opportunity. I've seen way too many of my friends go down the tubes. And others are too scared to even start.

It is very sad really. I'm glad you put exactly into words how I felt. All my friends feel the same way, "I mean what is this education going to do once I'm working at Anheuser-Busch (spelling, tired) and I really didnt need all of that stress or really just the grade stress. I'm smart enough to do the job, I just couldn't pass the courses which have little to no true world value in the long run." It's ridiculous and should be stopped.

ariesathena · November 18, 2005, 5:14pm

There's an engineer shortage for the same reason there is a teacher shortage - you aren't paying people what they are worth (considering necessary time, education, working conditions, etc).

Sam_Lee · November 18, 2005, 5:52pm

Don't have time to read the posts here. According to a recent survey done by a Chinese newspaper (Hong Kong based), most Chinese engineering students want to go to grad schools in the US. A student said it's not unusual 2/3 of the class study TOFEL, GRE..etc at the same time! Another survey indicates that 50% of foreign students from China stay in the US after graduation despite the tremedous economic growth in China. There may be shortage of "home-grown" engineers/scientists but the influx of foreign talents provides a healthy balance.

IlliniJBravoEcho · November 18, 2005, 11:43pm

If you're foreign . . . personally I'm not a fan of the foreigners because all they do is hang out together and never experience the other side of things. I always try to talk to them but they just would rather go and talk with each other and segregate themselves. Now that the percentage of them is getting bigger as the american students dwindle I find myself with people I would want to work with less and less. They never join anything except asian groups and just stick to themselves. You're in a new country . . . experience it. That's how the ones in my classes act at least. Which is why I'm not a fan of a large percentage of the workforce being foreign (and by foreign I mean asian).

Quentin · November 19, 2005, 5:35am

Sakky, the 23% seeking employment figure you cite is that 23% of all ChemE grads are seeking employment. However, many of students report that they are going to grad school or are doing "other endeavors" (Peace Corps and the like, I imagine). I choose to count these people as not being in the labor market. Thus it seems like you should compare the number of students seeking employment to the number actually employed in order to determine a more true unemployment rate. Yes, I suppose that this might overestimate unemployment since some grad school students would prefer work to school, but given the academic strength of Berkeley's student body I wouldn't be surprised if most grad school students coming out of Berkeley really want to earn their master's degrees and/or doctorates.

I wasn't criticizing engineering for being insufficiently "pre-professional'; indeed I'm fairly sure that engineers are better prepared for immediate work after graduation than other students, but that's not the point. I was just curious as to why engineers don't show a consistent pattern for pay and unemployment.

(By the way, using your method, ChemEs have "seeking work" of ~23% while CivEs have "seeking work" of ~10%, and yet ChemEs make more money. Shouldn't the labor market be doing something about this?)

sakky · November 19, 2005, 7:38pm

[quote]
I wasn't criticizing engineering for being insufficiently "pre-professional'; indeed I'm fairly sure that engineers are better prepared for immediate work after graduation than other students, but that's not the point. I was just curious as to why engineers don't show a consistent pattern for pay and unemployment.

(By the way, using your method, ChemEs have "seeking work" of ~23% while CivEs have "seeking work" of ~10%, and yet ChemEs make more money. Shouldn't the labor market be doing something about this?)

[/quote]

Like I've always been saying, labor markets are not freely competitive markets, and never will be. That's true whether we're talking about engineering or anything else. After all, if labor markets really were perfectly freely competitive, then nobody would ever be unemployed. Everybody would always have a job that pays them precisely what their marginal productivity is.

I'll give you another example - investment banking. Ibankers get paid a lot of money. On the other hand, there are also many people who want an Ibanking job but can't get an offer. A competitive labor market for Ibankers would dictate that the pay of Ibankers would decline until labor quantity supplied = labor quantity demanded. As salaries decline, more people would be hired, but at the same time, fewer people would want to get the job, until at some point, market equilibrium is reached. But obviously we never see that. Instead, the salaries of bankers remain high, and yet there are still plenty of people who want in and can't get in. I would suspect that the ad-hoc "unemployment rate" of investment bankers, calculated as those people who want a job compared to those who actually get hired, is probably well over 90%. Especially at the premier banks like Goldman Sachs. For every one person that Goldman Sachs hires, there has got to be at least 10 people who wanted the job but didn't get an offer. I suspect there are far far more than 10 people.

And the reasons are as I explained before. Labor markets are riven with asymmetries and behavorial distortions. The fact is, all workers are not created equal. Some workers are more productive than others, and companies never really know who that is. It's that lack of information about who really is going to be a good worker and who isn't that confounds companies. Hence, companies often times respond by increasing salaries above what a market equilibrium point would be. That way, they get a larger pool of interested candidates and can pick the best. Not only that, but the higher salary increases the morale of those workers (making them more productive) and also increases the fear of getting fired and losing that juicy salary (also making the workers more productive).

And then, like you mentioned, there is the strong behavorial issue. Lots of people would rather take no job rather than take a job that doesn't pay them as much as they think they deserve even though that's obviously not a truly economically efficient thing to do, as making even minimum wage is still more money than sitting at home making zero. And one might even say that this is an entirely rational response to an imperfect market. The truth is that a lot of companies will base a salary offer on your previous salary or your previous job. For example, if you made 100k before, they might offer you 125k, but if you made 125k before, they might offer you 150k. That's why a lot of companies ask you how much you made in your previous job, because they will use that to determine how much they should pay you now. Hence, by taking a lowball offer, you may actually be hurting yourself in future salary negotiations in future jobs. In that situation, you may actually be financially better off by taking no job.

Not to mention the strong aspects of pride. Let's face it. If you graduate from Berkeley in ChemE, you're going to feel pretty embarrassed if you end up having to take a low-end job that only pays you 25k. You'll probably prefer to take no job at all. It may not even that you personally feel ashamed to do the job, but you know that other people around you will pity you and talk about you behind your back if you take that job. But if you're a Film Studies graduate from a no-name school, you might be delighted to take such a job.

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