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...while 19 percent of undergraduates major in science, technology, engineering or mathematics, only 8 percent are working in STEM occupations 10 years after graduation. Some believe that STEM majors are attracted to business by the higher salaries in this field. So many of the opportunities for scientists are not well-funded, Rose said. Other industries do a better job at recruiting and pay. Last year, less than a quarter of Penns Engineering graduates went into engineering, while 52 percent went into jobs in consulting, information technology and finance-investment analysis, according to Career Services.
<p>That 52% that went into consulting, information technology and finance-investment analysis is a broad statement because for one, there is a not a consensus on which category to place software developers (who can also be called software engineers). Ask one person and it’s I.T. Ask another person and it’s engineering. This debate is a carryover from where the discipline of computer science is placed within universities (some in engineering, some in math department, some as a solo department).</p>
<p>Also some more-business-consulting firms also dive into I.T. “consulting” like Booz Allen, Grant Thronton, etc and even have segments of their business dedicated strictly to government contracting.</p>
<p>Add to that, many I-Banks/Finance firms actually hire CS majors to PROGRAM…basically being a software developer but with financial applications.</p>
<p>Well… You work so hard studying STEM only to get paid less than those people who worked way less, studying easier subjects, and earn more money. What did you think will happen?</p>
<p>Remember that “STEM” includes many biology majors (as numerous as all engineering majors put together). Given the poor job and career prospects of biology majors who do not get into medical or other professional school, it would not be surprising that a large number of them are not in biology jobs (low paid lab technician jobs mostly) several years later.</p>
<p>“STEM” really is not monolithic in its academic and employment characteristics. Unfortunately, people (including students and policy makers) seem to think it is.</p>
<p>Since Penn is a high prestige Ivy League school, it would not be surprising that the recruitment from prestige-conscious finance employers is heavier there than at, for example, San Jose State.</p>
<p>Fair enough, but that doesn’t strike at the heart of the issue, which is why don’t traditional engineering firms- including traditional software firms (hence, not IT) - simply pay their employees better? It doesn’t seem to be a matter of profitability: Apple, Microsoft, IBM, Cisco, Oracle, Symantec, Adobe are some of the most profitable and cash-rich firms in the world, far more so than the banks (especially now). Let’s compare the two “MS’s”: Microsoft vs. Morgan Stanley. Microsoft has a net cash stash (after subtracting debt) that is 1.5 times larger than Morgan Stanley’s entire market cap. Nor do differentials in labor force size seem to make much difference, as Microsoft has only a 1.5times larger workforce than does Morgan Stanley. Either way you cut it, Microsoft has comparable cash on hand, on a per-capita basis, as the entire firm value of Morgan Stanley. </p>
<p>So why do finance firms continue to pay their employees better, if engineering firms are more successful and more profitable?</p>
<p>But that speaks to another part of the point: why exactly are biology graduates paid so poorly? It’s not as if their skills are not valuable: pharma and biotech are some of the most profitable industries in the world.</p>
<p>To get into the top end finance and consulting jobs, you need to get your bachelor’s degree from a high prestige university (e.g. Ivy League, MIT, Stanford), since the employers are very school-prestige conscious. A bachelor’s degree in business from San Jose State probably won’t get you there.</p>
<p>Even so, the perception that a finance, consulting, or some other type of “business” job has better career ROI than a STEM job provides a powerful incentive to get a business degree from lower-tier universities and colleges.</p>
<p>For the moderately selective schools that most college students attend, majoring in business is not going to get them into the top end consulting and investment banking jobs that some people worship as the be-all-end-all goal. Employers of these jobs are prestige-conscious, and won’t be recruiting at San Jose State and similar schools.</p>
<p>Because it justifies attending (and paying for) all of those high-priced private high-schools and universities. Remember…</p>
<p>Most engineering employers have starting salary ranges for new grads, with the max of the range being no more than $15,000-$20,000 over the min. A $65K to $50K difference is not much if one grad attended a Top-10 school and another did a 2+2 program with the last 2 years at a school ranked between 50 to 100. It becomes a “return on investment” thing.</p>
<p>Those I-Banking/High-End Consulting jobs can at least bring back decent “return on investment” to grads of Top-10 schools…hence why so many aim for such jobs. The way the salary ranges are set up for fresh engineering grads of ENGINEERING firms, a Top-10 grad is pretty much (in NFL/NBA terms) that “1st round pick who never ended up a superstar starter”.</p>
<p>When you look at how an engineering career focuses more on experience than education as the years go by, some grads are looking to cash in on all those years spent competing against the best and excelling against the best. If a profession (namely the software profession) is basically going to pay a Top-10 school grad with 10 years experience the SAME as a 2+2 grad with 10 years experience, where is the incentive to attend the Top-10 school?</p>
<p>Industries like I-Banking/Finance/High-End Consulting gives that incentive.</p>
<p>But that only moves the goalposts. Why aren’t there more biology jobs? After all, pharma/biotech are some of the most profitable industries in the world. </p>
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<p>Actually, I would turn that question around. Why should finance firms pay their employees so highly, when - as continues to be excruciatingly painfully demonstrated - the finance industry is not particularly profitable, especially after adjusting for the risk-weighting of their business models. What the finance industry seems to deliver is the illusion of profits. However, the return on investment enjoyed by equity-holders of the finance industry has been mediocre at best. </p>
<p>So I must congratulate the employees of the finance industry for they’ve ingeniously managed to devise a method to extract the bulk of the benefits of their industry at the expense of everybody else, including their own shareholders (along with society at large through taxpayer bailouts). </p>
<p>Maybe we engineers ought to concoct a way to do the same? Why not? That’s what they did.</p>
<p>I do agree with freecell’s core point, which is that engineering firms have no incentive to change their hiring practices as long as they are profitable, as they currently are. </p>
<p>Hence, perhaps the goal should be to provide companies with that incentive. Assuming that the most productive engineers do indeed tend to be disproportionately from brand-name engineering schools such as MIT, Stanford, Berkeley, and the like (for otherwise, why do they have such high engineering rankings?), I would ask why do some of those engineering graduates continue to take jobs as regular engineers for regular engineering pay? After all, not all of them take other career paths such as Ibanking, consulting, med-school, law-school, etc. Some do indeed seem to settle for regular engineering jobs.</p>
<p>What that means is that those engineers are essentially poisoning the labor market for everybody else. As long as companies can hire top engineers on the cheap - or in other words, as long as top engineers continue to sell themselves on the cheap - nothing will ever change. </p>
<p>Along those lines, I’m ready to propose a reform. All engineering students should be strongly encouraged to take a Negotiations course, and specifically, one targeted towards Salary Negotiations. Ibankers, if nothing else, seem to be savvy negotiators as part of their jobs, and presumably regarding their own pay as well. I would submit that a Salary Negotiations course may be arguably the most important course you will ever take in your life. </p>
<p>Otherwise, like I said, as long as enough Top 10 eng graduates continue to settle for average eng salaries to fill hiring needs, and never negotiate for something better, firms will never change.</p>
<p>Just because a company or sector is profitable does not mean that it requires a lot of labor. Even if it does, that does not mean that its demand for labor is high relative to the supply of such labor.</p>
<p>Most engineers have little negotiating power because of the supply and demand for their work. A very few (as a percentage of all engineers) can command a top salary either through their academic credentials or some achievement that a prospective employer can leverage.</p>
<p>If you’re going to ask why this isn’t true of ibanking, I’d guess it is a part of human nature. More people (worldwide) want to invest money to make more money than to employ engineers (directly or indirectly) for some particular purpose.</p>