While I’m not convinced that students majoring in finance have the abilities necessary for engineering employment, I’m willing to drop that point for now because it isn’t important to my argument. Even if finance students should be able to work as engineers, the simple fact is that most engineering positions (software engineering would be a possible exception) require a degree in engineering. Sometimes a specialty is specified, sometimes no.</p>
<p>And this fact easily proves the point I was making: the only financial professionals who could actually find employment as engineers are those with engineering degrees, and these individuals are a self-selected group because they chose to deviate from their educational training when they took a finance job after graduation. Thus, the fact that more engineers move into financial positions than the other way around proves nothing.
Did you read my post? Because this doesn’t address it at all. You have never actually explained why society would be better off if these “top” students became engineers instead of bankers or consultants. Unless you have evidence on the actual ROI from “top” students vs. slightly less prestigious students, this entire point is irrelevant.</p>
<p>In fact, the only thing you have said is that these same “top” students end up acting with remarkable incompetence at consulting/finance firms. Which kind of turns your point.</p>
<p>Regarding “educational resources”, haven’t you made the point that top research institutions may provide little in the way of actual instruction many times yourself?
What problem? Again, why exactly is it bad that a few kids graduate from MIT and work as consultants not engineers? What impacts really occur?</p>
<p>Uh, please read my posts again. I specifically identified the possibility that finance undergrads could return back to school to obtain master’s degrees in engineering, whereafter they would presumably would be eligible for numerous engineering jobs. Is that not feasible? I can think of plenty of science and math majors who later earned graduate engineering degrees; a finance undergrad major is similar to an applied math major. Heck, like I said, I even know one girl who majored in English and then earned a master’s in engineering…at MIT. </p>
<p>I therefore don’t see how a finance undergrad earning a grad engineering degree would be any more remarkable from an capabilities standpoint than would be a math undergrad earning a grad engineering degree. But capabilities is not the issue, for the problem is not that the finance undergrad couldn’t earn a grad engineering degree, but that he wouldn’t want to, because he makes more money in the finance industry. That’s the crux of the issue. </p>
<p>At the end of the day, plenty of engineers enter the finance industry through graduate school - either an MBA program or a MFin. However, few if any finance undergrads enter the engineering industry through graduate school, even though they certainly could. The question then is - why? </p>
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<p>Uh, did you read my post because it addresses your point emphatically. Again, all I have to do is point to the misallocation of educational resources devoted to (purportedly) prestigious engineering programs where many of the students will not actually work as engineers. Ask yourself - why should MIT and Stanford continue to run high-powered and high-prestige engineering programs for students who won’t actually be engineers? What societal purpose does that serve? Society would be clearly better off if educational resources were allocated to those students who are actually going to utilize those resources. If Idaho State engineering students are actually going to work as engineers and MIT students are not, then the Idaho State engineering students should actually receive the bulk of the world’s engineering educational resources. </p>
<p>Here’s the core irony. You yourself have admitted on other threads that certain engineering programs have greater resources and prestige than others and that, ceteris paribus, prospective engineering students should prefer those schools. But if students at those schools do not actually choose to work as engineers, then that panoply of resources and prestige is wasted on them, which means that there is no reason to prefer those schools at all. That is a clear matching misallocation and hence a clear loss of societal value. We should then start to see rankings where Idaho State is ranked #1 in engineering, such that prospective engineering students will prefer to head there. </p>
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<p>Again, see above. We as society provided (supposedly) the best engineering educational resources for these students, and then at the end of the day, they decided not to actually become engineers. Those resources would then be better utilized upon students who actually become engineers. </p>
<p>Let me give you a clear example. A venture capitalist is reviewing 2 business plans, one written by an MIT alumni and the other written by an Idaho State alumni. The overwhelming odds are that he will choose to fund the former, due to the prestige of the engineering degree (granted, he may choose to fund neither, but if he funds one, it is far more likely to be the former). Like it or not, venture capital is a highly elitist and brand-centric industry. The ISU grad may well have had the better plan, but he’s left unfunded. If he had the name brand of MIT to support him, he might have been funded. That represents a clear misallocation of societal resources, as investors will think that the MIT-backed plan is superior to the ISU-backed plan. </p>
<p>Or take employer recruiting. The most prestigious engineering employers such as Google, Apple, Facebook, and the like recruit heavily at MIT, but as far as I know, less heavily (and perhaps not at all) at Idaho State. But if MIT continues to produce graduates who do not actually want to work as engineers, then those recruiters would be better off recruiting at Idaho State. Maybe some guy at Idaho State would be the best possible fit for the next job opening at Facebook, but we’ll never know because Facebook won’t recruit him. Again, that’s a clear example of a societal mismatch. </p>
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<p>No, it only serves to prove my point further. However incompetent they may be in reality, clients think they are competent. After all, clients keep hiring them. Hence, if you believe in price signals, then those top engineering students who become consultants/bankers are apparently providing exactly what clients want them to do. </p>
<p>Put another way, if engineers (who work as engineers) actually provide what clients wanted, then you would think that they would be paid more - certainly more than the ‘incompetent’ consultants and financiers. But the clients are sending a clear price signal that they want the consultants and financiers to continue doing what they are doing. If anything, the differential in price signals indicates that they want more consultants/financiers (however incompetent we may think they are) and less engineers (however competent we may think they are). </p>
<p>The bottom line is that we have a crucial mismatching of resources. Recruiters think that MIT and Stanford are the best engineering schools in the world. Faculty thinks the same. Prospective students think the same. Venture capitalists think the same. Hence, the lion’s share of the best engineering resources are going to continue to flow to those schools, which are clearly wasted on them if their graduates do not choose to work as engineers.</p>
<p>It’s not distressing only to me. I think it should be distressing to all of us - and indeed, is. After all, engineers are the backbone of the nation’s technological and innovation base. Barack Obama himself stated that he would like more talented kids, rather than become bankers, to become engineers - that is, to actually work as engineers and not just earn engineering degrees and then become bankers. David Cameron and other leaders of the UK have publicly lamented the erosion of British technological leadership as, in recent history, the best students in the UK would rather become financiers rather than engineers, which surely goes a long way towards explaining the current travails in the British economy, and frankly, the American economy as well. </p>
<p>But that all speaks to a far larger point, which is that I believe that engineers in the US are vastly underappreciated, not only in terms of pay but also in terms of social respect. Engineers produce tremendous value, but they capture relatively little of that value, the bulk of it instead being taken by investors and financiers. IBM, Intel, HP, General Electric are some of the most profitable firms in the world - far more so than many of the Wall Street banks, yet relatively few of the profits accrue to the engineers who are the source of that profit. {Put another way, without the new microprocessor innovations developed by their engineers every day, Intel would rapidly cease to exist as a going concern, yet Intel engineers are not particularly well paid.}</p>
<p>What I advocate is that engineers be better paid, to a level commensurate to the tremendous value they provide to society. Frankly, I’m surprised that posters here would continue to object so vociferously. You all truly don’t want higher pay? {Hey, for those of you who truly don’t want higher pay, you are always welcome to send it to me, as I’ll happily cash your checks.}</p>
<p>But prestige is not completely subjective. For example, in a listing of engineering school prestige, nobody is going to rank MIT last. You might argue about where exactly MIT would be slotted within the prestige hierarchy, but it’s clearly not going to be in last place. </p>
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<p>In this case, I would simply point to the differentials in pay: the Goldman guy is clearly being paid more. </p>
<p>But the question then is - why? In particular, that raises the question of just how important certain tasks are within society. After all, as other posters have said before, engineering products have to work, or people will die. Planes have to stay in the air, bridges can’t collapse. So wouldn’t it then be logical for the engineers who design safe planes and bridges that prevent deaths to be paid exceedingly well in return? But as we all know, that doesn’t happen: those engineers do not really get paid that well, certainly not the level of consultants and bankers. That’s a stark example of engineers providing tremendous value to society, but capturing little of that value for themselves.</p>
<p>“That’s a stark example of engineers providing tremendous value to society, but capturing little of that value for themselves.”</p>
<p>You are thinking about it the wrong way. If engineer X doesn’t build the bridge, there are ten thousand others lined up for the job. Again, its supply and demand. The market demand is what dictates pay, not some lofty ideals about what job is providing value to society and what isn’t.</p>
<p>And that’s why I often times disagree with economists, because prices do not adjust quickly, and sometimes not at all, due to the legions of distortions inherent to labor markets. To wit, economists are enamored with long-run equilibrium points where markets will indeed clear as supply and demand equilibrate. But as Keynes famously said, in the long run, we’re all dead, highlighting the point that economists never discuss the speed at which markets will adjust. Sure, perhaps one day the relative wages of engineers vis-a-vis consultants/financiers will ultimately reach an equilibrium point, but that date may well be decades in the future when we’re all retired, hence that equilibrium is irrelevant to us in our lifetimes. {In fact, the notion of long-run equilibria is one of the many unfalsifiable and therefore unscientific claims that economists have long made, as any evidence of a market failure can always be explained away as the markets still not having yet reached equilibrium. How very convenient of economists to postulate claims that can only be shown to be false long after everybody living today is dead.}</p>
<p>Let me put it to you this way. Honestly, how many times does anybody actually truly ‘interact’ with the labor market - that is, try to find a new job? Maybe once every few years, if that? In contrast, most of us receive a steady paycheck every month - the pay of which is not subject to market forces but is rather an internal social/political calculation within the company that we work for. Companies interact in supply/demand markets every day, which then pass through to investors through the financial markets, but individual employees are largely shielded from any kind of market. If a company accrues a billion dollars of extra profit this quarter, perhaps only a small slice of that will be allocated to the employees through a profit-sharing arrangement, but the rest otherwise accrues to the investors. Put more starkly, if the company suddenly loses a billion dollars this quarter, that doesn’t mean that all employees suddenly go unpaid. They still receive a steady paycheck nonetheless. Granted, some of them might be laid off, but those who remain will still be paid their regular wage, even as the company loses money. The employer therefore acts as a risk-bearing mechanism that shields employees from market pass-through. </p>
<p>What that then means is that, because employees directly interact with markets only rarely, wages will then tend to transition towards their equilibrium point very slowly. By the time such a point is reached, we may well all be dead.</p>
<p>But interestingly enough, the same could be said for the consultants and financiers - which is surely true given the hordes of people dreaming of entering those industries. It has been stated on this thread that there are surely plenty of people at average colleges who would like to become bankers and consultants but can’t even garner an interview, let alone a job offer. </p>
<p>After all, let’s say that I’m a Wall Street bank. I could argue that if employee X doesn’t want to take my job, then I could surely fire him and hire one of the many other college graduates who are desperate to enter the finance industry. So why do I have to pay employee X as well as I do now? I could surely pay far less for that job and still find plenty of people willing to take it. {After all, even a 50% pay cut to bankers would still mean that bankers are well paid.} </p>
<p>Indeed, finance and consulting salaries clearly demonstrates how supply and demand fail to work. Those who obtain jobs in those industries are paid well, whereas plenty of others get no job offers at all but would surely like to. The laws of supply and demand would dictate that wages should therefore fall to the point at which markets would clear - with no net unemployment (read: everybody who wants a job in that industry will have one). </p>
<p>But again, ask yourself, if you truly believe in neoclassical economics with respect to labor markets, then why don’t banks and consulting firms lower their wages to the market clearing point to take advantage of the glut of people trying to enter those industries? Why are only engineers subject to the laws of supply and demand, but not consultants and bankers? You say that if an engineer doesn’t want to take a low wage to build a bridge, society will just find some other engineer to build that bridge. Why can’t society demand that if bankers and consultants don’t want to provide a particular engagement for a low wage, society will simply find some other banker or consultant who will do it?</p>
<p>Outside of that Vice President position, the pay is not really that rewarding GIVEN ALL it takes just to get into the field.</p>
<p>I myself review resumes of Java developers with 5 years experience from 2+2 engineering programs (non Top-10) and they can get 6 figures…and don’t really have to “outdo” everything and everyone. I think one has to add in the stress and long-hours factor before we mention high-finance like it is some highly accessible industry.</p>
<p>You guys have waaaaay too much time on your hands. Don’t you have jobs to do? I don’t even have time to read all this stuff, can’t imagine having the time to write it.</p>
<p>You need to focus on the front office salaries. After bonuses, you make $200,000+ per year after 2 years of working there. And the salary grows quickly after that.</p>
<p>…after having to be treasurer of Jr. Hedge Fund club in college…and co-chairman of the Jr. Mathematical Finance club in college…and a 3.99999 GPA…and 60+ hours of working per week.</p>
<p>I think i see what your saying sakky…your trying to say that engineers are under paid/valued and that perhaps people on wall street are over paid?</p>
<p>Globaltraveler, after reviewing many of your posted messages, I see that you continue to be out of sync with the financial rewards of Investment Bankers.</p>
<p>The $200,000 per year is only after two years, which is more than what many equally bright engineers make after 15-20 years on the job.</p>
<p>This, however, is peanuts to what these kids will be making only a few years later, namely $500,000, $1 million, $3 million and even $10 million per year…further, the ones that move over to Private Equity and Hedge Funds are seeing $20-40 million per year…</p>
<p>What is out of sync is not telling folks that these jobs are for a SELECT few. These jobs are highly competitive…about 20,000 kids competing for same 100 jobs. There are a LOT of things on the checklist to garner these jobs.</p>
<p>I don’t want these kids pulling out huge loans and impacting their social lives to for some job that is only offered to 10% of the engineering graduates…probably 10% of the engineering grads of the Top-10 schools because other majors can get these jobs also.</p>
<p>I know about the income. It is what is needed to get these jobs that is not talked about.</p>
Okay, I see what you are saying now. A few thoughts:</p>
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<li><p>I’m actually not so sure that many engineers enter the finance industry through graduate school. Realistically, only a very small number of top MBA programs will put their graduates on this track. Many engineers do indeed obtain MBAs, but I think they more often do so with the aim of moving into general managerial positions, possibly even at their current employers.</p></li>
<li><p>As you point out, not many finance graduates pursue graduate studies in engineering. Regardless of the reasons, this makes a finance degree appear unusual and possibly unwise for a student considering engineering. On the other hand, an engineering degree easily and frequently translates into an MBA. Thus, a student with interests in both engineering and finance is probably far more likely to major in engineering as an undergrad and then switch via grad school instead of getting a bachelor’s in finance.</p></li>
<li><p>Some percentage of engineers and scientists who end up in finance work as quantitative analysts. These individuals usually have PhDs in STEM fields. This is a completely different situation from our main discussion, but may account for some of the transfers.</p></li>
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<p>Still, this is not a key point.
Lots of things are true ceteris paribus. If all other factors truly are equal, then the remaining variable is really the only way to choose short of flipping a coin. A difference need not be large to be significant in some situations.</p>
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<li>Let’s not overemphasize the issue. You’ve mentioned MIT and Stanford. Princeton and Northwestern fit the same classification. But if you look at the top 25 engineering programs (USNews or NRC '95, take your pick) I suspect that the vast and overwhelming majority of graduates pursue engineering careers. Not finance, engineering. Last year, Purdue graduated more engineers than MIT, Stanford, Princeton, and Northwestern combined.</li>
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<p>I’m not aware of ever having argued that a significant difference exists between Purdue and MIT in terms of engineering reputation.</p>
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<li><p>One of the primary reasons to choose a higher ranked engineering school is additional employment opportunities following graduation. But, [as</a> you have pointed out](<a href=“http://talk.collegeconfidential.com/11187577-post53.html]as”>http://talk.collegeconfidential.com/11187577-post53.html), companies aren’t likely to prefer schools where they cannot hire anyone. Thus, if top engineering programs do indeed confer hiring benefits for engineering jobs, we can conclude that many students at these schools do in fact pursue careers as engineers.</p></li>
<li><p>To expand on #3, many of the reasons a student might choose a higher-ranked engineering school actually have very little to do with their eventual ability to contribute to society. Obviously this becomes somewhat subjective as we discuss what exactly constitutes a meaningful contribution to society. But even if I think attending MIT over Idaho State confers some advantages for the student, I have never argued that it offers advantages for society as a whole. And you’ve never proven that it does, either.
That’s a legitimate issue. But the best way to solve it would be to change the way venture capitalists evaluate business plans. Even if you could somehow get all MIT graduates interested in engineering, looking more closely at the content of the plan would surely be a superior way to ensure that the best plans are chosen.</p></li>
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<p>And, let’s face it: reforming the venture capital system is hardly less realistic than whatever it is you are advocating we do with higher education or engineering salaries.
You can look to what I - and you - said above. If Facebook were incapable of getting the engineers they need at MIT, then they will get them elsewhere. The fact that this isn’t occurring clearly signals that they are successfully getting people at MIT.</p>
<p>If a problem does in fact exist, it will solve itself as firms recruit engineers slightly further down the rankings because they can’t get MIT grads.
Eh? I don’t really see how this matters. Let’s try an example: John from MIT gets a degree in mechanical engineering but chooses to work at McKinsey. The job he might have taken at Boeing gets filled by Jane from UIUC, and the electric utility that would have employed Jane now hires Jerry from Idaho State.</p>
<p>Now, you have previously claimed that John ends up working as part of a team at McKinsey that produces poor results. I’m wondering why we should want him working as an engineer instead of Jerry.
Speeches by politicians attempting to rally support have zero credibility as evidence.</p>
<p>I’m going to ask you a simple question: are there currently more entry-level engineering job openings than entry-level engineers capable of doing them?</p>
<p>Look, not many people in any major* enter the finance industry through graduate school. </p>
<p>But what is clear is that a disproportionate percentage of engineers do become financiers. Former engineering undergrads at the top MBA programs generally represent around 1/3 of the class (and nearly half in the MBA program at the MIT Sloan School), despite representing only 5-10% of all conferred undergraduate degrees nationwide. And the vast majority of graduates from the top MBA programs do not take general management positions, but rather take jobs in finance or consulting. </p>
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<p>But that doesn’t speak to the issue of the fact that many engineering students - at least at the top schools - choose not to work as engineers. </p>
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<p>Let’s be perfectly honest: Purdue would like to be more like MIT, but MIT does not want to be more like Purdue. Whether you think a big difference in engineering reputation exists between MIT and Purdue, there is a perception that a gulf exists. Tony Stark, for example, didn’t (fictionally) graduate from Purdue. Will Hunting did not (fictionally) complete astounding feats of mathematics while mopping the hallways at Purdue. MIT is well established as a metaphor around the world as the archetype for excellence in science and technology. For example, I know one woman from Portugal who said that her undergrad school is known as the “MIT of Portugal”. I doubt that any school in Portugal would be deemed the “Purdue of Portugal”. </p>
<p>To be clear, I am not saying that the difference in perception between MIT and Purdue is necessarily deserved. But you can’t deny that it exists. </p>
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<p>And by the exact same argument, if programs such as MIT and Stanford do indeed confer hiring benefits for non-engineering jobs such as finance or consulting - and it is hard to argue that they do not - then we must also conclude that many students at those programs pursue non-engineering careers. </p>
<p>The upshot is that a far lower percentage of engineering students at MIT or Stanford actually take jobs as engineers, compared to the percentage of engineering students at the average school. That is ironic. </p>
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<p>Whether engineers or financiers offer advantages for society is beside the point. What is clearly suboptimal is the mismatch of educational resources. MIT has arguably the best engineering educational resources in the world, which are then wasted upon students who don’t actually become engineers. Surely it would be better to reserve those resources for students who are actually going to work as engineers, no? </p>
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<p>Eh? I’m afraid you continue to make the same mistake, which is to assume that the number of jobs in any particular field is static. On the contrary, they aredynamic. If Facebook, Boeing, or the electric utility aren’t able to hire (presumably) top engineering talent, then they may choose to hire nobody at all. The number of people to be hired is a dynamic variable that is determined by the health of the firm and its strategy - and that is itself determined by the quality of the people they hire. </p>
<p>Let me give you an example. Much of the early Google search engine was built by old Stanford engineering friends of Sergey and Larry who they chose to hire. It was precisely because of the talent of those engineers that caused Google to grow, thereby allowing them to hire still more engineers. If the first version of Google had flopped, then the company would never have succeeded, and the 25,000 people that Google currently employs would not have those jobs. </p>
<p>The same is true for any company. Job slots are not static, to be dealt out to whoever happens to be next in their desirability queue, like orders in a deli. Many (almost certainly most) companies will simply choose not to hire anybody at all rather than hire somebody who they don’t think fulfills their demands (however defined). Companies are almost never in the position where they absolutely must hire X number of people. Rather, they have wide flexibility to decide how many people to hire in any given year, and that range might include zero. </p>
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<p>That’s a nonsequitur, for the reasons stated above. There is no such thing as a fixed number of job openings - entry level or otherwise. Rather, the number of job openings is dynamically determined.</p>
<p>But again, the issue is not regarding the pay within the lower ranks of finance, but that those lower ranks opens career doors into other cushy high-paying fields, such as venture capital or private equity. Nowadays, to enter PE, you almost always need a prior stint in investment banking. </p>
<p>But the same cannot be said for engineering. You spend a stint as a chemical process engineer, and you haven’t really opened any doors to high-paying cushy jobs available to you.</p>
<p>But you didn’t have to do any of those things (other than working 60+ hours a week), if you had gone to the right college. For example, I can think of plenty of people who had a very enjoyable time in college, and certainly did not have anywhere near to perfect grades, nor did they join any school finance clubs, yet are now extremely highly paid financiers. </p>
<p>Of course, the fact that they went to schools such as HYPSM may have had something to do with it. </p>
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<p>Perish the thought - the financiers who crashed the economy, required a taxpayer bailout, yet continued to draw giant - indeed, record-breaking- bonuses anyway might actually be overpaid? Meanwhile engineers are actually underpaid? Nah, of course not. </p>
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<p>No, I’m afraid to say that I still think you are deeply out of sync. To be clear, where we agree is that those jobs are indeed for the select few. But where we disagree is that being admitted to one of the top schools in the country already makes you one of that select few. The thousands upon thousands of students at the average schools who dream of finance jobs will unfortunately have to keep dreaming (or at least wait until they are admitted to a top MBA program), because their chances are nil. But the chances for the students at the top schools are very strong. </p>
<p>I would assert that during any nonrecessionary economy, any HYPSM engineering student with moderately decent (i.e. B average) grades can get a relatively high-paying finance job. It may not necessarily be at the best firms, but it will still be a decent finance job. It’s hard to even walk around the MIT Career Center without tripping over a finance recruiter.</p>
You were remarking on the fact that there is greater movement from engineering to finance than vice versa. I believe my response gives a fairly credible explanation.
I don’t think there is a measurable difference in curriculum or engineering-related (ie, not finance/consulting) student outcomes between the two. And that’s all that is relevant here. Your sky-is-falling rhetoric about a lack of qualified engineers is overblown simply because the true workhorses of engineering education - the Purdues, A&Ms, Illinoises, etc. - produce far more engineering grads than the MITs or Princetons.
See above. The real, tangible impacts just aren’t that large.
Here’s an interesting question for you: has there been a significant reduction in the number of real engineering companies recruiting at MIT? If so, then I’d argue that MIT is no longer the best place for a student truly interested in engineering and resources have begun to shift to more productive uses. If not, then by your own logic those companies must be having some success recruiting at MIT and the whole thing is a non-issue.</p>
