<p>Speaking of the Marginal Revolution blog - it happens to be run by economists Tyler Cowen and Alex Tabarrog at George Mason University…which is a publicly funded university. Indeed, most of the structure of modern-day economics, both as a distinct body of knowledge and the accompanying profession and career ladder populated by economists, is a public good supported by taxpayer funding, whether in the form of public universities and government agencies that employ economists, of taxpayer research grants to support economics training and research projects, or the collection of economic data that provides the raw materials of economic research. </p>
<p>I therefore continue to find it ironic to the extreme when economics - ore more specifically, certain interpretations of economics - is then invoked as a talking point with which to denigrate and minimize the crucial role of government. Without the active participation of government, economics as the academic discipline that we know it, wouldn’t even exist at all.</p>
No, sakky. I did not ask how engineers at John Deere or Apple should be compensated relative to investment bankers, or anesthesiologists, or Subway Sandwich Artists. For as long as I have been a part of this forum - over three years now - you have tirelessly argued that engineers ought to be compensated according to “the value they provide to the world.” But it is clear that not all engineers perform the same tasks. I am asking you: does an electrical engineer at Apple or John Deere provide more ‘value’ to the world? And how much of a salary difference should exist based on this disparity?
Why? Compare the number of investment bankers and management consultants to the number of engineers. Clearly, you cannot redistribute those earnings in a fashion that would have more than a few engineers earning those top wages. Why should the rest of us care?
Only 1% of a population can be in the top 1%. Certainly, jobs at Apple are competitive. But one need not get a job at Apple to have an income well above the national average as an engineer.</p>
<p>Actually, you have actually answered your own question: value is subjective. Sure, not all engineers perform the same tasks, but not all investment bankers perform the same tasks. I therefore must return to the original statement that it is not at all clear why investment bankers should be paid more than engineers, when it is certainly not clear that they provide more value to the world. “Value” is fundamentally speaking a political and social judgment, not merely an economic one. </p>
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<p>Uh, how’s that? While the absolute numbers of bankers and consultants may be small, the financial power that each one possesses relative to engineers is absolutely yawning, indeed, often times larger by an order of magnitude (or, in the case of bankers, sometimes by 2 or 3 orders of magnitude). </p>
<p>Put another way, according to the BLS, there are around 1.5 mn engineers in the nation. Imagine if instead of bailing out the finance industry to the tune of $700 billion, we could have distributed that sum to the the engineers instead. That would represent nothing less than a whopping $400,000 “lump-sum bonus payment” for every single engineer in the country. And that’s just the funding associated with the bailout, that doesn’t even count all of the regular revenue/profits that the finance industry enjoys. Why exactly is the nation unable to afford to improve engineering pay, when it apparently can conjure nearly a trillion dollars at will to rescue the bankers? </p>
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<p>An income as high as the other industries in question? </p>
<p>And that’s precisely the point. Talented people have a choice about which industry they should enter. As long as engineering refuses to pay its employees better relative to other industries, then talented people will inevitably prefer those other industries.</p>
<p>Now allow me to turn the question around. For as long as I have been on this part of the forum - which has been years - I have battled numerous posters, seemingly including yourself, who apparently continue to believe that engineers should simply not be paid better, but rather should simply be satisfied with their lot. And to that, I must continue to ask the question: why do you fight? You guys are truly not interested in having more money? Or at least the possibility of having more money. If so, hey, feel free to send it to me. I’ll take it off your hands. {One counterargument seems to be that any pay increase might only accrue to the top x% of engineers. But so what? You might work your way up to becoming part of that x%. Even if not, shouldn’t you at least support your fellow engineers who are part of that x%? Just because you might not make more, why would you want to prevent others from doing so? }</p>
Correct, value is subjective. Compensation is not and should not be set based on sakky’s interpretation of the ‘value’ provided by a certain profession.
If you want engineering firms to “pay salaries in accordance with the consulting and banking firms” that capital has to come from somewhere. I believe you have previously suggested that engineering employers ought to terminate or downsize current management consulting contracts in favor of wage increases for engineers.</p>
<p>However, there are more engineers than highly-paid management consultants. There isn’t enough capital to give out very many raises. Just as only a few people will ever survive the competition and become wealthy consultants, only a few engineers could expect to gain these highly competitive positions.
I am not interested in talking about the economics of the “bailout” as that is a political topic outside the domain of discussion on CC. Suffice it to say that we may agree on this point to the extent that your description is accurate.
First, I fundamentally disagree with the position that salaries ought to correspond with your subjective notion of value.</p>
<p>Second, I don’t like witch hunts. In the absence of a specific advocacy your rants about comparatively low salaries in engineering are at best useless or at worst negligent. There are many approaches that might ‘solve’ this ‘problem’ but prove harmful overall.</p>
<p>Third, the time I spend on this forum regularly drives home the point that CC is not at all representative of the real world I live in. Dude, engineers make a solid living. I looked at the BLS stats for my community; only physicians, dentists, and management occupations outearn engineers (and engineering managers outearn all management occupations other than CEO). Becoming an engineer is a whole lot less risky and stressful than incurring huge debt for medical school.</p>
<p>See, I don’t like everything about the status quo. You want to argue that too much capital is allocated to the FIRE sector compared to manufacturing? That’s cool, I’m sure there are lots of places on the Internet where you can enjoy that discussion. But barring major structural changes to the economy, I see increased engineering wages as a bad thing. I see that causing increased competition for places in engineering school and careers in the field, plus decreased global competitiveness.</p>
<p>You say that a few kids from MIT get to be hard-charging investment bankers…good for them. I don’t care. Can you prove that it costs me anything?</p>
<p>I must strongly disagree, for while I agree that there are relatively few management consultants, you said it yourself - they are highly paid, often to the tune of 7 figures and up at the partner level. The elimination of just such one partner would result in at least a $50k/yr salary gain for 20 engineers. Heck, the salary of even one relatively low-level management consulting associate would be redirected to vastly boost the salary of several engineers. </p>
<p>Nor do I see why it matters whether only a few people - engineers or otherwise - might be able to attain highly competitive consulting positions. After all, only a small handful of tech entrepreneurs will become billionaires, but that fact clearly hasn’t deterred people from starting a proliferation of tech companies, particularly nowadays. What matters is the opportunity that you might one day become such a billionaire. </p>
<p>But far more importantly, to this day it still remains extraordinarily difficult to pinpoint exactly what social value-add that consulting (and finance) actually provide to the world, where I doubt that anybody would dispute that engineering provides significant value-add. We live in a clearly far more technologically advanced world than we did even a decade ago. Much (probably most) of consulting and (especially) finance seems to be parasitic in nature, extracting revenue generated by a de-facto oligopoly. Imagine if we could shift that revenue towards boosting engineering. </p>
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<p>Well, look, it’s not my subjective notion of value that is at stake. The truth is, salaries of everybody are subjectively determined. The reason why Jeremy Lin was recently offered a salary from the Houston Rockets that apparently engendered discontent amongst his (former) Knicks teammates to the point that Carmelo Anthony described it as being “ridiculous” is because the Rockets subjectively determined that Lin was worth that salary. Management consultants and bankers are paid highly because the business world has subjectively determined that they are worth what they are paid. Raising awareness of the value of engineering would therefore surely improve their subjective standing. </p>
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<p>Harmful to who? To consultants and (especially) bankers? Sure. But given the economic carnage of the last few years and that continues to occur - witness the unfolding LIBOR scandal - I don’t think most people exactly feel much sympathy towards them. Do you? </p>
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<p>Actually, it is precisely the fact that CC is an unrepresentative forum that drives home my point. I have always agreed that the average engineer is living relatively well, and for that reason, I have always recommended that average students should consider becoming engineers. </p>
<p>But, as you alluded to yourself, the readership of CC clearly tends to skew strongly towards the exceptional. While only a vanishingly small percentage of people in the world would ever be able to attend a top engineering school such as MIT or Stanford, a disproportionate percentage of them can be found on this forum. They are also precisely the types of people who have evidently been attracted by the siren song of consulting and banking (for, before the crash, nearly half of all MIT students who entered the workforce took jobs not in sci/tech but rather in consulting or finance). </p>
<p>So, noimagination, I would agree with you that if the membership of CC was indeed representative of the entire population at large, then my posts would indeed be relevant to few of them. But that’s simply not the case, as you stated yourself. </p>
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<p>I give you credit for being honest…and might I then recommend that whenever you receive a raise, might you send that money to me? Furthermore, perhaps you could recommend that all of the engineers that you know to send their “excess” salaries to me as well? After all, since you’ve just admitted that you don’t want higher wages, hey, I’ll help you take that money off your hands. </p>
<p>But to be less facetious, I never said that the salaries of all engineers should necessarily increase. I have always stated that the guy who graduates from a 4th tier engineering school with a 2.0 GPA who nevertheless obtains a $50k/year salary is obtaining an excellent deal. Good for him. Perhaps his salary doesn’t need to be increased. My discussion has always revolved around the top engineering students from the top schools…the very population that is disproportionately represented within the readership of CC. And frankly, the competition for spots in schools like MIT and Stanford is already harsh - it’s hard to see how they could become much harsher. And even if it did, I doubt that that would be a bad thing. As a case in point, the competition to enter the PhD EECS program at MIT is surely one of the harshest of the entire realm of engineering education, but I don’t see anybody advocating that MIT lower its standards. Those who aren’t admitted are free to apply to a lower-ranked Phd program. </p>
<p>I must also ask why - if salaries decrease global competitiveness - why exactly consultants and bankers don’t seem to share the same sentiment. For better or worse, the United States has by far the most prominent consulting and banking industries of any nation in the world, despite the supposedly ‘uncompetitive’ high salaries that they paid. You never hear of Wall Street bankers lamenting that they ought to be paid less for fear of becoming uncompetitive relative to the finance industries of other nations. Why is this a concern specific to engineers? </p>
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<p>They represent lost human capital that was trained for engineering and should optimally be working in that field. It is quite clear - at least to me - that the world benefits from the greater technological innovation that the top engineers disproportionately provide. Imagine if we could produce a viably clean and cheap energy source or a suite of medical devices that could perfectly replicate the functions of any damaged organs (e.g. a prosthetic eye for the blind, prosthetic limbs for the paralyzed), or a lightweight long-lasting battery that allows you to use your Iphone uncharged for months at a time. That is the promise of engineering. </p>
<p>On the other hand, like I said, it is far from clear exactly what value the consulting and banking industry provides…and indeed, whether the finance industry actually subtracts value from the world through ever-more-ruinous and common financial crashes necessitating widespread taxpayer bailouts. Yet, like I said, those are precisely the industries that are attracting away many of the best engineering students. Instead of helping to produce wondrous technological discoveries, they are instead exploiting loopholes in the financial regulatory system or bamboozling executives with fatuous talk of ‘core competencies’ or ‘hedgehog strategies’ that could ultimately result in Enron-style scandals fostered by former McKinsey partners. </p>
<p>So you ask how it hurts you, and I think the answer is clear. Less technological innovation along with more financial scandals. Haven’t we all been hurt by the financial crash, started by the banking industry, that has precipitated the loss of millions of jobs, thrashed the net worth of millions of Americans, and continues to exact a dreadful toll in Europe while necessitating unprecedented taxpayer bailouts? Wouldn’t the world have been better off if banking employees, or at least the former engineering students, had instead been developing technologies instead of contributing to the world’s largest financial catastrophe in 80 years? I don’t know about you, but that seems like a clear win to me.</p>
And is that a good thing? How much is that technology improving the quality of life for people, overall? These are subjective questions.
Again: if you want to argue for structural changes to the US economy, there are economic and political forums where that kind of discussion is appropriate. CC is not one of them.</p>
<p>Whether the consequences of an event are good or bad depends largely on perspective. In ten years, the owner of the Houston Rockets can perhaps tell us whether, in his hindsight, the amount paid for Jeremy Lin was justified. That is his business, and all you have to decide is whether to be a Rockets fan or not.</p>
<p>My opinion is that engineers are very well-compensated in relation to most of American society, and that American engineers are exceptionally well-compensated in relation to most of the global population. It seems very foolish for the people near the top of the pyramid to question the status quo in the hope of a more lucrative (but also more competitive) lifestyle. Surely the downside potential is greater.</p>
<p>If you have clear, actionable steps that will allow engineers to get higher pay, then please feel free to share. Otherwise, your posts don’t seem to do much besides sell careers in finance and consulting to prospective engineers on CC. Just my opinion, in the hope that you will find it useful.</p>
<p>Well, let me ask you: how many people with smartphones are willing to relinquish them? How many people would willingly refrain from using the Internet? The empirical evidence seems quite clear that most people do indeed prefer the advancement of technology. </p>
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<p>Um, how’s that? Do you own this forum? If not, then pray tell, exactly what gives you the right to tell others what topics they’re allowed to discuss here? I don’t tell you what you’re allowed to discuss. </p>
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<p>Then by that Panglossian argument, no American ever has a right to agitate for any change about anything, right? After all, even the poorest American living in the vilest, most crime-ridden neighborhood still lives better than plenty of poor people in the Third World. So he should have no right to agitate to improve his lot? </p>
<p>More importantly, we as Americans should never be concerned about improving the state of the citizenry of the country, just because we are already a rich nation? Heck, why should Americans have ever implemented social reform ever in their history? Abolition of slavery, civil rights movement, women’s suffrage, legalization of unions, abolition of the military draft - why ever enact any of these reforms, for after all, Americans since the founding of the nation have always been rich relative to the rest of the world. Imagine telling women and minorities that they shouldn’t have been given equal rights because, even pre-reform, they were already better off than women and minorities in poorer countries and such reforms would surely entail risky downside potential for the nation.</p>
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<p>Sure, here’s a simple one: political lobbying. Engineers and scientists need to become more politically vocal and demand greater respect and support for sci/tech funding…and if they want to identify a source of revenue for that funding, might I point to that $700bn financial bailout as a starting point. I would ask why exactly does the Federal Reserve wield such extraordinary powers to provide oceans of liquidity at below-market rates to banks, but not for the funding of, say, tech startups? </p>
<p>Here’s another step: become a registered patent agent. Anybody with an ABET-accredited engineering degree is legally allowed to take the USPTO Bar exam and, upon passage, become a fully certified patent agent. You don’t need any work experience, and can attempt the exam literally right after you graduate. While patent agents are not able to provide legal opinions, they can provide opinions regarding patentability. They can then leverage the patent system to protect the inventions of themselves or their colleagues. Even if they never do, the fact that you are an registered patent agent will surely only improve your marketability and value as an engineer, particularly given the widespread patent litigation and negotiations that happen seemingly on a daily basis within the tech industry.</p>
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<p>So you’re entirely sanguine about the notion of Jeremy Lin aggressively negotiating for - and evidently receiving - a whopping increase in salary, despite the fact that he was already being paid far more than the average American (Lin was being paid the NBA minimum salary of $600k which is an order of magnitude greater than that of the average American), but the notion of engineers agitating for higher salary somehow fills you with dread regarding its downside potential? Why the difference? </p>
<p>Just like you argued that engineers who are already at the top of the pyramid (relative to the rest of the world) would be foolish to question his lot, by the same logic, maybe Lin should similarly be happy to take another minimum contract. After all, maybe there’s downside potential to the Houston Rockets overpaying and thereby damaging their future competitiveness. Or - from a socio-ethnic standpoint - maybe there’s a downside in having such a high-profile Chinese-American player perhaps underperform relative to his contract and thereby undermine the ability of Chinese-Americans of ever earning top sports contracts in the future. Heck, maybe he even reinforces the stereotype that ethnic Chinese people are nothing more than untrustworthy, money-grubbing schemers who are preternaturally motivated to fleece others. </p>
<p>Those are just some of the potential systemic downsides that I can see from the signing of Lin. But I doubt that Lin cares about any of that. Nor should he. He simply cares about improving his own station in life. Engineers should also be concerned primarily with improving their own stations in life.</p>
<p>I only see the relevance of advice for engineering students and graduates. A general indictment of the FIRE economy, or whatever else you are arguing for, doesn’t relate.
Well, you certainly have the right to demand a higher salary. Let us know how it goes.</p>
<p>In case you are missing it, part of the message I am trying to convey here is that engineering and investment banking are different and that this difference is a good thing. People who are interested in the finance lifestyle can pursue that, through an undergraduate degree in engineering if that’s the preparation they want. I don’t envy them the competition, or the current prospects (banks are not doing well right now).
That’s all I’m going to add on the subject; the admins and moderators are the only groups responsible for interpreting and enforcing the TOS. Just keeping everyone informed.</p>