Saturday, December 18, 2010

Why Americans Don't Go Into Engineering

Ok, maybe they are, but anecdotally, they sure don't seem to be getting programming or IT jobs. I work at a pretty big dot com company, I got my masters degree in Computer Science at ASU and in both instances I was demographically very much in the minority. In my current position, I work primarily with people who have immigrated either from India or China and our company has a big development center in India many with whom I work pretty closely.

Well, not long ago I came across this article about the banking system in America.

Here, the article talks about the growth of America's financial system from 1/7th of the economy to about 1/3.

Since 1980, according to the Bureau of Labor Statistics, the number of people employed in finance, broadly defined, has shot up from roughly five million to more than seven and a half million. During the same period, the profitability of the financial sector has increased greatly relative to other industries. Think of all the profits produced by businesses operating in the U.S. as a cake. Twenty-five years ago, the slice taken by financial firms was about a seventh of the whole. Last year, it was more than a quarter. (In 2006, at the peak of the boom, it was about a third.) In other words, during a period in which American companies have created iPhones, Home Depot, and Lipitor, the best place to work has been in an industry that doesn’t design, build, or sell a single tangible thing.

In this paragraph, it talks about the wages, where financiers used to be paid on average the same as those with the same qualifications in other industries. Their wages have grown tremendously since.

From the end of the Second World War until 1980 or thereabouts, people working in finance earned about the same, on average and taking account of their qualifications, as people in other industries. By 2006, wages in the financial sector were about sixty per cent higher than wages elsewhere. And in the richest segment of the financial industry—on Wall Street, that is—compensation has gone up even more dramatically. Last year, while many people were facing pay freezes or worse, the average pay of employees at Goldman Sachs, Morgan Stanley, and JPMorgan Chase’s investment bank jumped twenty-seven per cent, to more than three hundred and forty thousand dollars. This figure includes modestly paid workers at reception desks and in mail rooms, and it thus understates what senior bankers earn. At Goldman, it has been reported, nearly a thousand employees received bonuses of at least a million dollars in 2009.

This paragraph talks about why many of our brightest are getting into finance over other fields such as say engineering:

Not surprisingly, Wall Street has become the preferred destination for the bright young people who used to want to start up their own companies, work for NASA, or join the Peace Corps. At Harvard this spring, about a third of the seniors with secure jobs were heading to work in finance. Ben Friedman, a professor of economics at Harvard, recently wrote an article lamenting 'the direction of such a large fraction of our most-skilled, best-educated, and most highly motivated young citizens to the financial sector.'

I don't think this is a full explanation. But when I talk to my Indian friends, there's this pipeline of young talent in India who attend college to pursue IT or CS degrees and the field is booming in select regions of India not to mention the many who come here to work for US companies - jobs Americans seem ever increasingly less interested in filling.

Again, I don't have a good explanation, but here's what I know from my own experience:

In the late 1990's the dot com, telecommunications industry, and computer industry simultaneously boomed and as a result everyone was getting into programming. As the decade drew to a close, there was a push to outsource manufacturing and eventually programming jobs overseas where the work force made significantly less money for the same work.

At the time, I was working in the defense sector and I knew many of my colleagues were in defense because it was an industry that could not get outsourced.

And it was true a lot of companies felt they could get something for cheap by just shipping jobs overseas. But I think now, companies are forced to go to India and China and other countries because there are simply not enough qualified workers here to fill the number of workers required to meet the labor needs.

It is true that Indian and Chinese workers in India and China have lower wages, but that won't be true indefinitely. As those countries develop, labor costs will rise.

And the software industry is not a race to the bottom industry. Just because a worker is paid a low wage doesn't mean he is cheap. It they don't produce that is a problem with far more consequences on the bottom line than if you paid for the brightest talent in the first place. So companies need to go where talent exists and then pay for that talent.

There's so much potential in engineering and science. So much we could develop and haven't. This is far from a zero sum game.

So, I'm not sure why Americans aren't interested in engineering? Is it because we don't enjoy math? Or that we get paid a lot more money moving money around the economy than we would building things? Or is it fear that we can't compete with the Chinese.

I'm not sure, but I'm afraid it's a problem.


Anonymous said...

Americans do not go into engineering jobs because it would be stupid to go into engineering jobs. I am a mechanical engineer who has had my job moved once to China, and another time taken by an H1-b visa engineers whom the corporation paid about 50% less to do the identical job description. Last night I went to a meeting of a local group of medical products engineers. You hear a lot in the media about this area producing lots of jobs, but at the social hour of the meeting one manager told me confidentially that most of these companies are simply looking for H1-B visas, because they can pay them less and have much more control over them (since the company holds the visa, the worker cannot change jobs so easily). My dad and my father-in-law and my grandfather were all engineers, and very successful. I actively discourage my kids from going into engineering b/c of the "Americans need not apply" policy which is increasingly the dirty little secret of corporate hiring now. Americans are not going into engineering simply because that is the rational choice.

tempe turley said...

Really??? Someone on a H1-B visa gets paid 50% less? I find that really hard to imagine since they are living here with the same cost of living concerns, and are in the same labor markets as me.

I work at a company employing a lot of people on H1-B visas, but I find it very hard to believe they get paid half of what I do.

I think there has been a push to move a lot of engineering jobs oversees where salaries are definitely cheaper. But I can't imagine that being forever sustainable. There are definite costs in managing teams across wide geographic boundaries.

But this is a complicated issue and I don't have a firm grasp on it myself.

But I do believe we need many more people in science and in engineering everywhere, especially here. There are still plenty of problems that demand a technological solution.

I'm sorry to hear you've had a hard time of it, but I hope that you keep persisting and find something soon (if you haven't already).