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OCR for page 36
Supply and Demand
for Engineers
The inability to accurately forecast developments such as levels of
economic activity and capital expenditure and societal events in gen-
eral suggests the difficulty inherent in designing systems for predicting
or managing supply and demand for engineers in any meaningful way.
The panel certainly was not qualified in this area, but it did examine
several factors that bear on supply and demand as well as existing
predictions.
Engineering Salaries
One indication of demand for engineers is their salaries. The most
recent earnings surveys show that engineers remain among the lest
paid of all employed professionals. The National Survey of Profes-
sional, Administrative, Technical, and Clerical Pay, which provides
detailed data over time, shows that engineers as a group earn more than
chemists, accountants, and engineering technicians {Figure 9~. The
survey also shows that, since 1963, the differential enjoyed by engi-
neers has remained essentially the same, despite some wide variations
in year-to-year salary increases. The average salaries of none of these
groups have totally kept pace with inflation {Figure 10J.
The picture for entry-level engineers is somewhat different. They
earn more than their counterparts in other fields, but the differential
increased after 1963 and became especially noticeable in 1977 {Figure
11~. By 1983, entry-level engineers were doing markedly better than
36
OCR for page 37
SUPPLY AND DEMAND FOR ENGINEERS
$40,000
30,000
20.000
ACCO U NTA NTS
O
1963 1968
ENGI j;^K~
_.
-
ENGINEERING TECHNICIANS
1973 1978 1983
37
FIGURE 9 Median salaries for engineers, chemists, accountants, and engineering
technicians in private industry, 1963-1983. SOURCE: National Survey of Professional,
Administrative, Technical, and Clerical Pay.
$40,000
30 000 1
20 000
1 0,000
ENGI N E ERS
.
CH EM ISTS ACCOUNTANTS
ENGINEERING TECHNICIANS
O , , , 1
1963 1968 1973 1978 1983
1 1 1
FIGURE 10 Median salaries for engineers, chemists, accountants, and engineering
technicians in private industry, 1963-1983 {constant 1967 dollars). SOURCES: Bureau of
Labor Statistics; National Survey of Professional, Administrative, Technical, and Cler-
ical Pay.
OCR for page 38
38
ENGINEERING EMPLOYMENT CHARACTERISTICS
entry-level people in other fields and had slightly outraced inflation
Figure 12i. The differentials among entry-level chemists, accoun-
tants, and engineering technicians, meanwhile, remained about the
same. The increase in the salary differential for entry-level engineers
suggests that some employers may have considered new engineers,
particularly computer-literate engineers, in short supply.
Salary data also shed light on the relative reluctance of engineering
students to pursue the Ph.D. Although the data are not definitive, it
appears that the cumulative total income of a Ph.D. engineer does not
catch up with that of a B.S. engineer for some years nearly 20 years by
one reckoning {Figure 13J after each receives the B.S. After that, the
Ph.D. clearly does better than a B.S. engineer.
The salaries paid by industry are said to be a major attraction for
academic scientists and engineers, but salary and mobility data do not
appear to support this view conclusively. Industry pays doctoral mathe-
maticians, for example, about 30 percent more than universities pay
them, but universities have no trouble attracting mathematicians.
Industry pays engineers about 15 percent more than universities do, yet
universities have much more trouble attracting Ph.D. engineers than
they do mathematicians. Industrial-academic comparisons may be
deceptive because they involve median salaries. For tenure-track posi-
tions, colleges and universities typically attempt to hire the best doc-
toral engineers available, and these people may command significantly
higher than the median salaries in industry. In any event, individual
choices of academe or industry doubtless involve factors in addition to
salary.
The federal government, like educational institutions, pays engi-
neers less than they can earn in industry. Federal salaries are limited by
civil service regulations. The effect is seen in a comparison of salaries at
the Naval Research Laboratory [NRLJ with those at three government
laboratories operated by civilian contractors [government-owned,
civilian-operated, or GOCO labs).l3 The director of NRL in 1983 was
earning $66,000 per year. The directors of two of the GOCO labs were
earning $110,000, and the director of the third was earning $90,500.
Similarly, an outstanding new doctoral engineer could command
$30,400 at NRL and $50,000 at the three GOCO labs. Federal laborato-
ries are reported to be having difficulty attracting and retaining engi-
neers because of the salary restrictions imposed by the civil service
system. 13
Hiring Practices
Companies with large engineering staffs, such as General Electric,
Westinghouse, and the large aerospace companies, tend to hire engi
OCR for page 39
SUPPLY AND DEMAND FOR ENGINEERS
$30,000
25,000
20,000
1 5,000
10,000
5,000
39
ENGINEERS
~ /
CH EM ISTS ~
\ ~
an- ·
ACCOUNTANTS
ENGI NEERI NG TECHNICIANS
o L I I I I
1 963 1 968 1 973 1 978 1 983
FIGURE 11 Entry-level median salaries for engineers, chemists, engineering techni-
cians, and accountants in private industry, 1963-1983. SOURCES: Bureau of Labor Statis-
tics; National Survey of Professional, Administrative, Technical, and Clerical Pay.
$30 000
25 000
20 000
15,000
5,000
) L
CHEMISTS
ENGINEERS
ENGI NEERI NG TECHNICIANS
ACCOUNTANTS
l
O L I I l l I I
1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 ~1983
FIGURE 12 Entry-level median salaries for engineers, chemists, accountants, and
engineering technicians in private industry, 1963-1983 {constant 1967 dollars).
SOURCES: Bureau of Labor Statistics; National Survey of Professional, Administrative,
Technical, and (clerical Pay.
OCR for page 40
40
700,000
630,000
560,000
490,000
CD
By
z
LL
LU
420,000
350,000
280,000
210,000
1 40,000
70,000
o
ENGINEERING EMPLOYMENT CHARACTERISTICS
- PhD
- BS
/'
,,K~
/k
///
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
//
/?
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32
YEARS AFTE R B.S.
FIGURE 13 Cumulative earnings of B.S./Ph.D. engineers. SOURCE: Panel on Infra-
structure Diagramming and Modeling, Committee on the Education and Utilization of
the Engineer.
neers on a continuing basis except in times of severe economic
retrenchment. At the least, this hiring practice makes up for attrition,
which is steady, if small, in a large company. The tendency is to hire
predominantly new graduates rather then seasoned engineers. The new
graduates are sprinkled across the disciplines and are considered a
source of up-to-date technology as well as replacements for departing
employees.
In times of long-term growth, the percentage of experienced engi-
neers recruited increases. Short-term needs for experienced engineers
with specific skills are often satisfied by retaining contract engineers
from engineering service companies.
In periods of low growth, large companies adjust their technical work
forces so that they can hire at least some engineers from schools whose
graduates have worked out well; such hiring permits them to preserve
working campus relationships and upgrade their staffs. These compa-
nies usually have full-time recruiters who visit schools, participate in
job fairs, conduct open houses, and so forth.
Newly recruited engineering graduates often are not hired for specific
OCR for page 41
SUPPLY AND DEMAND FOR ENGINEERS
i'
41
obs. Instead, they enter organized programs involving successive
assignments to different operating elements of the company. These
programs generally range from six months to three or more years and
are carefully developed to acquaint the new graduate with the com-
pany, its procedures, and the responsibilities of various departments.
Upon completing the program, the employee is either given or permit-
ted to choose a permanent assignment.
Companies with small engineering staffs are much less likely to hire
new graduates. Instead, they tend to recruit engineers with at least
some experience to meet immediate needs in specific functions or
disciplines. Today, for example, the competition among small electron-
ics companies for electrical or computer engineers with 2 to 10 years'
experience is very keen, if not "cutthroat. "
Smaller companies without formal employment departments are
much more likely to use recruiting agencies to obtain experienced
engineers. The newly hired employees are assigned at once to the
projects for which they were hired.
Co-op Programs
Other things being equal, companies often prefer to hire new gradu-
ates who have spent work periods with them during a cooperative
work-education, or co-op, program. A number of colleges and universi-
ties offer such programs. Typically, undergraduates spend alternate
semesters in school and working full-time for companies that partici-
pate in the program. Other approaches are possible in some programs,
for example, students work half a day and attend school half a day.
During work periods, students have an opportunity to become famil-
iar with individual companies and to learn something of the realities of
engineering in industry. Companies, meanwhile, have an opportunity
to observe prospective employees in a work setting. Thus, such pro-
grams provide financial support for students, important industrial-
academic interchange, and sources of intermittent and ultimately
pe' Immanent employees for industry.
Co-op programs require continuous commitments from both aca-
demic institutions and industrial participants to remain viable. Never-
theless, they are affected by national economic cycles. During periods
of economic growth, co-op programs tend to expand with the needs of
industry. During economic recession, on the other hand, the programs
can suffer severely. Industrial practice during business downturns var-
ies widely with respect to these programs. Some companies maintain
co-op support levels for existing participants but curtail additions to the
OCR for page 42
42
ENGINEERING EMPLOYMENT CHARACTERISTICS
program. Others do not renew a co-op's contract upon completion of a
work period. Still other companies cancel contracts before completion
of a work period. All of these practices have negative effects on the
participating students and academic institutions.
Properly managed co-op programs are valuable to both schools and
companies and offer students a unique, work-related educational expe-
rience. Improperly managed programs suffer both short- and long-term
damage.
The State of the lob Market
In the past few years there have been frequent reports of shortages of
engineers, notwithstanding the dam-peeing effect of the recession of
1981-1982. Actual shortages, however, appear to have been limited to
certain specialties, such as electrical, electronics, and computer engi-
neering. Some observers are concerned that shortages of engineers will
persist beyond the near term, but the Bureau of Labor Statistics expects
problems only in certain specialties involved in fast-changing technol-
ogies. On the whole, BLS projects an overall balance in supply and
demand for-engineers during the coming decade.~3 The BLS model,
however, like others in the field, has shortcomings that reduce its
reliability. It is based on a simple numerical balance and on current
staffing pattems, which can change at any time. Further, the model
does not consider the quality and level of degree attained, although
these factors are highly relevant in the real case.
Impact of Government
The federal government has a major influence on supply and demand
for engineers. Federal agencies directly employ about 100,000 engi-
neers; the demand for engineers in several areas of the private sector
depends heavily on the availability of federal contracts for research and
development. Federal agencies also support engineering education,
directly and indirectly, through a variety of mechanisms, including
research contracts and grants, scholarships and fellowships, equip-
ment and facility grants, and faculty incentive grants. Because of- the
impact of the federal government on the engineering profession, com-
mittee members studied the role of the federal government in the edu-
cation and utilization of the engineer; that work is summarized in
Appendix E.
Representative terms from entire chapter:
median salaries
