Future of Engineers

Tom Gillis writes a post on his blog on Forbes today called The End of the Engineer. It's sort of like reverse STEM recruiting we typically see everywhere else. Which would be refreshing if it wasn't so ignorant. He first posits that post industrial revolution the need for better machines and manufacturing has been outsourced (not going to argue manufacturing has been outsourced). Then he talks about how the slight differences in performance that engineers generally strive for are no longer as crucial. He cites Apple as moving away from the engineering model towards one of marketing and customer understanding. Saying instead that that is what makes Apple successful.

 

He may be right that incremental improvements no longer please consumers. But I think that's always been the case. I think music industry people were surprised when MP3s gained such popularity. Their quality was a lot lower than CDs. However their portability and ease of use with a variety of devices was what had the mass appeal. And the same with cell phones and smart phones. We use them for convenience not because the sound quality is fantastic (anyone remember the old hear a pin drop Sprint commercials?) Now industry executives are surprised that the mainstream way to watch music videos is YouTube. Watch what you want when you want at your own convenience and for free. That's what consumers want rather than the high quality that executives might have assumed consumers would always be demanding. However, these incremental changes are still appreciated when your smartphone or your LCD TV gets slimmer or the next model of car gets a little lighter and a little better fuel economy.

 

So none of this means engineering is no longer crucial. He mentions the hoardes of engineering graduates from India and China. But for now, whether its societal or level of education, these high numbers have not meant Chinese and Indian companies are always able to compete with equal fervor with western companies. Part of Apple's success is certainly marketing based. But a lot of it is a core product that required a lot of fantastic engineering. And just because Chinese companies have no qualms about stealing IP and churning out cheaper products later doesn't mean they actually have the independent engineering knowledge to make another Apple. And as the sole commenter on his blog alludes to, not every American company that relies on engineering talent is a consumer electronics company.

 

True we're no longer innovating as much in agricultural machines, but we are in power generation plants, offshore drilling, mining applications, solar and wind energy, automotive design, aerospace, weapons, military technology and medical and biomedical breakthroughs. I think Mr. Gillis has really been sheltered too long in the bubble that is Silicon Valley. Apparently he is a VP at Cisco and his Forbes profile includes such excellent buzz words as "social networking", "new security paradigm", "leverage today's tools", "strategic" and he goes on to claim credit for making Cisco strong in the security market. I hope none of the engineers on his team who helped him position Cisco as a strong security leader read this article and realize their head honcho doesn't appreciate their technological contributions. For all his flattery of Steve Jobs and Apple one can only assume he's trying to get a job there. I hope Cisco recognizes this and lets him go so he can make his move. If I want marketing and social media BS I'll go talk about it on Twitter. If I want a company that makes reliable hardware and services because I know they have a good engineering core I will continue to go to companies like Cisco. When a VP doesn't see what's right beneath his nose he doesn't deserve the job.

 

Gillis goes on to recommend that people get Liberal Arts degrees and that he will give that advice to his own children. I sincerely hope he's kidding. As a highly paid executive I'm sure he'd have no problems placing his children with jobs after they get their Art History or Communications BA but he's not only living within the soft bubble of Silicon Valley then he's living within the privileged bubble of upper class if he thinks liberal arts degrees are a viable path to a solid middle class lifestyle. Engineering isn't as respected as it used to be (as evidenced by this article) but I wouldn't tell an intelligent young person who had strong math or science skills not to major in it any sooner than I'd suggest a broad liberal arts degree is a good path either. People should follow their passions certainly as success tends to be elusive no matter what path you take. But underestimating the need for some percentage of the population to be engineers is complete ignorance. Just because we aren't always putting these minds to the best use is a limitation of our policies and a focus on short term growth. If we were thinking Apollo Program big again we'd be able to achieve things way beyond what Gillis could imagine. And we'll need engineers to get us there.

How the party started

Whenever you see a news or documentary clip that talks about the great depression they always show pictures of flappers and 1920s parties. So much of the financial bubble that led to the 1929 stock market crash we seem to portray as a wild party leading up to it.

I can't wait to see how the exuberance leading up to the 2008 recession is graphically depicted. I hope to see photos of those wild parties of the early 2000s.

What do you do for a living?

I was curious what the most common occupations were in the states and as I started to dig through BLS data I discovered they produced the table already. I'm not surprised to see retail at number 1 and food prep and food service at number 4 and waiters at number 6. I guess I'm surprised elementary school teachers even made the list (this is from 2010, I wonder if it will drop for the current year) and very surprised any management type occupation made the list at all: operations managers at number 12. Given the disparity in mean annual salary between that and everything else it seems like not a bad job to get into.

 

What do you think, does this look like what you thought it would?

Man Woman Job Recession

The Pew Research Center put together an interesting report on how the recession and subsequent "recovery" has affected men and women disproportionately. You probably heard all of the media crying about how this was a mancession or some such BS that made it sound like it was women's fault for men losing jobs at the early part of the recesssion.

The story you won't be hearing is that men have been recovering quickly since the end of the recession while women's employment is staying flat or dropping. If men took the brunt of job losses early on maybe it's to be expected they'd be picking up faster. But the report goes into talking about how layoffs in state employment might be contributing overwhelmingly to the loss of jobs for women. And while we hope construction and manufacturing will recover in this country it seems like state employees are the new favorite punching bag of free market junkies. So I wonder if this recession will be more permanently painful to women than it was to men. And probably an ignored storyline.

Mercenary Engineer

One of my classmates from undergrad coined the phrase mercenary engineer in place of mechanical engineer. At the time, about to graduate, we were all desperate for employment and opportunities. After years of being sold the bill of lies that is STEM recruiting we'd all felt certain we'd have secure and financially rewarding employment very soon. Whether it was all oversupply or just effects of the recession everyone had become a little less picky and us mechanical engineers were willing to work pretty much anywhere doing pretty much anything. Will engineer for pay.

 

One of the reasons I went into mechanical rather than electrical or structural or chemical was how diverse the field seemed to me to be. Don't get me wrong there's a lot more to sparkies than I realized at the time. But whether you're developing a box for one application or another a lot of the design can be the same if you're working within your specialty. I knew mechanical engineers worked in the auto industry, industrial manufacturing, wind power, mining, aerospace and aviation, space, defense...you name it! Developing one product can be wildly different from another. I liked that kind of variety though I'm sure it's not easy to jump between industries. So I thought my classmate's description of the mechanical engineer was pretty apt: a broad set of skills and an engineer willing to work in a lot of different fields.

 

The picture is a miniature from Reaper Minis and is Rosie the Chronotechnician.

Mechanical Engineering Employment and Pay

Continuing this week's theme of jobs jobs jobs for all you hardworking engineers, I was curious what the outlook had been in my own discipline. I already covered employment and salaries in most disciplines between 1999 and 2010 but wanted to zero in on the mechanical engineers.

Mechanical engineers have had a bit of a bumpy past. The general trend is up but it hasn't been easy. My personal theory for the boost is that the wars in Iraq and Afghanistan have acted as stimulus programs for mechanical engineers. Our own Works Progress Administration putting us to work building tanks and humvees and fighter jets and bombs. The first major climb lags us entering the wars but is pretty strong. I give the delay to the delay in starting Department of Defense contracts and actually funding companies.

Maybe the post 2006 boom is due to the surge (I'd have to look it up). Trends in the automotive industry could also be strongly responsible as well as oil drilling, coal mining, etc. I think the strength even in the recession shows the numbers benefit from more than just commercial development alone. For comparison I pulled the civil engineer's chart over the same period of time.

So same boost up from about the same period on. This one has got to be thanks to housing. The quick and consistent line up and the drop right at the housing crash has had a big effect on the employment of civil engineers. How about our friends the sparkies?

It ain't easy being a sparky. The dot com bubble burst and it hurt. A couple of little climbs later and the recession hits and they are knocked back again. Still, given how heavily commercial electrical engineering is it's probably got a much more sustainable path to growth than defense dollars and government bailouts of the auto industry. Something to keep in mind.
Next a quick look at pay for mechanical engineers:

The bottom line is inflation adjusted. Without that the skyrocketing wages look pretty crazy. But even with inflation engineers managed a 10.5% increase to their mean annual salary over the last ten years. What? You're probably thinking. I'm a sprocket and my salary hasn't been going up. Could be what with the recession and choosey employees they're more likely to hang on to somewhat older and more experienced engineers in lieu of hiring younger ones or keeping young ones on. That may not be the personal experience of older engineers, but even if we're taking very minimal trends it can add up. And 10% increase over 10 years for the gain of 10 years of experience seems kind of like a bargain on the employer's side of things.

Still, the war might be to thank (or blame) for the strength in mechanical engineering employment. ME employment is up over 15% from 1999. Despite the bust civil engineers are employed at 19% more than 1999. And as you can see in the graph electrical engineers broke just about even (actually a drop of two tenths of one percent). I don't think engineers should go into a field based on national numbers and national salaries. Locality can make a huge difference. And of course it's important not to chase money but to do something because you think you'll enjoy it.

Engineering Employment Over Time

How has engineering fared as a career during this recession? How has it been doing over time? Must be jobs week here at Design. Build. Play. Since I was so hard on software "engineers" before I made a separate category from today's Bureau of Labor Statistics data. I'm including programmers separately (but still there) from computer/software engineers (which here includes both systems software and applications). So how do we engineers do?

As you can see computer and software engineers have done particularly well. I'd grant the decline to programmers as being employers are ever more demanding specific degrees from their programmers so it's more just a transfer between categories. The recession has only continued the downward trend from before.

In comparison, civil, electrical and mechanical look almost flat. Of course they aren't really. So maybe you went into engineering for the money, how's that been doing? Here's some not adjusted for inflation salaries over time.

Again it's the same breakdown by discipline and again you see the obvious levelling off of the programmers' salaries. Mechanical and civil seem tied like in the previous graph and now electrical has a definitely higher salary. Is this because it has lower employment compared to the other disciplines as seen in the first graph? Does scarcity drive electrical engineering salaries up?

Engineering Jobs by Discipline

I talked before about what states are hiring engineers and where all the engineering jobs are. Best estimate there are something like 44,000 engineering jobs open nationally right now. The census says that in 2008 84,000 people graduated with engineering degrees. Engineering shortage? I think not. Probably my 44,000 search was not broad enough to include the kinds of jobs engineering graduates might go into. But still, that's nowhere near a shortage, is it Corporate America?

So what kind of engineers are being hired right now? Software engineers.

Making up almost half of open jobs software engineers have it made. If we have a shortage of engineers, maybe it's that kind of engineer. The problem is we're recruiting people into a very diverse field without specifying what we really want or really need. I was curious how this stacked up to major choice and pulled a some numbers from a local university to give a breakdown:

You can tell mechanical and civil/structural majors are heavily overrepresented. People are probably going into these fields and finding the jobs aren't there. This is all magnified when certain geographic areas (Detroit vs Silicon Valley) have very different focuses even when colleges might be more diverse. Chemical and electrical engineering majors are a little closer to the national average of open jobs and software/computer engineering heavily underrepresented.

I'm a bit torn by including software engineers here. There's a big difference between "computer engineer" and a programmer. Many job openings ask for a degreed engineer when what they really need is a programmer. But if they're asking for an engineering degree that becomes a part of the requirement that job seekers have to meet even when it's unlike other engineering disciplines. Given the low numbers though it's possible those with other degrees, or no degrees at all, are filling the gap for these open software jobs. That is if anyone is even hiring.

Where are the engineering jobs?

So who's hiring engineers? It's no surprise in raw numbers that the top five states with engineering jobs open* include some of the most populace states with large metro areas and of course the center of automotive engineering in the states.

But how does that compare to the population of those states? Washington DC tops the list at the most engineering jobs per capita. Illinois is still doing pretty good and though it's not the list Michigan pulls in at #6. As for bottom of the list Montana comes in last but no region is left alone here with southern states and northeast also represented. The big population states of California and Texas fell in the middle of the list.

*Total job openings per state were pulled from CareerBuilder as a basis of estimate. Total state populations pulled from Wikipedia.

Bernanke's Economic Outlook

So on Tuesday Bernanke spoke to some banker's association in Atlanta and covered some important topics: like, is the humidity there not craaaazy?

 

Okay, not really. He re-iterated the same stuff he always does. That they'd rather pick from their tool belt of regulatory options to affect the economy rather than doing interest rate changes. Why? Does he not crave absolute power? Well the real answer is the interest rate is already so low, it's no longer a tool that the federal reserve really has available to them. But if they admit to this maybe consumer confidence will implode...or something. Not to mention continuing to keep interest rates incredibly low is really working out for the banker elite who's making a killing on borrowing money from the government at 0% and then lending it back to the government via treasury bonds for 3 or 4%.

 

He mentions trying to keep inflation low, though it's clear from low rates for so long that this is not a priority for the voting majority of the federal reserve board. Instead it's more cheap talk to buoy up certain people (large debtors like banks who have a bunch of mortgages or the government itself) rather than worry about those who are at a critical point (the poor and the elderly living on fixed incomes).

 

He states that his objective is to keep inflation low and keep the value of the dollar high and his excuse for why this is not actually happening is the importation of oil. Gas prices, something the reserve doesn't even look at in its core inflation index, are wildly inflating and somehow contributing to a falling dollar value. The US actually only imports about 51% of its oil. Something like 350 billion a year. With a 14 trillion GDP, 1 trillion handed to banks as free money, and a looming national debt, Bernanke really wants to blame this one on gas prices? If anything the falling price of the dollar might be contributing to speculation on oil as a commodity which could be one of the main reasons for the rising price of gas at the pump.

 

His only concessions to the real people is that they are working on achieving "maximum employment" (almost as if he is admitting to a possible future of long term high unemployment rates). I guess he is working on that like I am working on being nicer to rich, elite bankers. Which is to say, not at all. Then he only briefly mentions that the lower growth rate the GDP is seeing is somehow contributing to what people really care about (employment, real wages) because it is "frustratingly slow". I'm not sure why he'd connect GDP with employment. That's like connecting stock market prices, dividends, and shareholder profits with real wage gains for the working class. The two are not correlated. Or if anything, are negatively correlated.

Catch a falling engineer

CNN International has an article up, why would be engineers end up as english majors. They really mean why they end up as non-engineering majors, but that's besides the point. They follow a student, Amenah Ibrahim, on her journey through her education.

"The first thing the (professor) told us was, 'You should expect to see this class dwindle down as the semester goes on.' It was the first thing they told us," she said.

They article references a study showing that STEM majors take students longer to finish. But it glosses over statistics that show that it's disproportionately a deterrence to underrepresented minorities:

Thirty-six percent of white, 21% of black and 22% of Latino undergraduate students in STEM fields finished their bachelor's degrees in STEM fields within five years of initial enrollment.

I think most of us in engineering would agree that a lot of the academic rigor that discourages people is probably a good thing. As some of the commenters put it, it prepares you for the real world. But more importantly maybe, you want your engineer, or your doctor or a number of other professions, to have gone through a rigorous education. You want the weak to go off to other majors where maybe their real life careers won't have such an impact. Though we know we have a problem that the system is encouragin white people better than it encourages people of other races. And that means we probably need better support systems in place and better university understanding. There's ways of making sure we're not booting out talented people without dropping the standards.

On the other hand, people are focusing too much on the "need" for STEM graduates.

James Brown, executive director of the STEM Education Coalition, said a big problem is that educators don't often realize the urgency of fostering the next generation of American scientists and engineers.

I'm sure they realize the urgency. They realize that the jobs that were available years before are no longer available. That even before this recession, getting a STEM job was not easy. If we aren't funding science, R&D and infrastructure programs graduating a bunch of scientists and engineers is not going to create a demand in jobs that isn't there. I just talked about this a few days ago, how while engineering is still one of the better employable majors out there at under 70% for 2009 graduates it's not a pretty picture.

The guy at the STEM Education group would be better off reaching out to businesses to start spending more of their reserves on research or to anti-tax politicians to start thinking about how we're going to fund future development in this country. We used to be the world leader in manufacturing. And while some might think manufacturing is coming back thanks to the weak dollar we're no longer the science and space leaders of the world. Like the space program and the interstate highway system that all means spending money. So while that's currently out of fashion, I'm not sure we should be putting the pressure on STEM students and universities rather than where it belongs: business and our politicians.

More on the superiority of engineering

Today on Engineer Blogs I talked about interdisciplinary engineering which is the theme over there this week. (See posts by Cherish, GEARS, and Paul Clarke as well). There's other engineering in the news today though, again from the NY Times Economix blog college majors that do best in this job market.

 

A month and a half ago I had a post on some economic news that included the mention of an article about engineering being the best paying college major. You'll notice some discrepancies. The CNNMoney article touting high salaries for engineers says they all had a higher starting salary than $60,000. However the Economix chart is based on earned income in the last 12 months so the median income for someone with an engineering degree employed in a job that requires that degree is...$35,548. Now probably some dinosaur engineers will show up and say that this was quite normal for them and kids these days are too demanding. Probably haven't read any of my numerous posts on inflation.

 

Hopefully the low number is due to people starting their job more recently than 12 months and only having a partial years earnings to report along with maybe some people who are working part time. Still, the percentage of engineering graduates who are employed in a job that requires their degree is 69.4%. That's the second highest after teaching at 71.1%. Higher than the oft praised "business" degree, health, or physical science (which will surprise no one in the sciences). Communications, humanities and "area studies" (whatever that it is) make up the bottom of the list. So while you shouldn't always hunt the money, hunting a degree that leads to more full employment might be useful. Though even the numbers of employed grads in the top fields are abysmally low. More victims of this brutal job market.

Home is where...

So I was listening to the radio this morning and then this story came on NPR about a brother and sister, both of whom had had to drop out of college and move into their family home. Their mother had passed away when they were both in high school and the eldest racked up some debt in college before they both decided they'd move home and try to get jobs in order to save the family home and keep up with mortgage payments.

 

The sister, Natalie, came back and was working as a secretary until she got laid off at the start of the recession.

 

They both need that one job — the one that will get their plans back on track. But neither of them can find it.

Chris is selling TVs right now, but it's part time. Natalie got laid off again. They pool what income they have, allocating it on a triage — to the credit cards, to Chris's dental work, to the house.

"Natalie and her brother, they don't want to sell the house, or they can't sell the house — if they do, they take a major loss," Rogers says. "So in a way, they're limiting their search options."

But while a lot of people out of work are stuck where the jobs aren't...

So I was thinking about them stuck in their house, in an area where maybe it's difficult to find a job even if you have a college degree. A lot of people are there right now, barely making it on part time income or a lower paying job than they wanted and unable to move to find a job because their underwater in the house. Seems like it's only the upper middle class schemers who are walking away from their homes, maybe the rest are scared about the problems with filing for bankruptcy or hear the stories about banks coming after those who short sold telling them they still owe extra money. Or maybe they don't want to throw away their investment, or maybe they want to do the right thing, or maybe they just want to keep their home.

 

I stepped outside and scared the bird that's decided to nest above our patio. It's right across from the door so every time we come and go it's a game of trying to not disturb the bird enough that it freaks out and flies away to the trees out front. It probably looked like a good place to settle down. The patio makes it relatively protected against the cats but mostly crows that go after small birds' nests. It might have been setting up on a day we were mostly out for a long day at work, it didn't necessarily know two bipedal mammals would be disturbing it a couple times a day.

 

So it's a lot like a lot of the homeowners right now. Probably just laid its eggs and can't just move the nest. Not always easy or possible to pick up and move where the jobs are. Sometimes you make the best decision you can at the time and can't predict how things will change. Sometimes it's still a good home and worth keeping even if there are problems.

Economic Trifecta

There's good news and there's good news. But is any of this anything other than corporate bull or unrestrained economic optimism?

 

According to The Detroit News, the auto industry faces an engineer shortage. Of course if you read the article there's no real data to back this up other than this tidbit:

The nation's auto sector added 32,000 jobs during the past year, and thousands have been among engineers.

General Motors Co. and Chrysler Group LLC announced last fall that they were hiring 1,000 engineers — though some are contractors. Ford Motor Co. is hiring 750 salaried workers in product development this year; many are engineers.

No real numbers on how many of the new hires are auto engineers. Or how that is supposed to backfill all the positions they laid off. Also the assessment that "the future is brighter" is pretty weak compared to their overly optimistic title.

CNNMoney has decided similarly to be optimistic reporting jobs recovery is fo' realz, yo. Yes hiring picked up last month. Not sure where there's any data to show it's sustained. I'd sure like it to be, but I'm also not afraid to be all Debbie Downer on this sunshine and rainbow fest if I need to.

And lastly, CNNMoney is all like engineering is the best paying college major. Fantastic.

Chemical engineers were offered the highest starting salaries this year -- an average of $66,886. Mechanical engineers received salary offers averaging $60,739, and electrical and communications engineering majors saw average offers of $60,646. Computer engineering was the fifth highest-paying major, with offers averaging $60,112.

Rounding out the top ten best-paying majors were industrial engineering, systems engineering, engineering technology, information sciences and systems, and business systems networking or telecommunications.

What, really? Where are these jobs?! I'm pretty shocked EE isn't much higher on this list, or CE as many of those people end up working in software. Which is where I've seen all the jobs lately. I guess this is the average pay if you were lucky enough to actually get a job. If you were part of the 10% unemployed who can't get a job, sorry. Or if you're part of the unknown percentage of engineering graduates who gave up and went into some other field just so you could earn a freaking paycheck not sure what your average salary is there. I'd definitely recommend engineering over art history, but I'm not sure we can celebrate about who has the "highest salary" when it's all moot as no one's hiring anyone anyways.

News flash- poor people still poor

A new article in the NYT is discussing how economic security is beyond reach of ordinary Americans. I'm not sure how this is even news, or why this is any revelation of anything new. I suspect if you looked back at the last 100 years in America you'd discover the same thing with possibly a few years of exceptions here and there. I'm not even sure why we're talking about it when one party in power thinks it's a great idea to cut government funding of everything from infrastructure programs to medical care and food banks for the poor. I mean even that's a misleading term, the poor, the unfortunate, who are we looking at here?

According to the report, a single worker needs an income of $30,012 a year — or just above $14 an hour — to cover basic expenses and save for retirement and emergencies. That is close to three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour.

A single worker with two young children needs an annual income of $57,756, or just over $27 an hour, to attain economic stability, and a family with two working parents and two young children needs to earn $67,920 a year, or about $16 an hour per worker.

That's no small change. The burger place near my work just put up a sign that they are hiring at $10 an hour which sounds like pretty good pay for flipping burgers. And by pretty good I mean I'm surprised the fast food industry pays any more than minimum wage, not surprised that somebody should earn that much for doing what I certainly wouldn't want to have to do for a living. It's scary to me how much my income is not above that dotted line and I think what it took to get me here. Are we really going to expect every single person in America to get years of education and work experience where they can reach a level that they can actually have a savings account? This doesn't even cover trying to pay for healthcare which I suspect most entry-level jobs are no longer providing.

The numbers will not come as a surprise to working families who are struggling. Tara, a medical biller who declined to give her last name, said that she earns $15 an hour, while her husband, who works in building maintenance, makes $11.50 an hour. The couple, who live in Jamaica, Queens, have three sons, aged 9, 8 and 6.

"We tried to cut back on a lot of things," she said. But the couple has been unable to make ends meet on their wages, and visit the River Fund food pantry in Richmond Hill every Saturday. With no money for savings, "I'm hoping that I will hit the lotto soon," she said.

Medical billing? I remember when that was supposed to be the cash cow for people to train and do for a living. Like nursing it was supposed to be a given that it would provide stable employment for a ton of people. I think there's a misperception that the poor are out of work people who hit their limit of savings and are struggling. But the real case is they've probably been struggling all along. They've been doing all the things that were supposed to grant prosperity: getting training, getting a job, working hard.

To develop its income assessments, the report's authors examined government and other publicly available data to determine basic costs of living. For housing, which along with utilities is usually a family's largest expense, the authors came up with "a decent standard of shelter which is accessible to those with limited income" by averaging data from the Department of Housing and Urban Development that identified a monthly cost equivalent for rent at the fortieth percentile among all rents paid in each metropolitan area across the country.

They chose a "low cost" food plan from the nutritional guidelines of the Department of Agriculture, and calculated commuting costs "assuming the ownership of a small sedan." For health care, they calculated expenses for workers both with and without employer-based benefits.

Ms. Kuriansky said that the income projections do not take into account frills like gifts or meals out. "It's a very bare-bones budget," she said.

They said they are still working on stratifying this to cities and states. Meaning I bet these numbers will rise in what kind of income it takes to live in a city somewhere, which is of course going to be where people have the best chance of getting employed to begin with. We all know the job market is rotten right now and I'm sure we all have that number in our heads about bare minimum to survive. But if we keep cutting taxes for the wealthy and closing off opportunities for the lower middle class and lower class what can we expect for our future? I mean these people did the right things. Medical billing usually requires some training, and frankly building maintenance is not a job without experience and skills needed. I know I couldn't turn around tomorrow and work in that industry successfully.

I think we have our eye on the wrong ball here. We've been worried about the high unemployent rate and the ever growing time it takes the average unemployed person to find another job. But it's not Joe the office worker who's having to dip into his precious 401k who I think should tug at our heart strings here. Compounding all the difficulties of just getting a job in this economy we're ruining the financial futures of those lucky enough to get these "low level" jobs. And that's not really sustainable economic development.

Insidious Inflation

It's another week of data mining for me. Trying to compare two equivalent pieces of hardware for what could be a very pricey subcontracting decision. It doesn't help the powers that be would like to limit the testing done (which of course limits the data) so that they look good to the people above them.

One place where there's plenty of data is the US Government websites. There's been some talk recently about the affects of TARP and the stimulus and the Fed buying up treasury bonds and pumping money into the economy and how that will affect inflation. There's been plenty of arguments that despite all this they haven't seen inflation really go up, and that's the Fed's major justification for not upping interest rates at this point. If you look at historic CPI you can see it's been pretty flat throughout this recession.

But of course the CPI doesn't include fuel or food or things most lower and middle class Americans purchase on a regular basis. Am I that concerned if the cost of my clothes or laptops is going up when food and petrol are my primary concerns? From my own personal data mining I've amassed a whopping three months of information on gas prices and you can see it's got a very obvious upward trend. The especially troubling part of that is that typical year end gas prices tend to drop and that starting the year on a high note for oil companies probably does not bode well for the rest of us.

Whether gas is really an early indicator could be argued. And the folks that are not inflation hawks will definitely argue to the contrary. Afterall, inflation is one of the best PR machines big business could really hope for. In many ways it's the opiate of the poor. It's much more satisfying to think back to what your father's hourly wage was in 1977 and think proudly you're making more than him. But you might not be.

The graph of median household income can be misleading and much more telling when you adjust the numbers for inflation. In actuality, real median household income has increased 7.5% since 1984 after being adjusted for inflation. (The numbers might be different if you look back to the 1970s, this was just the years I picked for consistency). So how does that compare to the economy?

The GDP can be seen to plateau during the recession a little and in fact the inflation adjusted gains make it look like GDP hasn't gained that much either. But in fact, US GDP has increased 73.9% since 1984, and that's with inflation adjusted numbers. So when we hear about how much wages are increasing or not increasing or try to compare ourselves to previous generations and measure how far we've come inflation can make it look like we're getting our fair slice of the pie when we're really not. And that's why I think the powers that be will not do anything to slow inflation anytime soon as it covers up the risking income inequality in this country and the gains business and industry have made on the backs of American workers.

All of these data sets were pulled from the US Census Bureau and the US Bureau of Labor Statistics. I used the US BLS inflation calculator to adjust the raw data to an inflation baseline of 1984 when my data started.

Engineering is Elementary

An elementary school in Minnesota is turning itself into a Specialty School for Aviation, Children's Engineering and Science. I like the idea of getting kids exposure early on to topics like engineering. But I dislike schools that tend to focus to narrowly on either a profession like this, or often language skills (which can be extremely useful if done well, or reduce the children's math and english understanding if not done well). I find it also kind of disturbing to see trends of pushing more people into the engineering profession. I think it's a great idea to make sure more people know about it and people who otherwise wouldn't have the option of going into it but have the ability or an interest to be able to pursue that but I fear programs like this give parents a false hope of a future stable career.

 

It's been all over the blogosphere about how there are a lot of PhDs in science. And post-doc salaries, as well as limited geographic choices and people leaving for other careers or not getting any job related to what they wanted would seem to imply we have an overabundance of scientists right now. Yes America, the UK and Canada need more scientists but they also need an industry and government foundation being the dual pillars of support for that innovation. And right now industry has been sorely lacking in this area for domestic development while government is fading away.

 

A little old, but this article discusses the myth of the engineering shortage. It discusses the H1-B Visa push in the late '90s to support a supposed shortage of IT and technology workers and how increasing education in China and India has meant where once we were competing with them for call centers or low level technician support now many professionals are on the same wave length as a highly skilled foreign workforce. And this opportunity is too much to pass up by domestic companies looking for short term profits. In fact for all the talk about a shortage of STEM degrees the article points out if you remove social scientists and technicans from the STEM umbrella past studies have looked at there has been a 130% gain in STEM degrees over a 20 year period while only a 30% increase in occupation. He goes on to state that given the graduation rates between 1993 and 2002 the US graduates enough workers in STEM to replace the entire STEM workforce every 15 years. Obviously, people don't retire every 15 years so unless there's economic growth at a rate comparable there's no possible shortage here.

 

Encouragement is not the primary issue assuming you don't care about recruiting minorities or women. According to the Alfred P. Sloan Foundation 30% of incoming college students state science and engineering as their intended major. Almost half drop out. If half did not drop out, we'd clearly have way too many graduates in those fields to be supported by the economy right now. So why do employers complain? The article discusses what they call the "Monster effect" meaning the job board site. Employers can recruit nationally and internationally and don't need to settle for local candidates. Ronil Hira, Associate Professor of public policy at Rochester Institute of Technology said the following:

"In the old days," he explains, "companies expected engineers to stay around a long time, so they paid for professional development. Now, they want somebody to hit the ground running. They've turned engineers from an asset into a variable cost."

Hira states how this means engineers and IT workers tend to train themselves, and therefore don't focus on specialities that are too specific and not as marketable in a larger job field. The article discusses the disparity present within colleges as well where business expect graduates to be good at project management and communication and so colleges shifted over to focus on these broader more transferable skills instead of focusing on hands-on technical knowledge.

 

If there was a real shortage, you'd see engineering salaries rising. But instead in the same timeframe average salaries for electrical engineers rose 10% and aerospace rose 9% while management climbed 14% and lawyers 12%. And a whopping 16% of US engineers are foreign born. On the surface this may not be significant, but it's much higher than the 11% of managerial/professional workers in general and I'm sure higher than less educated fields.

 

Is there a non-cost advantage to bringing in foreign workers? The article includes an anecdote from an employer who brought on at least one US entry level worker and has said he will hire no more because they were more project management focused and could do the actual design and execution of the design that he needed. He compared that worker to interns he brought over from Germany whom he claimed were much more hands on and strong with machine design and tool making.

 

I'm sure there's some selection bias involved here in bringing over what are likely the top of the crop of German engineering students looking to move to the US versus what might be a local candidate who is not at the top of the US pool of potential engineers. But I also thought of Fluxor's recent post on the disparity between the on paper qualifications of an entry level engineer and their actual design and hands on skill. And there is perhaps something to note in the differences between German engineering (as well as other more hands on local programs) versus highly ranked universities. I've noticed schools that rank higher in the engineering discipline tend to be pretty strong on theory and analysis which makes sense if you're training the next crop of students to be research focused PhDs but less sense if you're training them for the workforce.

 

I agree with the article's quandary that engineers must now train themselves in these specialized skills whereas 20 years ago companies would generally provide that training for you. I think anecdotally about my own experiences of going out and learning CAD on my own and paying my way through local programs before I ever even started my engineering program. Most of the older designers I work with were taught AutoCAD or Solidworks or ProEngineer through workforce programs that don't exist anymore. When there are a plethora of candidates with these skills that you can pick and choose from, you don't need to train anybody yourself anymore. Even my school learning of these programs along with whatever on the job training I could snatch up was not quite enough to qualify me for a job and a title. The old problem of entry level jobs requiring experience, but how do you get that experience. In a field like design, I feel like I have the skills but because my title isn't what a potential employer thinks it should be it isn't counted. They assume if I actually had the skills I would have managed a title change but there's no incentive from an employer to recognize an employee who pays for outside education or training. Especially if they can get that employee to do the work without the title.

 

So I think we can assume there is no shortage of engineers. I think we can also draw some conclusions that employers can now be way more picky than before, and that that isn't always fair but it is the reality. Future engineers will have to graduate with a strong grasp of the theoretical fundamentals, communication, writing and project management skills, as well as strong hands on design and machine knowledge. Only so much of this can be learned from University alone and I suspect as time goes on training at community colleges as well as individually motivated on the job training and increased pressure for internships prior to the first full time job will become the status quo.

 

No longer can an engineer go through college and expect to derive all of her knowledge from that experience but will need to stay knee-deep in school projects, reading some current research and manufacturing papers on their own, self-taught review of the fundamentals for the field in which that engineer decides to apply for jobs, and career-focused technician classes at night. I hope to see some of these hands on programs snatched up by larger research and state universities, but I do not expect it. It is the only way western engineers can remain competitive with their foreign colleagues.

Grumpy Old Employees

Is an aging workforce a good thing in this economy? The Fiscal Times thinks so. They argue older employees delaying retirement is good for many reasons, one of which being less pressure on social security with workers not retiring all at once.

Over the past 16 years, labor force participation rates for men aged 62 to 74 climbed 39 percent, reversing three decades of decline. At the same time, participation for older women jumped 66 percent. In 2010, the government reported the highest number of 60-somethings in the work force since age-specific records began in 1948 — 12.9 million. 

They also argue that these workers contribute to the productivity and GDP of the nation being essential in this economy. But I'm not sure there's an evidence that employing these highly experienced workers longer actually helps with productivity. Even the reasons stated that people keep working seem pretty self-centered and not likely to contribute to engagement at work:

An AARP survey found that 69 percent of older workers plan to stay on the job into their golden years, but the majority would prefer part-time options. The top two reasons for wanting to keep working were for money and health insurance. The people who are already working past traditional retirement age tend to hold jobs that are structured differently: more flexible, fewer hours, less office politics and higher satisfaction, according to research by the Families and Work Institute.

And I have to admit the whole thing about them preferring to work part time is sort of ridiculous. I'm betting a huge chunk of the population would prefer to work part time, at least at different points in their lives. Would that we all had the pull and influence at work to make it so, not to mention retirement savings to dip from. But it's telling that this data reflects my own anecdotal experiences: that the older employees I know who keep working tend to do so because they think they can not afford to retire, or are concerned about health benefits (either because they are too young for medicare, think it will be too costly, or are neo-cons afraid that "obamacare" has somehow affected their precious entitlement benefits).

I am sympathetic. I think if you don't have the money that's a perfectly valid reason to keep working longer.

The financial crisis and recession have motivated some workers to delay retirement, as they struggle to recoup losses in their nest eggs. Even a two-year increase in the median retirement age could cut in half the share of households that are financially unprepared for old age, according to a McKinsey Global Institute study.

What with the magic of compound interest, it's no surprise that older workers can make up for retirement losses in a shorter timeframe. If their 401k was already substantially larger than younger workers, it's no wonder a few years could help to really turn it around. Not to mention the stock market's gone up more than 50% from its low in 2008. But here's where the article loses me. It's trying to convince me that all these people staying in the workforce longer is a good thing for the economy: of which I and most people I know care mostly about one thing, jobs.

Rather than seeing these people as crowding out younger workers from jobs, it's important to remember that as they stay in the work force longer, they generate more demand for goods and services — which creates jobs, Stevenson said.

Oh really?

Take the health care sector, where a shortage of nurses has forced employers to focus on retaining older workers, and to view flexibility as a strategic business tool rather than an accommodation, said Ellen Galinsky, president of the Families and Work Institute. Bon Secours, for instance, offers more flexible and part-time work in addition to facilitating transitions to less-physically demanding jobs. The company child care center is available to grandchildren of employees, not simply children. "They've done a lot of things to make the work force more appealing to older workers," Galinsky said.

The utility industry's engineers, executives and field technicians have an average age of 48, five years older than the median U.S. worker. At PSE&G in Newark, about a third of the energy company's 10,000 employees are already eligible to retire, said David Lyons, a PSE&G director. To keep skilled workers, the company implemented a phased retirement program three years ago that lets eligible employees work up to 24 hours a week for two years while receiving pension benefits, in addition to a program to rehire retirees for temporary engagements of up to 24 months.

Yeah I don't think all those brand new nursing graduates who can't find jobs are thanking you for your diligence in hanging on to nurses past retirement age. Like other industries in the past, there was all this talk about how there would be an extreme nursing shortage in this country once baby boomers started retiring. And young and motivated people flooded nursing schools. Last year the California Institute for Nursing and Healthcare was anticipating 40% of nursing graduates would be unable to find jobs. I get why companies would rather hang on to an older worker with much more experience rather than hire a fresh grad. But this to me is a win for the employer at best, and possibly the older worker, but a loss for GenY and GenX workers who have already dealt with the fact that many management positions would be out of their reach for much longer than previous generations and now are having the rug of education and hard work leading to a semi-stable job pulled out from under them.

Engineers also I think will not thank industries for offering juicier benefits to their oldtimers (who will already qualify for social security at much younger ages than successive generations, who do not know if it will even still be there for them). We already saw stability and pensions denied after the generation that retired before boomers and now we're seeing a desperate gamble to give some last, tasty benefits to boomers that no later generations will ever get a whif of. The national unemployment rate of engineers may not seem so bad, but the last career fair I was at included several hundred new graduates, many who had been unable to find their first job still after eight months since graduating and many more who were graduating soon and ten years ago might have already had a job offer but now had only the long unemployment of their peers to look forward to. Many of these bright young engineers would love to be wooed and coddled by utility companies. I agree a fresh engineer is not a decades experienced engineer but I wonder if comprehensive training programs are really much more expensive than increasing pension benefits or extending health insurance.

 

There's a lot of good studies cited in this article but no proof to back up that keeping older workers in the labor force longer has any benefit whatsoever to the economy or the GDP in any real measure. Even if it's good for the GDP, we've already seen that though this recession is supposedly over and GDP starting to rise that does not necessarily trickle down to the average worker. Until then I'm going to see this for what it is: another trick by employers to preserve short term profits and not look ahead towards long term growth.

Your Stuff

I had to haul around my laptop the other day. Due to not having a trunk in my car this meant dragging my heavy backup into the doctor's office, than around me all day on the first day of classes. While in the library during a break I had to pack everything up just to walk over to the bathroom only to return a few minutes later. It's frustrating, but of course the consequences of not taking my valuables with me are overwhelming and far outweigh the trouble in hauling my stuff around. I began to reflect back on how there are no lockers on campus and how for security reasons no lockers at my high school. Obviously, the lockers themselves might not have been that secure but as a commuting student sometimes I lament a place I could stash some books for a few hours and not have to carry them around.

 

Then I began to wonder what it's like for those don't have a home or a car to keep their things in. The stereotypical homeless we can picture with shopping carts or large trash bags. Ratty looking, but I wonder if that doesn't discourage someone assuming their valuables are worth stealing. I would suspect homeless are a highly vulnerable population to theft and how difficult it must be to not have anything of value that you can't carry around with you. I wondered if there are solutions for these people. The shopping carts they use are technically stolen property and might get taken away from them. City workers might see their stashed belongings as trash and throw it all away. Does anybody have in mind backpacks or carts that could help the homeless? Or how about a safe place to keep their things?

 

A little digging pulled up this program for a homeless storage facility in Portland, Oregon. There's also this program at the First United Church in Vancouver. It's not a permanent storage facility, but a place that people can leave things while they go to job interviews or appointments. It's interesting as a society we focus so much on where we are going to house our homeless, which is important, but other things that make such a big quality of life difference are perhaps overlooked. I see this as akin to internet access for the homeless. It's important we realize they are people like us and the needs we have are the needs they have but with no property their lives are extremely complicated. I wonder if it might not be more beneficial if many of the engineering solutions that we look to implement in third world countries as affordable healthy and quality of life enhancers weren't applied to our poverty stricken population. Urban homeless may not have the same needs as rural third world poor but they do have needs and I'm not sure it's getting enough attention at the moment.

The Rational Consumer

How reliable are economic models that depend on economic actors to act in their own best interest? I just watched the Nova documentary, Mind Over Money which displays various theories of economics as modelled by mathematical equations that expect us all to act in our own best interest or those who think emotions and behavior cause us to act irrationally.

 

They talk to Robert Shiller a Yale economist who it could be said predicted both the tech stock crash and the housing market crash as speculative bubbles. He argues against the rational consumer theory, stating that bubbles are not based on self interest. He talks about the "Tulip Mania" in the Netherlands in the 17th century, widely believed to be the first speculative bubble of which there are records. Tulips were relatively new and not unlike today they were trading tulip futures as well as actual tulip bulbs. At the peak, some of the most expensive tulip brands were selling a single bulb for 12 times the yearly income of a typical skilled craftsmen. While many attributed this bubble to crowd irrationality and use it as an example of behavioral economics (as does Shiller) many others try to draw rational explanations from this event. I still found it interesting that there could be such speculation on something that seemed to have very little intrinsic value whatsoever. But then, in the documentary they show that in studies even when "traders" are told a commodity has no value and will be completely without value at the end of they experiment they tend to take risks and buy creating a bubble and ending up busted in the end.

 

It's an interesting documentary, though I think Nova pushes the behavioral model a little too much. Though I agree and think it's folly to think that as a mass people will always act in their own self interest. The fact that people were willing to pay up to $600,000 for a three bedroom home a few years ago and now because they are underwater, but can still afford the payments, they often choose to walk away from their mortgage. If they kept paying they'd likely have some decent equity in their home. And hanging on to the home they can probably expect its price to eventually rise over time. But as is typical, we discount the future and make decisions that appear to be only in our immediate best interest. The immediate value of the home, and the immediate consequence of mortgage payments are more important than a forclosure on our financial records or lost equity or downpayment. The difficulty of obtaining equity in the future is discounted and the advantage of walking away now is considered more important.

 

Documentaries like this always make me worry about the stock market which I invest in, but secretly worry is some house of cards built on nothing. I worry about the price of homes as well as other bubbles and the stagnant wages of American workers right now. But at least you can live in a house. You can't live in a tulip.