Chapter

The Industrial Markefor Engineers

Contents

PageShortages: Present and Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92Supply and Demand Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Supp!y projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96Supply-Demand Gaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97Defense Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Adjustments to Supply-Demand Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99Supply Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......100Occupational Mobility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...............101Demand Adjustments . . . . . . . . , . . . . . . ..., ..., .,...., . . . . . . . . . . . . . . . . . . . . . . . .102Increased Search and Recruitment ..., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........102Internal Training and Retraining of Engineers ..., . . . . . . . . . . . . . . . . . . . . . . . . . . ., ....102Rearrangement of Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ...102

The Consequences of Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......,103Variability in Shortages of Engineers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., ., . . .I04Impact of Shortages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ... Io5Mobility and Flexibility of Engineers and Related Professionals. . . . . . . . . . .......106Desirable Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... ... ..I07

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..,.108

List of Figures

Figure No. Page4-1. Percent of All Offers and Percent of All Bachelor’s Graduates ., . . . . . . . . . ..., 914-2. Employed Engineering Personnel 1960-82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 924-3. Engineering Freshman Enrollments, B.S., M.S., and Ph.D. Degrees . . . . . . . . . ..., 934-4. B.S. Engineering Degrees, 1968-83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 944-5. Supply and Demand for Engineers, 1978-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

Chapter 4

The Industrial Market for Engineers

As shown in chapter 2, most science bachelor’sdegree recipients either go on to graduate school—the Ph.D. being the true entry-level degree fora research career—or obtain employment in aconscience field (see chapter 2, table 2-2). Morethan three-quarters of all engineering B.S. recip-ients, by contrast, obtain immediate employmentas engineers in industry. In addition, more than90 percent of all the job offers to all science andengineering bachelor’s graduates in 1984 were inengineering, engineering technology, or computerscience (see figure -1). 1 Therefore, when consid-ering the utilization of science and engineeringbachelor’s degree holders, it is appropriate to fo-cus on the industrial market for engineers.

‘Opportunities in Science and Engineering: A Chartbook Pres-entation (Washington, DC: Scientific Manpower Commission, No-vember 1984 }, p. 32.

According to the Bureau of Labor Statistics(BLS), the number of employed engineers in theUnited States doubled between 1960 and 1982, in-creasing from 800,000 to more than 1,600,000 (seefigure 4-2).2 During that same period, 1960-82,the U.S. gross national product (GNP) increasedby 100 percent in constant dollars and the nationalresearch and development (R&D) budget grew by103 percent in constant dollars. Thus, the growthin demand for engineers appears to correlate verywell with growth in GNP and growth in total na-tional expenditures for R&D.

‘-2 Engineerin-g Education and Practice in the United States (Wash-ington, DC: National Research Council, 1985), p. 88. It should benoted that there is a serious discrepancy between BLS and N’SF dataon employed engineers, the latter showing 1,847,000 engineers em-ployed in 1982, Science Technology Resources, NSF 85-305 (Wash-ington, DC: National Science Foundation, January 1985), p. 545.

Figure 4-1 .—Percent of All Offers and Percent of All Bachelor’s GraduatesMen Women

(percent) (percent)70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 70

1 I 1 I I I I I I 1 1 1 I I

Engineering/I Offers

b Y engineering ~ Graduatestechnology

Business/management I o

Computer sci.1mathematics

k

- Humanitiest social sci.

Healthc professions

SOURCE Opportun/1/es In Sc/errce and Eng[neer{ng (Washington DC Sclentlflc Manpower Commlsslon 1984) p 32

91

92

Figure 4-2.— Employed Engineering Personnel,1960-82

1960 1970 1 9 7 4 1 9 7 6 1 9 7 8 1 9 8 0 1 9 8 2

Year

SOURCE: Englneer(ng Educatfon and Practice in the United Sfafes (Washi ngton DC Nat Ional Research Counc 11, 1985), p 88

The number of first year enrollments in engi-neering school and the number of engineeringbachelor’s degree recipients has fluctuated quitewidely since World War II, with peaks andtroughs apparently produced by transitory polit-ical and social events and trends (see figure 4-3).3

‘Engineering Education and Practice in the United States, op. cit.,p. 52.

However, beneath the fluctuations, there appearsto be an overall trend of an increase of slightlyless than 3 percent per year in the number of engi-neering B.S.S awarded each year. The recent surgein engineering B.S. S awarded in 1980 to 1983 ap-pears to be something of an aberration, that couldbe followed by a decline in the late 1980s, sinceall previous peaks have been followed by troughs.

The growth in engineering B.S.S has been some-what uneven across fields, with electrical and me-chanical engineers showing the greatest increasesover the past decade, as can be seen from figure4-4,4 The number of aerospace, chemical, indus-trial, and mining and petroleum engineering B.S.Shave also increased dramatically, more than dou-bling for each field since 1976. Only civil engi-neering failed to show a dramatic increase in the1976-83 period, perhaps because it was the onlyfield not to suffer a decline in the early 1970s.

‘Robert C. Dauffenbach and Jack Fionto, “The Engineering De-gree Conferral Process: Analysis Monitoring and Projections, ” re-port for the Engineering Manpower Commission, November 1984,

p. 13.

SHORTAGES: PRESENT AND FUTURE

The principal industrial employers of engineersare companies that make transportation equip-ment (11 percent); communication equipment (6percent); electronic components (3 percent); andoffice, computing, and accounting machinery (5percent). Other major employers include engineer-ing companies (10 percent) and the government(12 percent). Many engineering employers havereported shortages of engineers, especially in theelectrical and computer specialties (CS), The Na-tional Science Foundation (NSF) annually surveysabout 300 major industrial employers of engi-neers. The table below reports the percentage ofsurveyed companies reporting a “shortage” of ei-ther electrical or computer engineers. s (NSF de-fines a shortage as a situation where an employerhas “more vacancies than qualified job applicantsin a specific field.”) Note the dramatic decline in

“’Shortages Increase for Engineering Personnel in Industry, ”Science Resource Studies Highlight (Washington, DC: NationalScience Foundation, Mar. 29, 1985).

the number of firms reporting shortages between1981 and 1983.

Electrical engineers Computer engineers1981 ......, . . 57 percent 51 percent1982 . . . . . . . . . . 31 percent 21 percent1983 . . . . . . . 7 percent 6 percent1984 . . . . . . . . . . 19 percent 15 percent

Other surveys report similar results. The 1983American Electronics Association (AEA) surveyof 815 firms employing engineers found that 32percent reported a shortage of electrical and CSengineers. b A similar study conducted amongMassachusetts electrical engineer (EE) employersin 19837 found 25 percent reporting shortages of“entry-level” electrical engineers, while 65 percentreported shortages of experienced EEs.

‘Technical Employment Projections, 1983-87 (Palo Alto, CA:American Electronics Association, July 1983).

7Paul Barrington, et al., “Employment Developments in the Elec-trical Engineering Labor Market of Massachusetts and the U.S., ”Northeastern University, 1983.

123456

7

9

10

A

Figure

120,000

105,000

90,000

75,000

60,000

45,000

30,000

15,000

4-3.—Engineering Freshman Enrollments, B. S., M. S., and Ph.D. Degrees

First-year enrollments

-

2 4

-

-04~ M.s.derees

- A

Ph.D. degrees

1945 1950 1955 1960 1965 1970 1975 1980 1985

Year

Returning World War II veteransDiminishing veteran pool and expected surplus of engineersKorean War and increasing R&D expendituresReturning Korean War veteransAerospace program cutbacks and economic recessionVietnam War and greater space expendituresIncreased student interest in social-program careersAdverse student attitudes toward engineering, decreased space and defenseexpenditures, and lowered college attendanceImproved engineering job market, positive student attitudes toward engineering, and entryof nontraditional students (women, minorities, and foreign nationals)Diminishing 18-year-old pool

ASEE Evaluation Report recommends greater stress on math/science and quality graduateeducation

SOURCE Eng~neer/ng Educat[on and Pract[ce In the Un(ted Sfa/es (Washington DC N ~t! ,na{ Re~~,~r h CO(J nc, I 1 s+851 p 52

94

Figure 4-.—B.S. Engineering Degrees, 1968-83

20,000

18,000

16,000

14,000

12,000

Io,ooo

8,000

6,000

4,000

2,000

011970 1975 1980

Year

SOURCE

The

Robert Dauffenbach and Jack Fronto, ‘The Englneerlng Degree Con ferral Process Analysts, Monltor[ng and Project ions,” report to Engineering ManpowerCommlsslon, 1984, p 13

key question for policy purposes is whether ing talent. It is clear that such adjustments takeshortages of engineers will be a problem in thefuture. This question is especially difficult to an-swer when it is not clear how much of a problemshortages cause at the present time. Shortagereports do not describe the adjustments that em-ployers and potential employees make to short-age situations. Employers have many optionsavailable to them, including hiring less qualifiedpersonnel and training them; raising wages to bidaway engineers from other companies; and re-arranging jobs and tasks to better utilize engineer-

place, but there is less clarity about the conse-quences. Some adjustments may be relativelypainless, while others may create as many prob-lems as the original shortages did.

Employees also have options available for deal-ing with shortage or surplus situations. They can,within limits, move to related and more profit-able fields, or seek training in those specialtieswhich are experiencing shortages. The interfieldmobility of scientists and engineers, and relative

95

responsiveness of undergraduates to market sig- how employers and employees are likely to ad-nals, are two important characteristics of the U.S. just to shortage and surplus situations. The prin-scientific and technical work force. cipal purpose of this chapter is to lay out a frame-

In order to evaluate the possibility and effectswork for understanding these adjustments, andto summarize the (admittedly skimpy) evidence

of engineer shortages over the rest of the decade,therefore, it is not enough to simply project sup-

on their effects.

ply and demand. It is also necessary to understand

SUPPLY AND DEMAND PROJECTIONS

Supply and demand projections for engineersare the raw material for evaluating the extent offuture engineering “shortages. ” In February 1984,the Office of Scientific and Engineering Person-nel of the National Research Council (NRC) helda symposium on Labor-Market Conditions forEngineers: IS There a Shortage?8 This symposiumbrought together the major sources of engineer-ing supply and demand projections: BLS, NSF,and AEA.

All three projections used 1982-83 as their baseyear. BLS projected engineering jobs through1995, using a sophisticated variant of the “man-power requirements” approach. First, BLS pro-jected the growth rate of the whole economy andof individual industries. Then it calculated howmany engineers would be needed to achieve thisgrowth rate. These calculations were based on his-torical patterns of engineering employment, plusanticipated changes in these patterns in the future.

NSF used a similar methodology to predict theneed for scientific, engineering, and technical per-sonnel over the period 1982-87. Its model, how-ever, gives more attention to specifying the courseof defense spending than does BLS.

AEA took a totally different approach. They sur-veyed their members and asked them to project

‘1.ah(]r .tldrhet ~’onc~itlt)ns t<)r Eng!neers. 1~ T h e r e a Shortage?

(\\’a\hingt{~n, IX. ~ational l<e~earch Ccluncl], 1Q84 I.

personnel needs—especially for engineers—through1987. The individual needs were then totaled. Thismethodology has been criticized, by W. Lee Han-sen and others, as being inherently unreliable.Most employers of engineers do not make firmprojections of their manpower requirements be-yond the next 18 months, so the responses to theAEA survey for the out-years are largely educatedguesses. Moreover, respondents to surveys of thistype tend to be overly optimistic about the rela-tive market share their company is likely toachieve, and hence tend to overestimate their per-sonnel requirements.

It must be emphasized that all three organiza-tions were projecting the number of new engineer-ing jobs. This is not the same as the demand forengineers. Employers not only have to fill newjobs, but they also have to fill vacancies causedby deaths, retirement, movement out of engineer-ing into management or other jobs, or return toschool. An accepted rule of thumb is that about2 percent of the engineering work force will re-tire or die each year, creating new vacancies.Another 4 percent of engineers will transfer outof engineering into management or some otherfield. These are not small numbers. In fact, thereplacement demand in any year is considerablylarger than the demand created by new job growth.Thus, the magnitude of any “shortage” dependscrucially on how these flows of people are treated.

96

Under the BLS moderate scenario for economicgrowth, the number of engineering jobs would in-crease by 3 percent per year, which is identicalto the rate of growth in GNP assumed in the BLSmodel, and also to the historic rate of growth inthe engineering profession. This growth rate trans-lates into 45, OOO new job openings each year.However, an additional 93,5oo engineering jobswill have to be filled each year because of attri-tion and transfers.

NSF comes up with quite similar projections:an annual growth rate for engineering jobs of 2.6to 4.5 percent. The low end of the range reflectsan assumption of stagnant economic growth (realGNP growth rate of 2 percent) and low defensespending, while the high end reflects strong eco-nomic growth (real GNP growth of 4 percent andhigh defense spending).

AEA projections for demand are much higher:about 50,000 new engineering jobs created eachyear within the electronics industry alone. Ac-cording to AEA, the electronics industry employsabout one-third of all engineers. Consequently,AEA projections of demand, on an economy-widebasis, are three times higher than BLS and NSFestimates. These high projections clearly resultfrom AEA’s use of a questionable methodology.

Supply Projections

There are two major components to supply—new engineering graduates and transfers fromother occupations. All three projections agree onthe likely supply of entry-level engineers.

69,000 annually. (All three projections fall sub-stantially below the number of engineering under-graduate degrees actually awarded in 1983 and1984 which were 72,471 and 76,931 respectively .9)

The key difference is how these studies handlethe transfer component of supply. BLS allows fortransfers out of engineering (into other types ofjobs or schools) but not transfers into engineer-ing. Thus, BLS makes no attempt to calculate oc-cupational mobility into engineering (though itsexistence and importance is acknowledged).

The NSF study, by contrast, makes two alter-native assumptions about occupational mobility.In the first scenario, occupational mobility intoengineering (and each of its subfields) is assumedto be equal to occupational mobility out of engi-neering. In the second scenario, it is assumed thatoccupational mobility into engineering takes placeat its historic rate, which is just enough to bringsupply and demand into balance. The AEA makesno assumption about the magnitude of interfieldmobility.

Supply= Demand Gaps

What kinds of gaps between supply and de-mand for engineers do these projections imply?BLS compares the supply of new graduates to thedemand for new jobs, and for replacements dueto attrition and transfers and finds that supplyonly meets 46 percent of the demand for allengineers.

BLS and AEA project that the supply of entry-Ievel engineers going into industry will average

*Engineering Education and Practice in the United States, op. cit.,p. 57; Scientific Manpower Commission, Manpower Comments,

63,000 annually, while NSF projects 65,000 to January-Februar y 1985, p. 34.

97

However, BLS is relatively sanguine about theimplications of this gap. It points out that in 1980,the latest year with good figures, new entrants alsofilled less than one-half of total demand. (This wasalso true over the entire decade of the 1960s,according to OTA calculations. ) BLS argues thatthe remainder came from:

. . . transfers from other occupations; employedpeople with previous experience or training inengineering or a related occupation; recent scienceand math graduates; immigrant engineers; olderengineers returning to the profession . . .

BLS concludes that the labor market for engineersin the rest of the decade should be the same asit was in 1980. So, if there were sporadic short-ages of EEs in 1980, there should be sporadicshortages in the future.

NSF arrives at roughly the same conclusion, butby a different route. Assuming that occupationalmobility into and out of engineering are equal (thefirst assumption) the NSF study projects a slightexcess of demand over supply for electrical engi-neers in 1987 (2.4 to 7.9 percent vacancies), anda rough balance for the remainder of engineeringfields. The second assumption leads, by defini-tion, to a balance of supply and demand. Finally,the shortage predictions of AEA are considera-bly more severe, due to their use of a questiona-ble methodology.

William Upthegrove presented a commentaryat the NRC symposium based on a Business-Higher Education Forum study of EngineeringManpower and EdUCatiOn10 that sheds consider-able light on the issue of supply and demand bal-ance. Figure 4-5, ] 1 taken from Upthegrove’s pres-entation, shows the flow of engineers into and out

‘OBuslness-Higher Education Forum, “Engineering hlanpower andEcfucation —Foundation for Future Competitiveness, October 1982.

I IL.abOr Market Condjtlons for Eng ineers : 1s There a .$hox-tage ~op, cit., p. 64.

of the profession. It reveals that when immigrants,bachelors of engineering technology, and B.S. de-gree holders from related fields such as physicsand mathematics are taken into account, onlyone-third of the growth plus replacement demandmust be filled by interfield mobility and upgrad-ing of nonengineers. Upthegrove’s flowchart doesnot take into account the 18,000 new engineer-ing M.S. degree holders who enter the job mar-ket each year and are available to contribute tothe supply side of the picture. With these included,the supply-demand balance would look even morefavorable.

Defense Needs

Before proceeding to look at labor market ad-justments to shortages, a key question that mustbe examined is the effect of defense budget in-creases on the demand for engineers. How sensi-tive are the projections of engineering demand tochanges in defense spending?

AEA asked its respondents to identify the por-tion of their projected future requirements thatwere based on the assumption of receipt of de-fense contracts. The purpose of this question wasto avoid the problem of double and triple count-ing, where several firms project the same hiringrequirements based on receipt of the same defensecontracts. The response to this question can beused to estimate the effect of increased defensespending. According to the responses, 16 percentof their projected requirements were based on an-ticipated defense contracts. Hence, even a dou-bling of defense spending would not have a largeeffect. This conclusion is buttressed by the resultsof Barrington, et al. ’s survey which reported that“most respondents did not see increasing defenseoutlays as a key cause of future shortages .’”12

12 Barrington, et al,, op. cit

Figure 4-5.—Supply and Demand for Engineers, 1978-90

Total supply = 104,700 to 113,400 per year.

Total demand (growth + death and retirement + transfers out)

= 104,100-113,400 per year.

IAverage annualtransaction from I1978 to Iwo A

Entry supply Growth of engineeringemployer demand

pool by expansion of68,100 economy 38,100@

Less 20% - l&80@Death or retirement

Available to employmentpool

Immigranta *taringengineering fi~loyment 5 , @ ,

B.E.I’. @n@rwerir?~ teGh*~@9Y3 *- produoed lo#O@

Le$s 20% - 2#ooAvailable to employment

pooi 8,7P

Total engineering andPseudo-engineeringemploymentdemand/pool

1978-1,071 ,OOOdprojected to1990-1 ,504,0(W

Emphyment of other rmwB.S. graduates 7,00W

upgmde of rmiatlngteohnieians or nonangineerMl. reofpients, or W,500 (iow)former demand 38,200 (hi@&

Demand createdby departures

Oeath or retirement21,00W

Transfer outf 3.7%-47,000 (iOwj4.3%.*,* Oigfo

a M L, Carey (Bureau of Labor statistics), “occupational Employment Growth Through 1990, ” Monthly Labor f?ewew, August 1981. These data from “low” 9rowth Pro”

bjection.Averages determined from values of table 18 in National Center for Education Statistics, Projections ot .Educat/orr Statistics to 1988-89 (Washington, DC: U.S. Govern-ment Printing Office, April 1980); and 1990 values from NCES Bulletin 81-406, Feb. 13, 1981.

c Occupational Prelections and Tra/fl/~g ~ata, 1980 E(jiflon, Bureau of Labor Statlstlcs, U.S. Department of Labor Bulletin 2052, September 1980. The 20°/0 ‘i9ure is

probably conservative in light of the increasing enrollments of nonpermanent foreign nationals in engmeermg programs.dBLs estimates, This estimate is consistent with W. p, uprhegrove’s IrnpreSSIOn that about one-half of foreign nationals who take 6.s. or Ms. degrees in us en9ineer”

ing colleges eventually stay in the United States.‘Unpublished data compiled in 1978-79 by Damel E. Hecker, Bureau of Labor Statlstlcs.f survey of engineering employment 1974-1976 Suggester an average transfer-out of 3.70/. More recent surveYs have indicated an even h19her rate (unpublished

Bureau of Labor Statistics data from Daniel E. Hecker).

S O U R C E Labor.~ar~et Cor?dltlons for @-yfreem Is There a Shortage (Washington DC Nat!onal Research Council, 1984), p 64

NSF studied the impact of different levels of crease of 18 percent over the same period. Thedefense spending in more detail, and came to NSF study found that shifting from low to highroughly the same conclusion. It looked at two defense spending projections increased the totaldifferent levels of defense spending–the “high” demand for engineers by 85,000 in 1987. This isprojection which assumed a 45-percent increase an increase of about 6 percent, and has the effectin real defense spending between 1982 and 1987, of turning a slight shortage into a slightly largerand a “low” projection which assumed a real in- one.

99

Thus, increased defense spending can boostengineering demand somewhat, but not enor-mously. This should not be surprising—only 18percent of the Nation’s engineers are employedin defense-related industries, 13 so an increase ofone-fourth to one-third in defense spending (thedifference between the high and low scenarios)should generate a 4- to 6-percent overall increase.

There exists a rule of thumb to calculate the ef-fect of defense spending on the demand for engi-neers. According to Landis, 14 an additional $1 bil-

) ‘The 1Q82 Post C-ensal Surve~’ c)t Scientists and Engineers, NSF84-330 (V$’ashington, DC: ~ati[~nal Scwnce Foundation, 1984), p. 60.

“Fred Landis, “The Economics of Engineering hlanpower, ’f Engi-neer~n~~ Educat]on, December 1985.

lion (1983$) in military spending will generate ademand for about 1,000 additional engineers ifthe funds are spent on procurement, and about4,OOO additional engineers if they are spent onR&D. On the average, electrical engineers shouldmake up about one-fourth to one-half the addi-tional demand.

Finally, we note that although defense spend-ing has a relatively small effect on overall levelsof engineering demand, it may have a very largeeffect on specialized subfields. It is impossible,however, to generalize about these localized de-mand effects. In the next section we will discusswhat is known about supply responses to subfieldshortages.

ADJUSTMENTS TO SUPPLY-DEMAND GAPS

The essential nature of a labor market is thatit adjusts; supply and demand respond to the sur-pluses and shortages. A projected gap betweensupply and demand usually does not indicate animpending shortage; rather, it signals that somesort of adjustment has to take place. Two typesof adjustment are possible: The first are adjust-ments among potential employees, such as an in-crease in the numbers of entry-level engineers ormobility of experienced workers into shortage oc-cupations. The second are adjustments by em-ployers of engineers who can:

●

●

●

●

increase their search and recruiting efforts;rearrange jobs to utilize available skills, edu-cation, and experience more efficiently;make larger investments on internal trainingand retraining of engineers; andcut back on production or on R&D.

Under certain restrictive conditions no adjustmentis possible. Most projections of shortages assumetacitly that demand and supply are independent,so that there can be no adjustment. This assump-tion makes sense, however, only under the fol-lowing very restrictive conditions:

● demand for the final product is relatively un-affected by labor costs;

● supply is not appreciably affected by wagechanges; and

• the shortage skills are unique, in that work-ers possessing them cannot be replaced byworkers from other occupations or by newtechnology,

If any of these assumptions are violated, thena projected supply-demand gap will be closed bymarket adjustment. These assumptions are veryrestrictive—the latter parts of this section provideevidence to support the prevalence of adjustment.

However, there are two sectors of the engineer-ing labor market in which it makes some senseto assume that supply and demand will not ad-just. The first is the defense sector. In defense-related work, the demand for the final productis usually not heavily influenced by the cost (andthus not by the associated labor costs). Moreover,defense-related work may demand very special-ized subfields that are in short supply in the shortrun.

Not surprisingly, the NSF surveys of shortages15

bear out this observation. About 64 percent offirms with a high proportion of their employmentin defense-related work reported shortages, com-pared to 33 percent overall. Thus, at least in theshort run, it makes sense to project supply anddemand independently for the defense sector.

“’’Shortages Increase for Engineering Personnel In Industry, ” op.cit.

100

The other sector in which a supply-demand gapactually reflects a shortage are startups. Consider,for example, newly formed companies in the com-puter industry. Since they are not yet producinga product, they are willing to accept losses in theshort run in exchange for the possibility of largereturns in the future. Instead of being expectedto immediately make a profit, they are compet-ing to get their product to market before theirrivals. For firms such as these to cut back on hir-ing when wages go up would be completely self-defeating, since it would reduce the possibility ofachieving profitability at any time in the future.Thus, demand for engineers, in this case, wouldbe independent (within limits) of the wage level.Similarly, if the firm is using cutting-edge tech-nology, the engineers skilled in this technologyare likely to be limited in number and not easyto replace.

Supply Adjustments

Outside of the two sectors described above,there are usually adjustments available to narrowpotential gaps between supply and demand. Themost obvious response to a “shortage,” at leastin the medium term, is for an increased numberof college students to receive training in that field.

Human capital theory predicts that studentswill, on the average, choose the profession thatoffers them the highest return on their investmentin education. 16 Assuming that educational costsat any college do not vary by major, the choiceof major should depend on expected wages andthe ease of advancement.

It is not possible to measure ease of advance-ment, but one can measure wages. Over the past10 years, the starting wage premium that a newlygraduated engineer commands over the averagenewly graduated professional has fluctuated froma low of 7.5 percent in 1975, to a high of 21.1 per-cent in 1981.17 During this period the number ofengineering baccalaureates increased from 38,000to 63,000. Since a large proportion of employers(35 percent in Massachusetts) adjust their wages

‘“Gary Becker, Human Capital (New York: National Bureau ofEconomic Research, 1964).

“ D o u g l a s B r a d d o c k , “The Job Market for Engineers, ” Occupa-(iona/ Outlook Quarter]y. summer 1983.

upward in response to shortages,l8 the recent be-havior of engineering undergraduates can be in-terpreted as a response to a shortage.

Freeman and Hansen19 have constructed regres-sion equations, based on data from 1949 to 1981,linking enrollments in undergraduate engineeringprograms to salaries in engineering jobs and inpossible alternative occupations. They find thatengineering enrollments are very responsive to sal-ary changes: A l-percent increase in real engineer-ing salaries will, by their model, lead to a 2 to4-percent increase in engineering enrollments.

Despite the responsiveness of college studentsto market signals, the supply of entry-level engi-neers can fail to adjust optimally to shortage prob-lems for a number of reasons. First, universitiesand colleges may not have sufficient resources tomeet student demands for a particular curriculum.This could happen because budget constraints orinstitutional rigidities prevent the university frompaying high enough salaries to attract engineer-ing faculty, or from investing in state-of-the-artequipment. Additionally, the university may havedifficulty evaluating where a new technology isgoing and how long the needs for a particular typeof training will last. Thus, the university may notwant to make an investment in expensive equip-ment or new personnel in the face of uncertaintyover future demand.

Students face much the same problem of hav-ing to judge the long-run value of choosing a par-ticular subfield. Even if a new specialty is neededtoday, students may steer away until it has be-come better established. Or, conversely, studentsmay react too strongly to current reports of short-ages, as that is the only information available.Past student responses to announcements of“shortages” have resulted in surpluses a few yearslater.

In all of these cases, both educational institu-tions and students may be acting rationally, giventhe available information. However, the overallresult may not be socially optimal.

IHHarrington, et d]., Op. Cit.l~Richard Freeman and John Hansen, “Forecasting the Changing

Market for College-Trained Workers, ” Responsiveness of Training

Institutions to Changing Labor Market Demands, Robert E. Tay-lor, et. al. (eds. ) (Columbus, OH: National Center for Research inVocational Education, Ohio State University Press, 1983).

Occupational Mobility

An increase in the number of engineering B.S.Sin response to a wage increase is not a short-termremedy to a supply-demand gap. It takes 4 ormore years to train a new engineer in college. Ina fast-moving market the needs of employers willhave undoubtedly changed by the time enteringstudents graduate. This lag effect is especiallypowerful for occupations subject to sudden un-anticipated surges in demand. The semiconduc-tor boom of the past 10 years, for example, waslargely unanticipated. How are jobs in such rapidgrowth areas filled?

One possibility is that people can move overto these “shortage” jobs from related fields. Alarge amount of independent evidence exists forsuch occupational mobility. An NSF study reportsthat 8 percent of those employed as mathemati-cians in 1972 had become engineers by 1978. 20

Over the same period, about 5 percent of physi-cal scientists switched into engineering. Overall,approximately one-quarter of all scientists andengineers changed occupations between 1972 and1978.

Attempts have been made to create occupa-tional mobility models on the level of detail nec-essary to project supply and demand. Shaw, etal., created a model in which occupational mo-bility was responsive to wage differences betweenoccupations, as it should be if occupational mo-bility was to eliminate shortages.21 Moreover, themagnitude of effects they found were significantrelative to the size of current shortages.

The bottom line is that occupational mobilityexists, it is responsive to relative demand, and itis important in reducing shortages. It is sugges-tive that when respondents to the 1983 AEA sur-vey were asked how they adjusted to a shortage,almost half reported they would substitute fromother special ties.22

‘O!National Science Foundation, “Occupation Mobility of Scien-tists ot Engineers,” Special Report 80-317, 1980.

‘] Kathryn O. Shawl, et al., InteroccuPational Mobilit-v ol Exper i -

enced Scientists and Engineers, CPA 82-15 (Cambridge, MA: Mas-sachusetts Institute of Technology, Center for Po] icy Alternatives,1982).

“Technical Employment l’rolects, 1983-87, op. cit.

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The major concern about occupational mobil-ity, from the employer’s point of view, is that itmay lower the quality of engineering work. Thiswas a major theme of the 1984 NRC symposium.We do not have the direct data to evaluate thisproblem, but we can draw some inferences fromthe patterns of shortages.

First, as noted above, there have not been manyreports of shortages at the entry level in recentyears. Thus, any occupational mobility occurringat the entry level —e. g., college graduates whomajored in physics but are taking engineeringpositions—has apparently not been causing seri-ous problems. This can be explained by notingthat entry-level personnel—engineers or other-wise—always have to be trained or supervised.

On the other hand, quality does seem to be aproblem in hiring experienced engineers. This isreflected both in the complaints of shortages ofexperienced engineers, and also in the responsesto direct surveys. Barrington (1983) asked sur-vey respondents what difficulties they encoun-tered in filling job openings for experienced EEengineers. About one-third cited wage competi-tion as the major problem, but the remaining two-thirds of respondents pointed to “lack of occupa-tion-specific work experience, lack of industry-specific work experience, and inadequate level oftraining by educational institutions” as contrib-uting to the experienced EE shortage .23

Why should occupational mobility lead to morequality problems on the experienced level than onthe entry level? The critical characteristic of anexperienced engineer is that he or she be able towork with relatively little supervision on portionsof a project. Someone switching occupations, bycontrast, will inevitably need additional trainingand experience. It is impossible to turn a physi-cist into an engineer with 5 years’ experience over-night, although experience in resolving problemsand handling responsibilities in one field can beusefuI in another.

The same is true when occupations are definedmore narrowly. A major complaint by firms isthat there is a shortage of experienced electricalengineers with expertise in particular subfields.

—————z IHar~ln~ton, et al. , oP. Cit ”

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The problem is that experienced electrical engi-neers specializing in other subfields have not beenworking fors years on the particular technologyrequired by their new employer. Firms willing tohire experienced EEs without the desired skills,and then retrain them, are probably experienc-ing some short-term loss in productivity.

Demand Adjustments

Employers of engineers have several availableresponses to a potential gap between supply anddemand. The most straightforward response is tocut back or slow down on research and designwork to fit the available labor pool. The short-age disappears because demand for engineers iscut back.

It is hard to know how important this type ofadjustment is, but cutbacks are probably the re-sponse of last resort. The AEA survey reportedthat only 4 percent of respondents would consider“cutting back business or reducing projects” in theface of shortages.

In a competitive economy, a firm forced to cutback on projects because of a shortage of engi-neers could be said to be facing the fact that thereare more profitable uses for engineers in otherfirms. To be more precise, the present value ofthe expected stream of future profits from hiringthis engineer is apparently higher elsewhere.

However, the U.S. economy has large noncom-petitive sectors. In particular, both the defense in-dustry and the educational sector do not base theiroutput decisions strictly on profit motives. More-over, not everyone in the economy shares thesame expectations about the long-term usefulnessof developing a new technology or product.Therefore, it is difficult to judge whether outputforegone by one firm is compensated for by out-put increased by another firm. If shortages are se-vere enough, all firms may have to cut back theiroutput .

tact with colleges, use of independent recruiters,and attempts to hire experienced engineers awayfrom other firms. The latter response may involveeither offering higher wages or benefits.

According to one report, the cost of recruitinga high-tech professional (e.g., an engineer) can beas high as his or her annual salary .24 Thus, theinvestment of firms in search and recruitment isnot insignificant,

Internal Training and Retrainingof Engineers

A common response to the tight engineeringmarket is for firms to take on more of the supplyburden themselves. In Massachusetts, almost allEE employers offer tuition reimbursement plans,and half of those surveyed had formal in-housetraining programs for engineers. zs According tothe AEA survey, approximately 70 percent of re-spondents, when faced with a shortage, would tryto “retrain or upgrade current employ ees. ”

Over the last few years several of the matur-ing computer companies, such as Data GeneralCorp. and Digital Equipment Corp., have adoptedmore systematic training approaches. Faced witha continuing series of shortages, they have shiftedfrom their traditional “buy” strategy to a “make”strategy for obtaining skilled personnel.26 This hastwo major consequences. First, it helps lower theturnover rate, which, in 1979, was 35 percent forthe electronics industry compared to 10 percentin basic manufacturing. Equally important, it in-creases the effective supply of experienced engi-neers. Since experienced engineers are in shortersupply than entry-level engineers, this may be cru-cial in alleviating shortages.

Rearrangement of Jobs

The third employer response to shortages is torearrange jobs and tasks to better utilize the avail-

Increased Search and Recruitment

A more common response to potential short-ages is to increase search and recruitment efforts.Search and recruitment options open to employersinclude increased advertisements, more direct con-

“Tom Barocci and Paul Cournoyer, “Make or Buy: ComputerProfessional in a Demand-Driven Environment, ” Massachusetts In-stitute of Technology, Sloan School, October 1982.

2sHarrington, et a]., op. cit.

‘bPaul Cournoyer, “Mobility of Information Systems Personnel, ”Massachusetts Institute of Technology, Ph.D. thesis, 1983; see alsoMichael Mandel, “Labor Shortages in Rapidly-Growing Industries:The Case of Electrical Engineers, ” Harvard University, January 1984.

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able skills. It is not clear how prevalent this re-sponse is. About 50 percent of AEA respondentswould react to a shortage by “increasing produc-tivity of currently employed engineers. ”

On the other hand, Massachusetts companiesdid not see this as a possible response to short-ages. Barrington reports that “respondents did notsee utilization of existing engineering staff as acontributing cause of shortages in the field . . .most firms are unwilling to alter their organiza-tional structures to mitigate shortage problems. ”27

These firms may feel that they have already in-creased productivity as much as they can so thatany additional changes would be counterpro-ductive.—- . .— .-—

2’Barrington, et al., op. cit.

Firms sometimes appear to willfully avoid or-ganizational change which would increase prof-its in the face of shortages. It is important tounderstand, however, that some institutional ri-gidities which appear to block the best utilizationof engineering talent may in fact be profit-maxi-mizing in the long run. For example, the possi-bility of promotion into prestigious managementjobs may serve as an incentive to get maximumeffect out of young engineers. To keep older engi-neers in engineering jobs could conceivably in-crease the number of engineers in the short run,but it might have the effect of lowering the totalamount of employee effort. Consequently, the re-fusal of many firms to rearrange their job struc-tures in response to shortages is not surprising.

THE CONSEQUENCES OF ADJUSTMENT

To see how well these adjustments to supply-demand gaps are working in the business world,OTA commissioned an in-depth interview studyof the market for EEs in the Boston area. Electri-cal and electronic engineers were chosen becausethere have been repeated reports of shortages inthose fields, because EEs serve both the defenseand the civilian sectors, and because employersof these engineers are often producers of new high-technology growth products such as computersand electronic equipment. Interviews were con-ducted in the Boston area by OTA contractor Dr.W. Curtiss Priest of Massachusetts Institute ofTechnology (MIT).

The interviews covered 5 categories: large firms(5), small firms (4), engineering school deans andchairmen (4), university placement and employ-ment agencies (4), the Massachusetts High Tech-nology Council Director, and “headhunters” (2).The interviews focused on the availability of theelectrical engineer in the Boston-Route 128 region.

In selecting firms, a variety of firms were cho-sen, reflecting the type of market (defense and ci-vilian) and products. Also, various firms havedifferent reputations for hiring requirements andcorporate climates. The typical contact at eachfirm was the vice president of engineering. The

firms contacted were: Raytheon Corp., AVCOCorp., Wang Laboratories, General Electric (GE),Polaroid Corp., Pacer Systems, Inc., Baird Corp.,Technical Alternatives, Inc., and Apollo Com-puter Corp.

Engineering school deans and chairmen werecontacted at MIT, Northeastern University, TuftsUniversity, and the Franklin Institute. Universityplacement contacts were at MIT and Northeast-ern. Employment agencies contacted includedComputer Placement Unlimited, Inc., High Tech-nology Placement of Winter, Wyman & Co., For-tune Personnel, and McKiernan Associates.

Nearly all of the interviews were made in per-son and lasted from 1 to 2 hours in length. Anopen-ended discussion was conducted with eachcontact using seven categories of questions. Thesequestions investigated how shortages of engineersvary over the short and long term, the availabil-ity of particularly needed skills, and the abilityof engineers to grow into job requirements. Ad-ditionally, the discussion covered the impact ofmilitary procurements, the benefits and environ-ments required to attract engineers, and the sen-sitivity of universities to market demands. Finally,interviewees were asked to compose a “wish list”in order to identify major concerns about the

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availability of engineers. To explore the hiring re-quirements in detail, the respondent was askedto describe a job description and how closely ahire would have to match the description.

Variability in Shortages of Engineers

Each firm had a uniquely different set of ex-periences regarding shortages of engineers. Theseexperiences depended on the character of the firm,its location, and its reputation. In general, indus-try responded that there were certainly shortagesof some types of engineers at particular times butsome firms reported no shortages because of theirparticular position in the market.

Shortages of engineers vary by geographic loca-tion. While the focus of the study was on theBoston-128 region, a number of firms had multi-ple locations across the country. Raytheon Corp.has experienced some shortages in the Boston re-gion but extreme shortages in the Santa Barbaraarea. Likewise, Pacer Systems has experiencedsome shortages in the Boston area but more short-ages at their Pennsylvania location where thereis a higher demand for engineers with substan-tial military service experience. A number ofplacement respondents commented on the exis-tence of shortages in the Silicon Valley area be-cause of the very high costs of living.

Shortages vary by the firm’s reputation and Cul-ture. Apollo Computer and Wang Laboratoriesstated that they do not suffer from any shortagesof engineers. Both firms are successful computerapplications firms with distinctive corporate cli-mates and reputations. Apollo Computer has aunique reputation for fast growth and the “Apolloculture. ” This places the firm in an “unreal,dreamworld existence” in which they can be ex-tremely selective about applicants. In contrast, acompany like Baird, an instrumentation firm,often finds it difficult to hire engineers within sal-ary ranges they can afford. They prefer to hirefresh graduates to help keep down salary costs.

Shortages vary across general areas related toelectrical engineering. Electrical power generationand distribution is an area that depends on theconstruction market and the demand for electri-city. The demand for electrical engineers in this

area is fairly steady and the supply appears ade-quate. The electronics industry, in contrast, hashad substantial periods of growth, creating a highdemand for the electronics-oriented electrical engi-neer. There have often been periods of shortagesfor particular skill requirements in the electronicsfield. Computer programmers in electrical engi-neering applications areas have also been in heavydemand. However, there is some indication that2-year educational programs are successful in meet-ing the demand for many of these requirements.

Shortages also vary considerably by special skillneeds. There are certain positions that requireboth excellent electronics hardware skills and

strong computer programming skills, such as inthe design of the next generation of computers.Qualified people are very scarce. Another currentarea of shortage is in the use of automatic testequipment (ATE). Knowledge of ATE has becomequite specialized to certain machines and softwarepackages. It is difficult to locate people with therequired background. Another scarce skill areainvolves engineers with both analog and digitalhardware experience. Many older engineers skilledin analog hardware find it difficult to make thetransition to digital hardware. Younger engineers,more skilled in digital work, find analog hardwaredifficult and foreign.

Changes in markets and opportunities are cons-tantly producing specific skill shortages. The re-cent emphasis on “automatics” such as roboticsand other industrial control machinery has cre-ated a heavy demand for industrial electrical engi-neers. Until a few years ago, industrial engineerswere in low status positions and many universi-ties, such as MIT, did not train industrial engi-neers. Another recent growth area, “very large-scale integrated circuits, ” has created shortagesof engineers both in industry and universities.

Shortages vary over time as economic condi-tions and growth opportunities change. Respond-ents with 20 to 30 years of experience recall theebb and flow of hiring over a number of cyclesof high and low demand periods. Memories wererecalled of how in the late 1960s, half of the em-ployment agencies went out of business, and sto-ries were circulating of engineers driving taxis.More recently, shortages in 1979 and 1980 were

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remembered in terms of prolonged searches andless than optimal hires. In prior decades, militaryemployment was viewed as unstable and compa-nies such as Polaroid were considered stable andsecure. In the current decade, military employ-ment is seen as a refuge and the frequent cyclesof civilian layoffs are viewed with greater anxi-ety. The current softening of the market is viewedby many as a temporary adjustment period.

Shortages are not perceived to vary much bythe level of military procurements. Many respond-ents emphasized that the two climates of militaryand civilian work are so different that there is lowmobility between the two “sectors. ” The militaryengineer is viewed as more risk averse, less crea-tive, and less likely to be interested in advance-ment. In contrast, the civilian engineer is viewedas more people oriented, more talented, betterable to bring out products, and more selective.It is more likely that engineers will move into themilitary sector when civilian hiring is down thanwill military engineers move into the civilian sec-tor when hiring in the military sector is down.Thus, when military procurements are rapidly in-creasing, those hiring in the civilian sector senseless competition in hiring the same people thanthey might if the mobility were higher.

Raytheon, a company with about 75 percentof its engineers conducting military work, indi-cated that they keep salaries at about the samelevel for both civilian and military positions re-gardless of changes in demand for military work.Pacer Systems indicated that tight government au-diting practices kept them from bidding up sala-ries for military engineers. While some of thesestatements appear to defy the economic laws ofsupply and demand, they were prevalent enoughto warrant further investigation.

Impact of Shortages

In general, shortages tend to lengthen searchtimes and may relax, somewhat, the requirementsrequired for a position. Many respondents statedthat, for the most part, the supply of engineershad improved over the last 5 to 8 years. Even dur-ing high demand periods, the impact of shortageshas not been dramatic.

Changes in the level of shortages of electricalengineers substantially affects the search time fora new hire. Responses about variability in searchtime were fairly consistent. During periods of rea-sonable availability the search period takes 1 to1 l/ z months. During periods of greater Shortage,

this time can easily double and a search periodof 4 to 5 months would not be unusual. In theseperiods, lesser known firms must be prepared tosettle for less desired choices in candidates. Spe-cial needs require more search time; the processof hiring the right chief engineer when the require-ments are fairly unique can take more than a year.

Shortages have an impact on the quality o fengineers and productivity. For example, duringthe recent 1979-80 shortage, a number of respond-ents said that significant compromises were madein hiring. The level of experience criterion was metless often. Also, firms used to hiring from “firstrate” schools might find it necessary to relax theirrequirements to include other schooIs during highshortages. Nonetheless, there was a sense that nolarge departures from expectations were evermade. The compromises were significant but nothighly burdensome.

Shortages also have an impact on deferred op-portunities. For example, new hires in specificareas may add to the future research capabilitiesof a firm, but a shortage in that area presents an“opportunity cost” to the company’s R&D effort,Polaroid encountered shortages of Ph.D. opticaIengineers and AVCO described shortages of “hardscience” based engineers that impeded expansionof their research capabilities.

A major impact of shortages may be job-switching and high expectations of engineers. A“star” engineer (heavily sought after for his or herhigh abilities and relevant skill area) will oftenswitch jobs every year or two. The change is typi-cally made to receive more responsibilities, workon more challenging problems, and for the cor-responding salary increase.

The electrical engineer has fairly high expecta-tions about the job in terms of challenge, goodrelationships with the supervisor, promise of K&Dwork, freedom and independence, cutting edgeprojects, being entrepreneurial in design, and high

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salary. With a very high degree of consistency,respondents described these expectations and theimportance of meeting them to hire and retain theengineer. It was also emphasized that a good sal-ary went along with the other expectations andwas not typically sought after as the primary goal.

Mobility and Flexibility of Engineersand Related Professionals

In general, it is difficult for an engineer to takea job requiring work much different than his orher previous experience. There are certain “feeder”fields like math and physics but it is nearly im-possible for, say, a chemical engineer to take aposition as an electrical engineer, or even for anelectrical engineer experienced in radio-frequencydesign to take a job in computer design. Profes-sionals in math and physics are often hired for“systems” work because their general training isuseful in general problem-solving and design.They are more likely to be hired by firms engagedin basic research, such as Polaroid and AVCO.They are less likely to be hired by a firm likeApollo Computer. Thus, when the demand ishigher for engineers than scientists, as has beenthe case over the last 10 years, mathematiciansand physicists can shift to fill some of the demand.To illustrate the magnitude of this shift, from 1973to 1983 the number of undergraduates in engineer-ing at MIT (primarily electrical engineers) hasgone from 1,257 to 2,405. Over the same timeperiod, the number of undergraduates in theschool of science has declined from 1,162 to 725.

Not all engineers are equally “flexible” or “mo-bile. ” The engineer in the top quartile of hisprofession is considered much more mobile andflexible than the other 75 percent in the profes-sion. Engineers that have reached positions ofmanagement or high rank typically have greaterflexibility and mobility than more junior engi-neers. Three factors seem to play a part in restrict-ing the flexibility and mobility of engineers—market limitations, management restrictions, andknow-how limitations. These factors are not in-dependent, but work together to reduce mobil-ity and, at the extreme, to render obsolescentmany engineers.

In terms of market limitations, firms oftenchange while in a period of crisis. They requireparticular engineering skills immediately and ob-tain these skills from the outside market becauseit is not practical to retrain in-house engineers inthe time available. In terms of management re-strictions, engineers become identified by man-agement as having certain abilities and know-how; it is difficult for management to take therisks associated with allowing an engineer to makea transition to a new skill area.

In terms of know-how, engineering is a highly“know-how” intensive profession. It takes con-siderable training and practice to be proficient ina particular area of electrical engineering andwhile some of these skills are transferable, manyare not. For example, analog circuitry know-howis not highly transferable to digital circuitry. Thus,over the last 20 years when the field was movingfrom analog to digital, many engineers becameincreasingly outmoded.

The interviews constantly reinforced this dy-namic picture of the way many engineers becomeunable to face periods of transition. Many re-spondents spoke of the need for more engineersto “keep up. ” There were stories about the keyengineer who did keep up and how he or sheplayed a significant role in the newer areas, in con-trast to those who did not. The placement offi-cer at Northeastern referred to those engineerswho worked in the same area for 10 to 15 yearsand then had to return to drafting or some otheroccupation requiring less skills when the areadried up. While many professional fields are facedwith technological change, the engineering profes-sion is probably more vulnerable than most.

For the more mobile and flexible engineers, theheadhunter plays a critical and dynamic role. Theemployment headhunter is a placement personwho actively seeks out individuals to meet aclient’s employment needs. Many employmentagencies receive applications from engineers andmatch these with employment opportunities theyhave identified in industry. The headhunter goesone step further and attempts to lure a “star” engi-neer out of one company to another. As disrup-tive as this first appears, the headhunter plays an

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important role from the standpoint of economicefficiency. He or she is helping to allocate a scarceresource to a more optimal allocation. The head-hunter establishes a network of contacts bothwithin organizations looking for talent and withinorganizations where the talent is “misapplied” or“underutilized. ”

In matching individuals, the headhunter is sen-sitive to the flexibility of the employer in termsof the technical capabilities of the individual andthe personal match. Often it was said that em-ployers hire “people they like. ” Thus engineersfrom certain styles and cultures of firms are muchmore likely to fit a particular position than others.But other placement professionals warned againstoveremphasizing the cultural variable. The bot-tom line is how well the person can do the joband as monolithic as many firms appear, thereare many subcultures within any given orga-nization.

In summary, many factors play a role in re-stricting mobility and flexibility. These relate toboth technical variables and cultural variables.For small incremental shifts in the work force,these factors will not be highly significant. For ma-jor occurrences of technological change and largechanges in the economy, however, these factorswill be quite important.

Desirable Changes

In concluding each interview, participants wereasked to identify the most desirable changes re-lating to the availability of engineers. The re-sponses addressed various availability, quality,and professional issues.

In terms of shortages, people in employmentagencies all wished they could have a larger, morecapable pool of engineers to draw from. Sincethey are personally responsible for how well theymeet their clients’ expectations, this is a signifi-cant statement about the shortage of engineers.Within industry, if a firm required a particularspecialty which was in short supply, the responsewas to have more engineers trained in that spe-cialty. For example, the GE generators sectionwished more schools provided “power systems

engineers. ” Raytheon, involved in more radiowork, wished schools trained more radio-fre-quency engineers. In many cases, the undersup-ply was in a low glamour area. Power systemsengineers, industrial engineers, etc., are lower sta-tus areas and many students prefer the high tech,high glamour areas. Whether “glamour” is a “cor-rect” economic market signal for whether studentsshould pursue a particular area of electrical engi-neering is an interesting question.

This leads to a very serious issue of the statusof engineers in general. Respondents from univer-sities unanimously indicated that they were up-set about the “second class” treatment of engi-neers. One respondent described industry astreating engineers as a commodity while anotherindicated that engineers are often used for “sub-professional tasks. ” The dean of one engineeringschool suggested that the supply of engineersshould be limited, as the medical profession hasdone with doctors, so that the standards of profes-sional excellence and stature could be raised. TheGerman model was considered a success in main-taining engineering professional standards. Theremay be a linkage between the status issue and thefactors that lead to immobility and inflexibilitydiscussed above. How can an engineer be a profes-sional if so much of his or her know-how can bebe made obsolete by the advancement of technol-ogy? One response to this dilemma has been toinstitute “lifelong Iearning. ”

Lifelong learning was emphasized by both re-spondents in industry and in the universities. Arecent conference on “Keeping Pace With Change:The Challenge for Engineers” was sponsored bythe Massachusetts High Technology Council andheld at Northeastern University. In a study spon-sored by the High Tech Council, the “half-life”of the engineering degree (length of time half ofthe knowledge acquired by graduation remainsrelevant to work tasks) was estimated to be be-tween 3 and 5 years for the Bachelor of Sciencein Electrical Engineering. The peak age for the per-formance of engineers, in terms of age, was foundto be the late twenties and early thirties. Accord-ing to this study, productivity typically declinesfrom age 30 until retirement.

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To counteract this process, lifelong learningprograms have been established within industriesand through universities. It was noted that theengineer over age 35 cannot be expected to returnto the classroom but needs different educationalresources to keep up. The older engineer needssupport groups in the company of his peers. Oneprogram is provided by Northeastern Universitywhere live graduate courses are provided usingvideo to locations along Route 128 in Boston. Thesystem has two-way voice for communication andcourier service for homework.

Perhaps, too, with newer information technol-ogies, the engineer can keep pace by greater useof information databases where the knowledge iskeyed by function and application. While generalcitation databases exist such as COMPENDEX onDialog Information Services, these only providebibliographic citations to the engineering litera-ture—a literature which is itself surprisingly lowon useful material. If the private market cannotrespond in providing these information services,it may be a role of government to help meet thisneed.

Respondents also expressed the wish for engi-neers toneering

have additional skills beyond basic engi-capabilities. A few respondents empha-

sized the need for engineers to be better able tocommunicate and write. A few indicated the needfor engineers to be better able to use computersimulation to test a prototype design in place ofbuilding the prototype because of the high costsinvolved in making custom integrated circuits.Two respondents emphasized the need for engi-neers to have stronger skills in scheduling andplanning, and a better sense of management’s ob-jectives.

Finally, Polaroid, AVCO, and Raytheon indi-cated the need for government and industry toprovide greater support of hard science and ap-plied research. A vice president at AVCO washighly concerned about the loss of hard sciencePh.D.s since the Vietnam War who could not onlycontribute to military strength but to basic re-search vital to civilian industrial strength. Fromthe university side, Tufts noted that the currentNSF emphasis on large research programs hasgreatly reduced opportunities to support researchat Tufts. The Commonwealth of Massachusetts’program to provide research facilities in micro-electronics available to universities and industrywas lauded as a way of providing facilities thatTufts could use to educate their engineeringstudents.

CONCLUSION

Shortages exist for engineers, especially forthose in a few high demand fields. in the last 5to 8 years, however, shortages have been trouble-some but not a large burden. Some firms havenever perceived shortages while others find thesupply of engineers much too small. The flexibil-ity and mobility of some engineers is high but formost engineers it is low. The engineering marketperforms reasonably well for gradual transitionsbut does not perform well during periods of ma-jor technological change or dramatic changes inmarket and/or economic conditions.

In general, there does not appear to be a needfor a direct government role in alleviating poten-tial shortages of engineers. The market for entry-level engineers seems to be functioning well enoughnow to eliminate shortages. At the bachelor’s

level, some educational institutions report thatthey do not have enough resources to train all theengineers that are interested, due to shortages offaculty and equipment.

Although there have been, and will continueto be, spot shortages of experienced engineers,they are not of a type amenable to direct govern-ment intervention. When a new technology is de-veloped, it simply takes time before there is a poolof engineers who are experienced with the newtechniques. There may be a role for the govern-ment in helping to promote the retraining of ex-perienced engineers into startup fields. Mission-agency sponsored R&D programs could conceiv-ably serve that retraining function. The Federalenergy and environment programs of the 1970s,for example, helped retrain significant numbers

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of scientists and engineers to become specialistsin those two fields. Many of these people are cur-rently employed in their new capacity by in-dustry.

A fundamental problem is the obsolescence ofknow-how and the corresponding obsolescenceof engineers. In response, many institutions andfirms are encouraging lifelong learning. Since gov-ernment has traditionally played an importantrole in education, there are some policy optionswhich may help. One important role is to pro-vide basic facilities for education such as themicroelectronic center that Tufts and other univer-sities find important in helping train engineers.Another role is to identify economic disincentivesto lifelong learning and provide either educationalsupport or tax relief to enable more engineers tokeep up their know-how.

In the area of information policy, there is thequestion of how new information technology can

assist in providing ongoing know-how supportand lifelong learning to engineers. Does the struc-ture of the market of engineers and their em-ployers encourage the private sector developmentof such information support systems, or are therepublic sector reasons for government support? Anumber of market failure reasons can exist for thelack of the development of such support systems.To the extent that firms do not fully bear the costsof the obsolete engineer, firms will underinvestin further training, etc. Also, information hastransferability problems—it is often difficult forthe supplier to exact the full value of the infor-mation because it is difficult to keep the informa-tion from being passed along (with no further rev-enue to its producer) .28

28 For ~ ~omPrehensive &cu5sion of these and other reasons see

W. Curtiss Priest, “The Character of Information, ” contractor pa-per for U.S. Congress, Office of Technology Assessment, Projecton Intellectual Property, Feb. 10, 1985.