Jobs and the Job Market

» Bill_Duffy - Engineering has lost its luster

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This article appeared today in the WSJ. I thought it was interesting because neither my son nor any of his talented friends now in college have chosen engineering as a career. From their point of view, Engineering is a very difficult major, the jobs are very cyclical, and it is a short term career--almost nobody continues to do engineering after about age 55.

So I think the short-sightedness of corporate executives have brought this upon themselves.

Even Tech Execs
Can't Get Kids
To Be Engineers

By ANN GRIMES
Staff Reporter of THE WALL STREET JOURNAL
March 29, 2005; Page B1

Vinod Dham is among a growing number of technology executives warning that the U.S. faces an engineer shortage. To stay globally competitive, he says, the nation must do better at steering its youth toward engineering careers. Mr. Dham knows how hard that is: He can't persuade his own kids to go into engineering.

The 54-year-old Mr. Dham would seem to be a prime role model. His engineering degree lifted him from his humble origins in India into a 16-year career at Intel Corp., where he became well-known for helping create the Pentium chip. His older son, 22-year-old Ankush, is studying economics, and that's fine with Mr. Dham, who says he couldn't get him interested enough to develop the rigor required for engineering. But ever since his younger son, 19-year-old Rajeev, was a boy, Mr. Dham has been urging him to pursue engineering -- and he, too, is going into economics. Rajeev "doesn't want to do electrical engineering," the elder Mr. Dham laments. "He tells me the job will be outsourced."

Silicon Valley is doing a lot of hand-wringing these days about a coming engineer shortage. Tech leaders such as Cisco Systems Inc.'s John Chambers and Stanford University President John Hennessey warn that the U.S. will lose its edge without homegrown talent. The U.S. now ranks 17th world-wide in the number of undergraduate engineers and natural scientists it produces, they point out; that's down from 1975, when the U.S. was No. 3 (after Japan and Finland).

But some of the nation's tech elite -- including many immigrants who benefited greatly from engineering careers -- are finding even their own children shun engineering. One oft-cited reason: concern that dad and his contemporaries will ship such jobs overseas.

Venture capitalist Promod Haque, for example, is in an ironic bind when it comes to advising his own kids. Like many other Silicon Valley financiers, Mr. Haque has recently begun funding tech start-ups in India and urging U.S. tech entrepreneurs to outsource from the start by forming companies that split operations between the U.S. and India. Mr. Haque chuckles about a recent dinner conversation with his college-age daughter, who he hoped would go into engineering just as he did. "She said, 'Dad, I'm not going to take any more computer-science classes,' " he recalls. "I asked her why. She looked at me straight and said, 'I don't want to go to India to get a job.' "

Experts cite a variety of other reasons for the U.S.'s engineer shortage, including poor math and science curricula in public schools. And there is also a persistent image problem. A recent study of 2,800 of Silicon Valley's youth by consultants A.T. Kearney found that 73% were familiar with high-tech careers but only 32% wanted to pursue them. In describing tech careers, students in the study used a variety of unflattering terms, including "intimidating" and "uninteresting." Others said they considered engineers to be "socially awkward" or "obsessed with work." Some female respondents linked computer engineering with work that is "tedious" or "antisocial."

That was the case for Susan Mason's two stepdaughters, Alexandra and Joanna. Ms. Mason, a Silicon Valley venture capitalist with a background in computer engineering, says she urged the girls to consider engineering when they were in high school. They ignored her advice: Alexandra became an audiologist and Joanna went into nursing.

"They felt that engineering was too solitary, even if they were working in a team environment," Ms. Mason recalls. "They wanted to have more interactions with people on a 'human' level," she says.

Ms. Mason recalls one talk where she and her husband warned the girls: "You understand you are taking the vow of poverty here? You know there is a big money delta here." The irony, she says, is that many young people in the Valley can opt for less lucrative professions because their engineering parents have done so well.

C.L. Max Nikias, dean of the University of Southern California's engineering school, says another problem is that colleges aren't able to keep students in the field who show initial interest: About 120,000 students start off in engineering in U.S. colleges and universities, but only half ever earn an engineering degree. Mr. Nikias has set up programs at USC -- including an updated curriculum and a career-oriented speakers program -- that are helping to retain students, he says.

But things haven't worked as well at home. Mr. Nikias's daughter, now a 20-year-old junior at USC, initially appeared to heed her father's advice that she become an engineer. Georgiana Nikias is good at math and science. Early in college she took six core classes that engineering students take at USC.

But then she ditched engineering for an English major. "In engineering, you truly have a chance to invent something or push society forward technologically," she says, but "I didn't love it enough to make a huge difference in that field." She wants to write science fiction, instead, or maybe go into law.

Mr. Nikias strongly supports women who pursue engineering degrees. So he felt that "if she trained in this profession, the sky would be the limit in terms of opportunities." he says. "I did try. [But] I'm not a good example of farming my own kids into the profession."

Kanwal Rekhi, a graduate of India's Institute of Technology and former chief technology officer at Novell Inc., says he very much wanted his son to become an engineer. But his son ignored his urgings, saying he thought the work would be too tedious. He graduated from film school instead. Mr. Rekhi says he also tried to persuade his 16 nieces and nephews to go into engineering. He even offered to tutor some of them in math. Not one took him up on that. "They said it was too hard," he says.

For Mr. Dham's younger son, the California lifestyle that an engineering career brought the family is one reason he is spurning engineering. Rajeev Dham worries that an engineering career these days might take him out of the state as outsourcing erodes engineering jobs there. "One of my older cousins is an engineer, and he was shipped out to Cleveland, where it's snowing and stuff," he says. "Obviously that factors into people's decisions. People who live in California want to stay in California, you know."

Write to Ann Grimes at ann.grimes@wsj.com1

-- posted by Bill_Duffy

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» Kirk - Re: Engineering has lost its luster

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In response to Engineering has lost its luster posted by Bill_Duffy:

It is very true. I'd not recommend engineering as a career unless people are driven to invent things and want someone else to pay them to work long hours in a lab funded by the company rather than in their garages on borrowed equipment. For some of us, there was no better job.

I went towards investing when I found you nearly kill yourself trying to meet deadlines and the ONLY reward is they expect you to do it even better and faster the next time around. Work 25 to 50% more hours for a 4% larger raise while the executives who push you get promoted in $100,000 a year increments with millions in stock options for their reward for pushing your team. Some companies give out good stock options to share the rewards with the engineers, but they usually pay 20% or 30% a year less...

If someone is REALLY smart, then they want to go to Stanford or Berkeley for graduate engineering then get funding to turn their ideas for new products or services into a company such as happened with the Google boy billionaires.

The rest might do better to get a BS in EE or ME then get a law degree and learn Mandarin to sue the Chinese for IP violations which should be a hot field in the future.

-- posted by Kirk

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» Bill_Duffy - Re: Re: Engineering has lost its luster

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The rest might do better to get a BS in EE or ME then get a law degree and learn Mandarin to sue the Chinese for IP violations which should be a hot field in the future.

Hi Kirk, That's funny! My daughter, who now works as a process engineer in biotech, is now trying to get into the Cal Berkeley Law School so she can become a patent lawyer.

I love engineering and my favorite course in high school was physics. But I did tire of the long hours at Agilent. The projects were always needed yesterday, there were always too few resources, and the big bosses got all the rewards. If I could do engineering on my own terms, I'd probably still be doing it. But I just cannot do the 12 hour days anymore. Unfortunately, these companies won't hire people for part time work.

-- posted by Bill_Duffy

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» passenger - Re: Re: Engineering has lost its luster

In response to Re: Engineering has lost its luster posted by Kirk:

I went towards investing when I found you nearly kill yourself trying to meet deadlines and the ONLY reward is they expect you to do it even better and faster the next time around. Work 25 to 50% more hours for a 4% larger raise while the executives who push you get promoted in $100,000 a year increments with millions in stock options for their reward for pushing your team

This is very true. High tech is very cyclical. Winner takes all. That forces company to get product out in very short limit of time in keen competition. Companies try to make money of 5-10 years in just 2-3 years. They even cannot afford to recharge emplyees who work for them for long time. Once you reach the age above 45+, it's almost over. That's why they want to recruit new graduate who can get more for them at less cost.
It's not uncommon for some company to pooling their own health insurance cost since their employee's average age is pretty young and they save more $ if they just take care of their employees' medical bill themselves(via a health insurance administration) than they pay premium to a health insurance provider.

The knowledge update itself is not all the reason. I have a friend who practice medical. He told me he had to spend 2-3 hours to read paper every weekdays. Something he learnt from medical school had completely changed due to progress and application of molecular biology. He also taught some classes and some of his students were 10+ years older than he. If you are a software engineer, the most update is from new programming language, new tools, new design methodology. The basic computer science theory and algorithm hardly change and it is not uncommon to hear the same interview question on data structure you heard 10 years ago. But if you don't know those new tools/language, you are out of luck for a new job even though it may take not much time for you to catch up. Company just don't give this opportunity to young people instead of you. I think shortage are on those who has exactly the skillset match and do not need more training and US should have plenty of reserves for those who can work in this field after appropriate training. They are just burried outside of tech industry from rounds of layoffs or damage of doing more with getting less.

The rest might do better to get a BS in EE or ME then get a law degree and learn Mandarin to sue the Chinese for IP violations which should be a hot field in the future

I think If you can apply your engineer expertise in one field to another area, you would be definitely more marketable.

-- posted by passenger

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» Normxxx - Re: Re: Re: Engineering has lost its luster

In response to Re: Re: Engineering has lost its luster posted by Bill_Duffy:

Too, too true! As a chief engineer my shortest workweek was 60 hours-- with 80 not uncommon! The pay and perks were much better than a line engineer or engineering manager, but not if you figured it out by the hour! So, I finally 'retired' into a government job. (FYI, at age 59.)

By the way, Bill, you sure don't have to be PC in government (unless you 'want to get ahead'). Since it is almost impossible to fire a government worker after their first year, they can be as outspoken as they like-- much more so than in private industry. I always told it like it was-- never more so than when I was working in government. Of course, I was ignored, but that's the way it goes.

I would link you to some of my publications, but then I would have to reveal my secret identity.

Which is not to say you can survive easily in government, unless you get an especially good job (which I did). The problem is, your brain rots from disuse! Except in exceptional cases, most government workers are kibitzers-- the contractor's do all the work! All you can do is try to steer them right, but you are severely limited in the directions you can give, even if they are doing it all wrong! And I famously worked on the FAA's Advanced Automation System, which was a $2 billion IBM fiasco.

Since I have been in automation from the beginning (1952 -- 2002) when it was analog, not digital-- I have been in almost every aspect of it including some medical- and bioengineering. I can sympathize with your daughter-- I think she is in one of the most exciting engineering fields left, and the law degree will add immensely.

P.S. What kind of work are you doing now?

-- posted by Normxxx

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» Bill_Duffy - Re: Re: Re: Re: Engineering has lost its luster

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P.S. What kind of work are you doing now?

I am now a full time investor and writer. I can do almost anything, but I really prefer just working for myself. Most of the technical jobs around here require an active security clearance, and the local defense contractors are not willing to do that for anyone beyond age 50.

-- posted by Bill_Duffy

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» Normxxx - Wage Earners' Falling Fortunes

Falling Fortunes of Wage Earners

By STEVEN GREENHOUSE, NYT | 12 April 2005

Beginning in the mid-1990's, pay increases for most workers slowly but steadily outpaced the rate of inflation, improving the living standards for nearly all Americans. But an unexpected reversal last year in those gains has set off a vigorous debate among economists over whether the decline is just a temporary dip or portends a deeper shift that may cause the pay of average Americans to lag for years to come.

Even though the economy added 2.2 million jobs in 2004 and produced strong growth in corporate profits, wages for the average worker fell for the year, after adjusting for inflation - the first such drop in nearly a decade.

"Pay increases are not rebounding, even though the factors normally associated with higher pay have rebounded," said Peter LeBlanc of Sibson Consulting, a division of Segal, a human resources consulting firm.

The problem is not with the jobs themselves. Most economists dismiss as overblown the widespread fear that the number of jobs will shrink in the United States because of foreign competition from China, India and other developing nations. But at the same time many of these economists argue that the increasing exposure of the American economy to globalization, along with other forces - including soaring health insurance costs that leave less money for raises - is putting pressure on wages that could leave millions of workers worse off.

"We're in for a long period where inflation-adjusted wages will be under acute pressure," said Stephen S. Roach of Morgan Stanley. "That's a most unusual development in a period of high productivity growth. Normally, real wages track productivity."

But some economists are more optimistic, saying that the wage sluggishness is temporary and that real wages have slipped only because a sudden spike in oil prices has briefly left workers behind the curve. These economists assert that wage stagnation will end soon, as normal growth brings a tighter labor market.

"What we're seeing now is not atypical; employers can't pay the wage bill to keep up with the oil price increase," said Allan H. Meltzer, an economist at Carnegie Mellon University. "I think the long-term trend will be that wages will right themselves and look like productivity growth on average."

The most commonly used yardstick of wages - the Bureau of Labor Statistics' measure of nonsupervisory private-sector workers, covering 80 percent of the labor force - fell 0.5 percent last year, after inflation. Real wages for these workers are now lower, on average, than two years ago. A broader measure, the employment cost index, which includes supervisors, managers and most government workers, dropped 0.9 percent.

At a Sprint call center in North Carolina, 180 customer service representatives are well aware of how such forces are squeezing them. Their jobs have not migrated overseas, but the employees just concluded their most bruising battle ever over wages.

The Sprint workers in Fayetteville emerged from negotiations that lasted months with a contract that left them with a pay freeze for last year and no definite increase for 2005. While the best performers are promised 2 percent merit raises, even those are likely to lag inflation.

"It's like their wages are in a severe coma," said Rocky Barnes, president of the union local. "Sprint said they had to restrain wages because the company's performance wasn't so good, but we think a lot of it has to do with offshoring."

Sandra J. Price, a Sprint vice president, took issue with union leaders. She said Sprint sought the freeze not because of low-wage competition overseas, but because benefit costs were soaring and the company felt the call center's compensation was generous for the area.

Whatever the explanation for Sprint's action, many economists, liberal and conservative, are perplexed by two unusual trends. Wage growth has trailed far behind productivity growth over the last four years, and the share of national income going to employee compensation is low by historic standards.

Mr. Roach of Morgan Stanley said wages were being held down by foreign competition; corporations that are moving jobs offshore; the uncertainty of businesses over demand; and management's ability to substitute computers and other devices to replace workers.

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

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» Normxxx - Slower Growth?

Fall in Indicators' Index Suggests a Shift Toward Slower Growth

By THE ASSOCIATED PRESS | 22 April 2005

A closely watched index devised to forecast future business activity fell in March, the Conference Board reported yesterday.

The composite index of leading economic indicators fell 0.4 percent last month, to 115.1. The decline was slightly larger than that expected by analysts, who had forecast a 0.3 percent drop.

The March drop came after a rise of 0.1 percent in February, and a revised 0.3 percent decline in January.

The March reading points to an economy that while experiencing some turbulence is making a fairly normal and expected transition to slower growth, economists said.

"This is no more than a slowdown in economic activity, but it's not an indicator that we're about to enter anything more serious than a slowdown," said Anthony Chan, senior economist for J. P. Morgan Fleming Asset Management in Columbus, Ohio.

The economic slowing suggested by the index was countered by another report from the Federal Reserve Bank of Philadelphia. That report pointed to stronger-than-expected growth in the mid-Atlantic region's manufacturing sector during April, along with rising prices.

Also, the Labor Department reported that the number of Americans filing first-time claims for unemployment benefits plunged by 36,000 last week, the biggest drop in three years.

The drop, which government analysts cautioned was vastly overstated by special factors, pushed the number of applications down to a seasonally adjusted level of 296,000. It represents the third consecutive week of declining claims.

Analysts said an early Easter skewed the weekly figures, and said the four-week moving average of claims was a better indicator. That figure declined by 8,500, to 330,250.

Economists noted that an earlier rise in claims for jobless benefits was the largest factor pushing down the Conference Board's index. Taken together, the economic reports point to a transitional period for the economy, they said.

"I think that slower growth may actually overstate what we're headed for," said Mark Vitner, an economist for the Wachovia Corporation in Charlotte, N.C. "I think more modest economic growth is what we're likely to see."

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

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» Kirk - U.S. jobless claims plunge to 296,000

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U.S. jobless claims plunge to 296,000

Easter-related seasonal adjustment cited

By Rex Nutting, MarketWatch
Last Update: 9:29 AM ET April 21, 2005

WASHINGTON (MarketWatch) -- First-time claims for state unemployment benefits plunged by 36,000 to a seasonally adjusted 296,000 in the week ended April 16, the Labor Department said Thursday.

It matched the lowest level of claims seen for this business cycle. It's also the largest one-week decline since December 2001. Read the full report.

A Labor Department official cautioned, however, that seasonal adjustment issues surrounding the Easter holiday may have distorted the decline in new claims. Easter fell relatively early on this year's calendar.

Distorted or not, the initial claims data correspond to the survey week for the April employment figures, which are due out on May 6. The claims figures are among the few solid clues economists use to forecast monthly payroll growth, recognizing that initial claims are mostly about how many jobs are being lost, not how many jobs are being created.

"Given the evidence of some weakening in the economy due to elevated oil prices, it is likely that employers will be more likely, for now, to react by holding off hiring new workers rather than by laying off existing workers," said Sophia Koropeckyj, an economist for Economy.com.

"I would not alter our payroll forecast based on a single claims figure, but we have been arguing since the March data were released on April 1 that payrolls for this month would rebound vigorously and we still feel that way," said Steve Stanley, chief economist for RBS Greenwich Capital.

As always, the government recommended looking at the four-week average as a more reliable indicator of labor market conditions.

The four-week average of initial claims, which smoothes out distortions caused by one-time events such as weather and holidays, dropped by 8,500 to 330,250, a four-week low.

After dipping to 307,250 in February, the four-week average of new claims has returned to the levels that prevailed for most of the last year, ranging between 330,000 and 350,000. This would be consistent with monthly payroll growth of about 150,000 to 200,000.

A year ago, the four-week average was near 350,000.

Meanwhile, the number of people receiving weekly benefit checks fell by 17,000 to total 2.64 million in the week ended April 9. The four-week average of continuing claims dropped by 9,000 to 2.64 million, the lowest in four years.

A year ago, continuing claims were averaging 3.01 million.

The insured unemployment rate -- the ratio of beneficiaries to those eligible for benefits if laid off -- remained at 2.1%.

The Federal Reserve had been focused on the weak labor market for much of the past four years. But recent comments from Fed officials indicate that they are satisfied with the improvements in job growth and are now focused primarily on inflationary signals in charting interest-rate policy.

The Fed is expected to raise its short-term interest rate target to 3% at the central bank's next policy meeting, scheduled for May 3.

Unemployment benefits are available for six months to those in covered employment who lose their jobs through no fault of their own. About a third of beneficiaries exhaust their benefits before finding a job.

-- posted by Kirk

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» Bill_Duffy - You know it's a bad job market

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When the guy at Best Buy who sells you your new laptop is the same guy who designed the chip....

-- posted by Bill_Duffy

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