Engineers, no. Scientists, yes.

Short answer: Since the first half of 2007, the number of employed engineers is down 12%, while the number of employed scientists is up 3%.  Perhaps a sign that we are keeping the R in R&D, while losing the D. A decline in the number of engineers is *not* a good thing.

Long answer: I just updated my analysis of engineering and science jobs during the recession. Using data from the  Current Population Survey, I calculated the number of employed engineers in the first half of 2010, and compared it to the first halves of 2009, 2008, and 2007. I did the same thing for scientists. The results are, as we say, illuminating. Here are the charts.

Important caveat:  Because this data is drawn off a survey,  it bounces around quite a bit. So small changes are likely not statistically significant. Still the patterns look clear.

Comments

  1. Could you expand on your definitions for both scientist and engineer? A significant number of people trained in engineering disciplines are not employed in development functions. They do engineering related work and work that requires an education in engineering, but they don’t do what most people think of as enginering (i.e. product design and devlopment).

    • Mike Mandel says:

      Here’s what the CPS interviewing manual says.

      … coders assign occupation codes on the
      basis of the kind of work the specified
      person usually does and on a description of
      his/her most important activities or duties.

      One word responses to the
      question on occupation (for
      example, clerk, engineer, manager,
      nurse, teacher) are usually far too
      general to be coded accurately.

      Suggested probe: What kind of engineer are you (e.g., civil, electrical, mechanical, nuclear,
      chemical, train, stationary, building)?

  2. William Wagner says:

    What percentage of these “scientists” are global warming flacks?

  3. This may be more an effect of employer with engineers primarily in the private sector and scientists primarily in education and government. That would be good for the employment stability of scientists but not good for the productive capacity of the country.

  4. This is India. I have a small engineering business and I get frequent calls from Indian firms soliciting outsourcing work.

  5. Elliemae says:

    I agree with the person who says that scientist tend to work in the government and education sector. This would make them more resistant to flux in the economy than engineers who tend to work in the private sector. I would also like to say that I wish I could find a way to turn this info into economic data on the development of new products in specific companies. In two to five years the companies that are lagging in development are going to falter and even fail when they lack new products to market. Whereas companies that continue to develop new products will prosper. You could really clean up in the stock market if you knew which was which.

  6. mike shupp says:

    NASA subcontractors are laying off as the Space Shuttle is phased out; really serious cutbacks in defense R&D can be expected in the next few years. That’ll drop your engineering employment figure by one or two hundred thousand.

  7. Michael Lachanski says:

    Even then, you really wage information to come to a conclusion about demand for engineers. This could be a supply shock or a demand shock (not to mention the cyclical effects that are bound to show up in the last three years of data).

  8. David Fieldhouse says:

    Presumably R&D costs have dropped more than future benefits. I understand small firms are credit constrained, but there isn’t a good reason for large firms to do this as well – which is typically the case. The fact that they don’t is really fascinating. Any thoughts?

    • What reasons are there to think that R&D costs have dropped more than future benefits? I would have thought, looking at Mr. Mandel’s chart, that the likelier story is that firms believe the opposite; they seem to be betting that the future benefits of R&D are dropping relative to the costs of R&D. It would most certainly fit with the business news reports that companies are sitting on trillions in cash because of “uncertainty.” CEO’s claim that the uncertainty is due to the government, but I think that they are rather too clever to admit that they have no idea where the economy is headed, and hence don’t want to invest any money. They’ve got to save face somehow for not being good enough at their jobs to see where they should be spending the cash to gain competive advantage.

      • “they have no idea where the economy is headed”

        Well, they don’t have crystal balls (some of them have no balls at all), and in some industry sectors the economy is headed right down the toilet. There is something to be said for diversification (didn’t we try this over the past few decades already), but most industries have fairly circumscribed economic functions and markets. If indications are that there is no demand growth at the end of the supply lines in any conceivable market segment, where are they supposed to invest? On top of that there is the aggregate dynamic of publicly traded companies being held hostage to their quarterly “performance” by “market analysts”, which tends to make executives with compensation tied to company stock (or options) extremely wary of uncertain investment. For the time being, cutting costs has not yet played out its “potential” in many places (i.e. cost cutting has not yet become discredited and causatively associated with underperformance, so for the time being that’s the fad).

      • In my line of work, for several years and probably the better part of the decade the story has been “consumer products”. Well, consumer products have reached the end of the flagpole. With the end of consumer credit as we knew it, and no organic income growth, there is no paying demand at previous profit margins enabled by manufacturing cheap in Asia and selling to Americans/Westerners who put it on the card or the HELOC. Now it’s manufacturing cheaper than ever in Asia and sell at bargain prices to whoever is still buying. That successive revisions of new gadgets are ever more expensive to design and make (diminishing returns) doesn’t help either. Selling equipment and services to business is a multiplier, and with no growth in consumer there is no growth in the business multipliers as well. Unfortunately people working in business (or no longer) are consumers too so there is a feedback loop with stagnation and decline in business feeding back into incomes and consumption. It is easy to blame executives for not investing, but in what would you invest?

      • cm, first, let me say, great comments. I agree with you that the incentives CEO’s face definitely do not point them in the direction of taking risks, especially not while they will almost certainly be rewarded for following business management fads. That said, I don’t think it takes a crystal ball to see where there are opportunities. Consumer credit as we knew it is over, and there isn’t organic income growth; hence many consumers are price sensitive in a way they haven’t been recently. Selling people cheap junk to that they don’t really need and doesn’t really do much to improve their quality of life probably has now reached its zenith. Given current circumstances, there probably is some advantage to be gained by trying to manufacture and brand for value instead of simply selling for the lowest possible cost. Another avenue is the selling of extremely low cost entertainment. Think of how many apps have already been sold. Think of how much money has been spent on cheap video games. Also, and perhaps I am wrong about this, but I think that in the coming decades the amount that U.S. residents spend on transportation, energy, and housing is going to fall steadily. I think that the combination of the taxing of carbon emissions, advances in renewable energy, continuing improvements and investment in efficient home appliances, and the widespread adoption of electric cars will, in total, change incentives such that people will no longer want or be able to afford living in large houses, but that once they opt to live in smaller dwellings, they will actually end up saving enough money on housing/financing costs and in energy costs to end up with more disposable income than they otherwise would have had. People who live in smaller dwellings will be less likely to want to fill them up with cheap junk, and will want to spend more money on things that have an experiential component to them. I’ll grant that it is vague, but if I were a CEO, I would be focusing on those trends and what they mean for my company. I really can’t think of any industry in which preparing for that future couldn’t be justified and would look to investors like it only has limited potential to bolster the company’s position.

      • “manufacture and brand for value instead of simply selling for the lowest possible cost”

        I don’t know. What if the move to low cost is in good part because the higher end markets are grazed off, and the only way to get more sales is going down market? When the income/wealth distribution is so heavily skewed, if you don’t sell cheap you don’t have a large market. Why do follow up revisions of iphone/ipod/ipad etc. get cheaper? Because that’s the only way to expand the customer base?

        Consider e.g. cell phones. They are not cheap. Most people probably can afford them only because they are rolled into the service fee. Who will shell out $600 (?) for an iphone just like that? You get a phone “free” or at nominal charge only when you sign up for 1-2 years.

        “extremely low cost entertainment … apps … cheap video games”

        These categories have low barriers to entry, which means that most players cannot make a lot of money, at least with limited-effort games. Fancier games need a lot of effort to produce, including a lot of artistic input besides the game engine. The game industry, at the corporate level, is notorious for the probably most abusive working conditions in (domestic) tech. This is not because game executives are more cutthroat material than everybody else, but because of the high risk of titles not performing, fixed schedules (e.g. games ready for the Christmas season or other major spending events), and margins not in line with that risk. As for e.g. iphone apps, there is probably a lot of hype currently, and a lot of developers are in the market for fun, to test the water, or because there is nothing much else that is cool. Most probably don’t make any money. At the end of the day, you again need customers who can shell out for that many new apps every month or additional service subscriptions.

        “things that have an experiential component”

        I don’t understand what you mean. What has such a component other than games or entertainment titles/services?

        As for disposable income being freed up by downsizing homes, I don’t share your optimism but time will show.

  9. Good posts CM!

    Where to invest? – Usually where there is an obvious opportunity (paying customer) or to solve a problem.

    The last obvious opportunity was the consumer credit boom caused by the trade imbalances – too much money to invest floating around, low interest rates.

    In the 1970’s-1980’s the problem was declining quality, outdated management/business structure and high cost of labor.

    I guess today the obvious opportunity would be consumers in emerging markets – they will need cheap-cheap-cheap goods. Chinese companies that aren’t burdened with high CEO costs and other mark-ups are probably better poised for those markets.

    The main problems today are the high cost of energy & commodities, high cost of education (US) and a high cost, health care system in need of “right-sizing”.

    1.) Research into new materials & new energy producing/saving techniques
    2.) Internet college degrees
    3.) Low cost clinics & medical equipment and products

    And of course there is the communications boom that Mike was talking about.

    • “Chinese companies … are probably better poised for those markets.”

      Not only because of cost, but also because of cultural affinity and geographical proximity (at least for the Chinese market).

      For (1) and (3), I think the government has to get involved, but in these days that’s difficult as prevailing ideology is not conducive to government involvement in things for the public benefit. For (2), I think the better approach would be to not have college degrees as an employment filter for positions that don’t really require one. Issuing more college degrees “lite” (in the sense of low cost of production) will not usher in prosperity, it will just devalue college degrees even more. Then everything that requires a Bachelor or Associate today will require a Master or PhD. Employers are not requiring college degrees because the work needs it, but as a filter to restrict their search to an allegedly higher quality candidate pool.

      • Of course there are many jobs where college level schooling is required. But there is enough evidence of title inflation in job descriptions. For example, in the tech industry one can observe that many highly successful veterans of old only have a Bachelor degree whereas today PhDs are much more prevalent. Now to some extent the state of the art has increased, requiring more specialization and longer and deeper penetration of the science. Also today there is hardly any job in tech not involving computers one way or the other. But in good part it’s just that more PhDs are minted by the higher ed system, and people pursue PhD programs in an attempt to leapfrog the already to ubiquitous Bachelors and Masters, which are virtually minimum requirements for the lowest level jobs that don’t have great career growth prospects.

    • As for the communications boom, sorry to be dismissive, but I identify this largely with the “attention economy” (celebrity reporting, everybody tweeting and clamoring for attention, exhibitionism, trivia/status updates, etc.). I’m not disputing the social significance, but even before modern communication technologies, and before any communication technologies, whenever the basic needs of a population were fulfilled (to the extent feasible in the mode of production), things turned to entertainment and social interaction of various sorts. What has changed today is that recent technology has enabled far greater volume and speed, and new formats (video chat, tweets, …). But are there new qualities of content? As far as I can see, with near ubiquitous reachability, communication has become more superficial. People call each other about trivial stuff, don’t make plans because you can always call the other guy, don’t think properly before writing something because you can always revise or clarify afterwards, etc. This enables a lot of flying by the seat of your pants, which I don’t consider a positive development overall. People communicate more but it’s probably to a large extent to compensate for the lack of proper thought and planning. And with written communication it is much more apparent how the lower cost of generating communications has greatly increased the volume of plain garbage. But I concede it’s a boom of sorts, and some money is to be made. But it’s a “superstructure” thing. What is underlying it?

  10. What is that…. about -250,000 engineering jobs against +10,000, between 2007-2010?

    That seems about right. I guess trading “low value” jobs for “high value” jobs doesn’t mean everyone will be employed, right?

    It’s not just engineers…

    http://www.nytimes.com/2010/08/05/business/global/05legal.html?_r=1&hp

  11. engineering jobs these days are on high demand as the economy recovers from recession`:-

  12. see here for best acesef work anywhere

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Archives

%d bloggers like this: