America Needs More Engineers

The quality of America's labor supply is low. Most politicians don't understand education reform. It's the backbone of the economy, and doesn't do much if it is given conventional treatment. We need a complete overhaul as to how we get people equipped for the labor market. The constant rhetoric of increasing graduation rates and improving test scores is just more pussyfooting. We need to re-instill the passion for math and science to produce the next generation of engineers from all disciplines: financial, environmental, mechanical, software, medical and more.

The proof is in the Beveridge Curve to the bottom right. Even as we extend emergency unemployment compensation, job vacancies continue to increase. As the plots move further away from the regression line, more jobs are left unfilled. This could mean that with unemployment benefits, the recipients don't utilize the time to acquire more skills.


Since I was a child, I've always questioned why people drift away from science and math. Up until fourth grade, children have great curiosity in the sciences. We all wanted to know how things were created - it was like explained magic. I remember at age seven I told my parents I wanted to be an astronaut. My Mom, always realistic, would tell me that that plan involved lots of work and heavy academics, but I replied that my back-up plan was to be an astronomer. Little did I know that that too involved the same level of math and science, coupled with hard work and determination. As I grew older, my elementary school had us play with LEGO blocks and introduced shapes and basic geometry with some math. I then wanted to build things. I came home and replicated cities with my building blocks - I wanted to become an architect. By fourth grade, something happened and all of my friends put aside their scientific dreams and wanted to be rock stars and athletes. This was where trouble began.

Some may argue that every child can be what they want, and there is nothing wrong with being a rock star and athlete. However, there is a lot wrong with this. The spillover effects on the economy are somewhat toxic. Glamorized careers produce little advancement to the economy as a whole. These rock stars do not contribute to the prime industries that utilize the nation's resources to effectively compete in the global economy. They often establish charities with little understanding of economics, causing more harm than good. The odds of being the next rock star and athlete are so low that the probability begs children to protect their human capital at all costs. Being an educated rock-star with some skills to fall back on is fine. An engineer who has a side band is also great.

Sadly, the damage has already been done. More Americans are entering the workforce with little skill and 9-10% unemployment rates are worrisome (not including the underemployed and those who stopped searching for jobs). Interestingly, Americans with just a High School education are evenly distributed among professions. This means that the less educated are still starting businesses and becoming productive managers. As support, these low skilled entrepreneurs need the expertise of skilled workers to expand. As lending declines, more entrepreneurs are relying on savings and personal credit to start ventures. The savings need to come from somewhere - a job. That job that can provide sufficient start-up income is hard to come by if you lack the necessary skills that are in high demand.

According to Manpower, 46% of senior human-resources executives surveyed in the company’s latest global annual survey said that their talent gap was making it harder for their firm to implement its business strategy. Only 27% said they felt their business had the talent it needed. And the shortage is likely to get a lot worse because of the imminent retirement of a generation of seasoned workers with sought-after skills in the rich economies. In 2008, one in four workers in America with a degree in science, technology, engineering or mathematics was 50 or over. Lockheed Martin, an aerospace firm, expects nearly half its science and engineering workforce to retire by 2019 and will have to hire a total of 142,000 engineers. Currently only 60,000 engineers a year graduate from American universities. -The Economist

There is intense pressure on the younger population to replace the old. Jobs require more skills and experience. Young graduates might obtain the skills but lack experience. Older workers have the experience, but lack skills. The solution is to work on getting the young population experienced while receiving a skillful education. At the same time, we must get the older workers into skilled programs, certainly before they give up and seek early retirement placing a strain on the near bankrupt benefit schemes of the nation. We need to act fast.

The problem is not just American, and we can actually learn from other nations. Russia faces an exodus of skilled people who have the income to venture away from the nation. This creates a problem as President Putin plans to rely less on energy exports and more so on human capital and innovations in technology and banking. Germany has comparative advantage in manufacturing, but its youth are shying away from math, science, and technical skills. Also, women are intimidated by the stigma of technical work being a man's job. The Arab World is probably the most interesting example of a plan that could have worked. Governments in the Middle East did well at educating the youth by creating great institutions and pushing its large population of young people through school. The problem was when most of them graduated, jobs were nowhere to be found. The management of most companies are run by a group of foreign educated elite and to some extent controlled by the State leaving managerial powers at the hands of the autocratic ministers. Little room is left for the recent grads to utilize their skills. Great opportunity for America.

We need a plan to leverage the shared problems of the world. It starts with labor. US companies should continue to recruit the skilled graduates from foreign lands, and the government should relax its immigration policies in certain respects. An Indian student who graduates from a US school looking to work in the US should be welcomed because it contributes to our economy; strengthening our comparative advantage against the home country of that student. We are placed one step ahead. Currently, it is very expensive to go through the immigration process with Visa issues and such, so US companies give up and wait for the few skilled US grads to apply.

While they wait, we should help them craft the incoming applicants to their liking. Organizations such as the National Math & Science Initiative (NMSI) are doing a great job at addressing this issue. NMSI sponsors advanced quantitative curriculum in schools across the nation. Exxon Mobil recently helped to spread the word with a series of commercials. This again is an opportunity for companies like Exxon to continue.

New York City has an adopt-a-school program that works wonders. Although it has been gradually dismissed throughout the years, some High Schools that are career focused create partnerships with companies such as Citigroup and grant internships to students. Students have a resume with skills already taught by the curriculum of their High School and sponsor company before entering college! Companies should team up with schools from as early as Middle School to guide a matriculation of well skilled applicants. It's cheaper than implementing a training program.

Research in Motion has a great collaboration with the nearby University of Waterloo in recruiting highly skilled graduates in the fields of engineering and management. The national  physics center and think tank founded by the company's two CEOs strengthens the relationship with Canada and its future generation. That is truly a great example of how corporations can best utilize regional human capital.

Bottom line is that we need to produce more engineers of various disciplines to effectively compete.