The Engineering Labor Market: An Overview of Recent Trends

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The role of engineers in developing infrastructure, technology, and innovation has long made the economic health of the profession an issue of concern for public policy.2 In the Great Depression engineers were critical in developing the New Deal public infrastructure that boosted employment. In World War II engineers were critical in advancing and military technology and deploying it in the field, which raised concerns about bottlenecks due to limited supply (Allen and Thomas 1939). Afterwards, many saw engineers and scientists as vital to national security and economic prosperity. In 1945 Vannevar Bush (an engineer himself) articulated the need for a strong science and engineering workforce in his famous statement on the “Endless Frontier” of scientific and technological progress (Bush 1945). For most of the next several decades, policy makers worried about shortages of engineers and scientists. Shortage fears reached a crescendo in 1957, when the Soviet Union's launch of Sputnik seemed to threaten US technological preeminence. But economists found little evidence of a classic market “shortage” in labor market data on wages, employment, and graduates (Blank and Stigler, 1957; Hansen 1961). Ensuing work recognized that the labor market for engineers functions differently from labor markets where demand and supply clear markets quickly because engineering education requires intensive and highly prescribed curriculum, causing supply to lag demand, and that because firms cannot easily find substitutes for engineering skills, wages may be driven up considerably in the short term, producing resultant cobweb type cycles not found in most labor markets (Freeman 1975 & 1976, Ryoo and Rosen 2004). Still, labor shortage fears have persisted into the 21st century (Teitelbaum 2014), perhaps most notably in the National Academy of Science-National Research Council’s report, Rising Above the Gathering Storm. Invoking Churchill’s characterization of Germany’s threat to Europe in his book, The Gathering Storm, the report was written to raise an alarm about the growing threat to the United States by the rise of other nations’ science and technology capabilities and insufficient U.S. investment in its own research and development (R&D). Warning that “The nation must prepare with great urgency to preserve its strategic and economic security” (National Academy of Science et al., 2007, 4), the report recommended increasing the number of engineering graduates to keep up with the large numbers graduating in countries such as China. As with the earlier post-World War II cries of shortage and calls for more engineers, these recommendations lacked clear and convincing evidence of unmet domestic demand. This chapter provides background information on the engineering workforce and trends in the supply of new engineers to the labor market that set the stage for the rest of the book. The