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FOREWORD This report is the first of several envisioned by the National Academy of Engineenng to address key issues relating to the long-term enhancement of the human talent indispensable to U.S. leadership in engineering and technology. Engineers and technologists are comical to all aspects of society: national secunty, economic competi- iiveness, and the general welfare. Ensunng appropriate flows of men and women into technological professions involves concerns at all levels, from mathematics and science education of young people through continuing education of expenenced workers in mid- career, as weD as Heir university education at undergraduate and graduate levels. This report asks questions and provides some answers about how employment of engineers in defense industries and laboratones affects employment in civilian industries and laboratories. It does not attempt to predict future supply and demand for engineers. Indeed, it clearly pouts out the need for much more extensive data to evaluate such issues. At the request of the National Academy of Engineenug, the Parle! on Engineering Labor Markets of the Office of Scientific and Engineenng Personnel of the National Research Council has performed a most useful task in examining analytically the often controversial question of how He talent pools in the defense arid nondefense sectors have interacted. The report also helps to bring into focus the broader issue that the nation must address. The challenge is provision of a sufficient number of outstaying scientific and engineering personnel in the context of the growing importance of technology to the economy In an era of steadily Creasing international industrial competition and a decI~n~ng number calf young Amencans available to enter technical careers. In judging the adequacy of the supply of engineering personnel, it is necessary to consider both quality arid quantity. Satisfying demand quantitatively can sometimes be achieved by devices, such as lowenng standards, which are counterproductive in the long run. The key to maintaining a vigorous and competitive engineering and technological enterprise is in producing a supply of highly qualified and well-~ained engineers for both defense and civilian activities. For that we need to place great emphasis on the quality of eng~nee~g education arid training in our universities and on enlightened hiring practices industry. As noted in the report, the available data bases on the eng~neenng profession have many deficiencies. Responding to shortcomings in information sources, the Pane} supplemented its use of published data with infonnation from a small sample of industrial recruiters and college placement officers. This report, which deals with engineering personnel as a whole, focuses on the larger pools of people--for example, undergraduate- leve} engineers. However, the report also recognizes He need for further work to examine He system at a finer scale for. an improved understanding of the extremely important question of He supply and dem=d of engineers Wined at the graduate levele We hope Hat the many groups concerned with engineering talent In both He defense and civilian sectors wiD find this report instructive and Hat it will stimulate further development of techniques for better anticipating future requirements for engineers at all educational levels and He policies to help meet them Robert M. White Vice Chainnar~, Nadonal Research Council, and P1 esident, National Academy of Engineering . . .. . . i
PANEL ON ENGINEERING LABOR MARKETS Harrison Shull, Pane! Chairman University of Colorado, Boulder Robert K. Armstrong E.~. du Pont de Nemours & Company Fredenck W. Garry General Electric Company Stephen J. Lukasik Northrop Corporation 1 1
EXECUTIVE SUMMARY Introduction The National Academy of Engineering (NAE) requested that the National Research Council through its Office of Scientific and Engineenng Personnel (OSEP) undertake an exploratory study to assess how recent increases in defense spending are affecting the supply of engineering personnel in civilian, nondefense labor markets. To address these issues, the Pane] examined a variety of data sources and histoncal models, information exchanged during a two-day conference, and facts gleaned from interviews with especially knowledgeable individuals, company recruiters, and university placement counselors. To avoid misunderstanding, the Pane! wishes to emphasize that this report does not attempt to assess long-range future relationships between the supply of and the demand for scientific and engineering manpower. Further component on the limitations of predicting the future from past and current conditions is given below (see page iv). Historical Overview The rate of increase in defense expenditures dunng the Korean War (1950-1953) was seven times larger than the rate of the most recent increase (1980-19851; it was two times greater during the Vietnam buildup (1965-19681. Defense and nondefense industries adjusted to the magnitude of these earlier defense expansions with little or no major disIocahons. The major reason for this was the existence of a set of adjustment mechanisms that permitted the eng~neenng labor market to accommodate reasonable changes in either demand or supply. Among these were long- term mechanisms such as a considerable increase in the supply of engineering degree recipients and short-term mechanisms such as substitution between engineering and noneng~neenng labor. The Current Situation The Pane} examined a number of sources to assess the current supply-demand relation for engineering employment. The Job Offer Index of the College Placement Council has actually decreased since 1982 for all fields except computer science, aeronautical eng~neenng, and electrical eng~neenng. The lower index suggests that Mere is no current shortage of engineers at the entry level. The High Technology Recruitment Index compiled by Deutsch, Shea, and Evans, Inc., shows that recruitment activity fell during the 1982 recession and, although currently on the rise, has not reached the peak achieved during the years 1978-1981. This suggests that, during the early 1980s when defense expenditures rose sharply, companies included in the Index were hiring at a reduced rate arid had little double fHlir~g scientific and engineering positions. Recruiters from 13 large corporations reported that they had no trouble filling . . .
engineering positions. Placement officers from about a dozen academic institutions indicated that currently the demand for graduates roughly matches supply and that there is less aversion to working on defense projects than during the late 1960s. lob offers from defense firms have acted to offset declines ire recruiting activity by the commercial sector and to absorb increases in the supply of engineering graduates. More significantly, the percentage of scientists and engineers working on projects sponsored by the Department of Defense in the early ~ 980s was, in general, lower than the percentage in the early 1970s. This is further evidence that defense outlays have not senously affected the numbers of engineers available for nondefense work. Anticipating the Future There are signs that defense spending is leveling and that, in the near future, defense demands will not stress the labor market for engineers. Current actions of Congress on the defense budget suggest that the rate of increase is likely to be less than onginally projected. Current available econometric models and available data are inadequate to make predictions of the effects of future perturbations on the engineering community. Existing models, for example, do not permit an adequate assessment of the probability of future significant over- and undersupplies of engineers. National security, in its broadest concept, dictates having a domestic professional engineer capacity to meet both defense and commercial demands. The trend toward globalization, however, as corporations strive to maintain or establish positions in markets that are increasingly international in scope, is producing a vaguely of new industrial operating concepts. These include joint ventures, licensing, and sourcing--not only of finished goods, materials, tools, skilled and unskilled labor, but also of scientific research and professional engineering work. Obviously, in such a period of dramatic industrial transformation, reliance on the events of the past quarter century and on current economic models provides an inadequate tease for predicting future engineering supply and demand. Although the marketplace is adaptable, it is not perfectly so. Enperfections produce adverse effects on individuals, on particular industries, or on particular subfields. It is important to consider waYs to minimize these adverse effects and to develop mechanisms . ~ . ^~ ~ , ~ ,~ ~ ~ ~ ~ ~ e that are cost ellectlve. A number or potentially useful mechanisms on wn1cn attention might be focused can be listed (see also pp. 15-17): Encouragement of increases (or decreases) in the number of new engineering graduates produced each year. Promotion of occupational mobility into or out of engineenng. Substitution between engineers and experienced nonengineers in the perform- ance of technical work. More effective utilization of engineers through such mechanisms as enhanced use of new information processing technologies, reassignment of tasks that can be performed effectively by others with less education, and provision of increased or more effective support personnel. Provision for an increase in the number of advanced engineering degree- holders. Retraining and continuing education of engineers in the workplace. Recruiting and hiring of foreign students and engineers and sending of engineering tasks to offshore talent pools. Restructuring of engineering education to provide more general skills that would allow a better match to the changing needs of the nation and permit more i IV
flexibility in responding to shorter-term fluctuations in the relation between supply and demand. Conclusions The main conclusions of this report are summarized as follows: . . The engineering labor market has exhibited a high degree of resiliency to the shocks of external forces, such as wide fluctuations in defense spending (see p. 4~. · The current defense buildup represents a relatively small increase when compared with earlier buildups (see pp. 5-71. · Although the current demand for engineering services is high, evidence drawn from a varied of sources does not suggest pervasive or serious industrial shortages. However, problems may exist in particular fields requiring highly specific Gaining, such as optics, and shortages of eng~neenng faculty have been well documented (see pp. 8-l I). Current understanding of the distribution of the best-quaTified engineers between defense and commercial markets is poor (see pp. 10-~. Quantitative models of engineering manpower supply and demand developed thus far are inadequate to predict effects of future defense program requirements on the civilian economy or other similar issues (see pp. 13-151. In addition, the Pane! suggests the following areas of further study to improve the anantilv and the quality of information about the eng~neenng labor market: . . . There is a significant need to refine and improve our understanding of all aspects of the engineering labor market. Better understanding is needed of how market adjustment mechanisms work and what steps would improve their functioning (see pp. 15-171. Quantitative models of engineering manpower supply and demand need further improvement. There is little reason to expend large sums in using present models to predict the future. Such projections may bear little resemblance to the actual future. But basic research on the models should be aimed to provide eventually an analytic too! to make more useful projections. The ability to assess potential future problems depends strongly on the development of a suitable continuing empirical knowledge base about engineering personnel supply and demand. Careful attention should be given to accumulating the essential data, to bridging current gaps, arid to avoiding unnecessary duplication of effort Considerably more attention needs to be given to conceptualizing and developing indicators of quality and, therefore, of understanding the most effective means of improving quality of education and of engineering performance (see pp. 15-171. · There is need to monitor the engineering labor market on a continuing basis, using both the developing empirical data base and the improving theoretical models to recognize emerging problems in a timely manner (pp. 15- 171. A study is needed to understand the rapidly changing international character of the supply of engineering services and its effect upon the competitiveness and national security of the United States (see p. 9~. v
CONTENTS INTRODUCTION HISTORICAL OVERVIEW Significant Events Policy ~inadves Conclusions TO CURRENT SITUATION Defense Buildup The Market for Engineers Defense Employment Sumunary ANTICIPATING THE FUTURE Andcipadng Demand Surveys Analytic Methods Ad hoc Methods Aniicipadng Supply An Evaluation Further Issues CONCLUSIONS ACKNOWLEDGMENTS BIBLIOGRAPHY APPENDIXES A. Commissioned Papers "Scientific and Engineering Personnel: Lessons and Policy D~rections"-- Eli Ginzberg "Modeling He Supply of Scientists and Engineers: An Assessment of He DauffenBach-Fiorito Work"--Michael S. McPherson "What Can Demand and Manpower Requirements Models TeD Us About the Impact of Defense Spending on the Labor Market for Scientists and Engineers?"--W. Lee Hansen B. Related Tables C. Views of Placement Officers Summary: College Relations Discussion Group Meeting "Defense and Nondefense Employment: The View from Engineenng Schools Placement Off~ces"--Robert K. Weatherall · ~ V11 1 3 3 3 4 s 8 10 11 13 13 13 14 14 14 15 15 18 19 ~ 1 23 25 43 53 67 79 81 83
The Impact of Defense Spending on Nondefense Engineering Labor Markets A Report to the National Academy of Engineering Panel on Engineering Labor Markets Office of Scientific and Engineering Personnel National Research Council NATIONAL ACADEMY PRESS WASHINGTON, D.C. 1986
NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineenng, and the Institute of Medicine. The members of the pane! responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee, consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Research Council was established by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and of advising He federal government. The Council operates in accordance with general policies determined by the Academy under the authority of its congressional charter of 1863, which establishes the Academy as a private, nonprofit, self-governing membership corporation. The Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineenng in the conduct of their services to the government, the public, and the scientific and engineering communities. It is administered jointly by both Academies and the Institute of Medicine. The National Academy of Engineenng and the Institute of Medicine were established in 1964 and 1970, respectively, under the charter of the National Academy of Sciences. This matenal is based upon work supported in part by the National Academy of Engineering Technological Leadership Program. Copies are a~a~lefrom: C)fB~ce of Administration and Finance National Academy of Eng~neenng 2101 Constitution Avenue, NW Washington, DC 20418 Printed in the United States of Amenca
NATIONAL RESEARCH COUNCIL 2101 Constitution Avenue Washington, D. C. 20418 Dr. Robert White President National Academy of Engineering 2101 Constitution Avenue, N.W. Washington, D.C. 20418 Dear Dr. White: September 1, 1986 I am pleased to transmit to you the report, The Impact of Defense Spending on Nondefense Engineering Labor Markets.. You will recall that the Office of Scientific and Engineering Personnel was requested to undertake a study to investigate the feasibility of assessing the impact of large increases and decreases in government defense spending on the availability of engineering personnel for the nondefense, commercial sector. To accomplish this task, a Panel on Engineering was formed, three papers were commissioned, and a body of relevant data was compiled. The Panel reviewed this material and, based on it, produced the final report. to you the Encineerino Labor , ~ ~ the feast bi 1 Sty The report presents evidence about past and current experience; it describes the limitations in our ability to anticipate the future and cautions against reliance on events of the past or the present in predicting future engineering supply and demand. The attached report represents the consensus of all members of the Panel. We hope it will serve a useful purpose in illuminating the facts and issues that must be conf ronted in addressing this important issue. Sincerely, . Harrison Shull Chairman, Panel on Engineering HS:jg The National Research Council is the principal operating agency of the National Academy of Scicnecs and the National Academy of Engincenng to sync ga~crnmcnt and other organizations