The real reason for hiring engineers

Teschler on the subject
Leland Teshler • Executive Editor
lteschler@wtwhmedia.com
On Twitter @DW_LeeTeschler

Ask most people about the role of engineers in the economy and you will get answers that mention technology research and new ideas embodied in patents. This is of course an image you could get if you studied some of the undergraduate courses at leading engineering schools. For example, at Stanford University, engineering students can take a course called Fundamental Entrepreneurial Solutions. At the Massachusetts Institute of Technology, the MIT Sandbox Innovation Fund program claims to provide individual entrepreneurship training. And the University of Michigan College of Engineering has an Entrepreneurship Center.

But in reality most engineers are not entrepreneurs, have nothing to do with corporate labs and have never applied for any patents. However, many are finding ways develop new products and invent new processes.

Until recently, the truth about what engineers really do was nothing more than tribal knowledge of technologists. But the question for the general public remains: if most engineers are not innovators in the style of Thomas Edison, why do companies hire them? Economists like to consider such puzzles. So recently economists from National Bureau of Economic Research researched stereotypes about engineering jobs, collecting data on firms that have many engineers on salaries.

The picture from the NBER study is that engineers are mostly bringing their employers stable productivity growth rather than Bell Labs-type innovations. NBER researchers have turned their attention to manufacturing firms because manufacturing industries provide employment for a disproportionately large concentration of scientists and engineers: manufacturers employ 20% of all scientists and engineers in the industrial workforce and more than 60% of all R&D scientists and engineers. beyond academia.

Moreover, it turns out that the more scientists and engineers a manufacturer hires, the more likely it is that its performance will exceed that of competitors. Researchers admit that they are not sure why this is so, but believe it is because engineers are spending significant efforts to get their employers to implement and adopt new technologies.

NBER researchers have found that workers tend to earn more money when working for manufacturers who have a large proportion of scientists and engineers. The researchers also said that the best strategy for engineers to increase their salaries was to get a job where the workforce contains a large share of engineers, rather than staying in a firm that increases the ranks of its own engineers. However, researchers have found that wherever scientists and engineers work, they earn an average of 15% more than other employees of the firm.

Researchers have also found a possible explanation for why scientists and engineers sometimes feel that their supervisors do not appreciate them: The workforce, which consists of a proportionately larger number of scientists and engineers, has had a much more positive impact on productivity than on company profits. For many of today’s company leaders focused on the short term, profits today outperform productivity gains, leading to productivity gains in the future.

Reading between the lines, NBER data suggests that most likely company management may not fully appreciate what their own engineering staff are doing for profit. This is something to keep in mind the next time you enter into a conversation about what you have done for me recently with your superiors. DW