MY JOB LIES OVER THE OCEAN
By Dan McGraw
Trying to assess the role of higher education within the national
economy is always tricky business. The obvious connection is that
technological innovation drives economic growth, and science and engineering
schools are responsible for developing the minds that drive the innovation.
Virtually every job on the economic ladder, every morsel eaten in
the economic food chain, is dependent in some way upon new ideas incubated
in classrooms and labs around the country.
But the danger is in trying to quantify the relationship between
economic growth and engineering education. If engineering schools
pay too close attention to national economic interests, they become
little more than technical job-training schools. Economic growth is
a byproduct of a great educational system, but educational institutions
cannot be great by merely serving national economic interests.
This is a much discussed point of contention between science and
engineering educators and economists. Should engineering schools merely
funnel grads into the job market, taking heed of what the private
sector needs to help its bottom line? Or should engineering educators
focus on creating an environment where their students discover the
next big thing, whatever that might be?
The answer is not easy, nor is it an either/or proposition. And the
issue is becoming more pressing everyday as globalization moves hundreds
of thousands of engineering jobs offshore to countries like India,
Russia, and China. The question for engineering schools is what role
they face in stemming the tide of jobs being lost. Should they retool
curricula to allow engineering graduates to better compete in the
ever connected worldwide economy? Or should educators do what they
have always done: provide the substantive education that will ensure
that the next leap in technological innovationbe it in biotech,
nanotech, or wireless technologyoccurs in this country.
The numbers are grim. Gartner Inc., a high-tech forecasting firm,
estimates that 10 percent of computer services and software jobs will
be moved overseas by the end of 2004. Deloitte Research surveyed 100
of the world's largest financial services companies and found
they expect to move 2 million jobs and $356 billion in operations
to low-wage, developing countries within the next five years. Forrester
Research, a marketing research firm, predicts that 3.3 million high-tech
and service-industry jobs will move overseas by 2015, jobs that will
provide $136 billion in wages.
The first jobs moving offshore are lower-level ones in computer programming
and at call centers for financial institutions. But there is now an
indication that higher-level engineering jobsarchitectural services,
research and development for computer chip makers, aerospace engineering
jobsare beginning to make their way out of the country as well.
When manufacturing jobs started moving offshore, we were told
not to worry, that the U.S. comparative advantage was in services
and high technology, Paul Almeida, president of the department
of professional employees for the AFL-CIO, testified before Congress
in the summer of 2003. We were assured that the new global division
of labor was both natural and benign: We would keep the high-paying,
high-skilled jobs while developing countries would do the actual work
of making things. Now, engineers with Ph.D.s and recent college graduates
alike are hearing that they are too expensive, that their job can
be done more cheaply abroad.
The trend is complex and full of many moving parts, from the valuation
of the dollar overseas to the ability of telecommunication to allow
a computer engineer in Bangalore, India, to do the same work as someone
in Silicon Valley. But what is at play here is central to the question
of a global economy and commoditization of engineering
work. If a computer programmer in India or China can do the work for
$10,000 a year, and a U.S. computer programmer makes $60,000 a year,
it is not difficult to see which country the work will gravitate toward.
How should engineering educators respond to the globalization of
jobs? Some predict that as lower-level jobs migrate overseas, followed
by R&D work, the best and brightest will shun engineering studies
for business or law or medicine. That will lead to a decrease in real
innovation, and the advantage in technology that the United States
has held in the world will slowly be eroded.
Richard Tapia, professor of computational and applied mathematics,
sees the situation as a bigger threat than most people realize.
In science and engineering, Tapia says, the job market certainly
drives the educational component. Our job is to sell science and engineering
education as an excellent opportunity. It drives the incentive for
students. What is happening now threatens a traditional strength in
this country. As job opportunities go away, a certain creativity goes
Tapia sees the move of even low-level tech jobs as having a subtle
long-term impact on developing new technologies and the economic
impact that goes along with that. How many companies started
over a cup of coffee? Tapia asks. People sit there and
start brainstorming. It's all part of the creative process. We
can't tell companies they have a certain quota for domestic workers,
but we can give them the incentive to keep work here in this country.
We must do that which strengthens our country long term.
On the other hand, the globalization of the U.S. economy may be just
another trend in the free-trade world. Under this theory, countries
do what they do best competitively, the work is done cheaper, and
consumers benefit in the long term. If computer chips can be made
more cheaply in China, then that's where the chips will be made.
It is more important to remain on the higher rungs on the global economic
ladder, designing the machines that use the chips, or creating new
technology that makes old chip configuration obsolete. And from that
innovation comes the real economic growth.
In the United States, especially in the educational community,
we often get spooked by economic trends, says Anita K. Jones,
a computer science professor at the University of Virginia and member
of the National Science Board. There are a lot of different
kinds of information technology jobs moving offshore right now. Many
of them are not sophisticated jobs. But we as educators cannot change
what we do in reaction to every economic change.
The challenge for the educational community is to educate people
for more sophisticated, knowledge-based jobs, Jones continues.
What an engineer does is use knowledge to find new ways of doing
things. That hasn't changed. We need to educate for the future
and, as always, we need to continue to educate our students better.
Competition for jobs overseas doesn't change our mission.
The term perfect storm has almost become a cliché,
but the term certainly applies to the factors that have caused so
many white-collar jobs to be shipped abroad. Just a decade ago, the
high-tech industry was rolling along with no end in sight. But the
current move of science and engineering jobs overseas predates the
Internet revolution of the 1990s. In the 1970sand more so in
the 1980sbasic manufacturing jobs were moved to Mexico and the
Pacific Rim. Still, as the AFL-CIO's Almeida testified, the high-tech
innovation kept the economy humming.
But the economy soured around 2000, and the terrorist attacks in
2001 put the economy further in the tank. Adding to the current economic
problems was the amount of funds private companies paid to upgrade
for the anticipated Y2K problems, and subsequent lack of spending
on IT in the ensuing years. The pressure during the economic recession
forced companies to look more closely at their bottom line.
But there was also an inevitable economic evolution taking place.
Much of the work being done in information technology and other engineering
jobs became simple rote work. Software applications and
writing computer code became more standardized and, therefore, more
commoditized. And as this trend was going on, universities in countries
like China, Russia, Ireland, India, and Malaysia were awarding science
and engineering degrees in numbers approaching their U.S. counterparts.
As more engineering graduates were being put into the engineering
economy worldwide, there was a downward pressure on wages.
Ron Hira, an assistant professor of economic policy at Rochester
Institute of Technology, studied the wage requirements for recent
engineering graduates around the world. U.S. engineers make about
$70,000 a year. The drop off for other countries is precipitous: Hungary,
$25,690 annually; China, $15,120; Russia, $14,420; India, $13,580.
The disparity in wages is exacerbated by the high value of the dollar
in recent years. Because of the high value of the dollar, foreign
engineers can live middle-class lives in their home countries. The
savings in wages boost private companies' bottom lines.
But the savings for companies are more than just wages. Because work
can be done on one continent, and then passed off to another engineer
in a different time zone, there are huge efficiencies to be achieved.
A programmer in Ireland, for example, can begin work on a project
and then pass the work off to an engineer in India. The same can be
done for engineering work for architectural planning, designing new
airplanes, improving industrial machinery, or basic biotech studies.
And the cost for private companies in moving these jobs offshore is
usually very cheap. In the past, when blue-collar manufacturing jobs
moved to foreign countries, the cost of building a new factory had
to be figured into the equation. With back-office engineering jobs,
the only costs are a desk, a computer hookup, and wages.
There is also the issue of the number of foreign workers who came
to the United States during the heady high-tech days to work under
temporary H1-B and L-1 visa programs. While huge numbers of foreign
workers were needed to bridge the technology gap during the 1990s,
many foreign workers, particularly from India, returned home with
knowledge of how U.S. companies worked and connections to gain contract
work from them.
A. Aneesh, professor of science and technology studies at Stanford
University, studied 150 foreign workers in the United States, mostly
from India. There has always been a misconception that these
workers came here under these visa programs with the intention of
staying here forever, Aneesh says. People came here because
the attrition rate of Indian companies was high in the 1990s, and
they came here because the work and pay were the best. The prime motivation
was to earn high dollars here, exchange them into rupees, and eventually
go home. Since the Indian high-tech economy has improved so much,
many foreign workers are going back and, unfortunately, taking jobs
The moves involve thousands of high paying jobs. According to Business
Week, Intel plans to move 3,000 chip design jobs to India by 2006;
Microsoft will move 500 software design jobs to India and China in
2003; Oracle will move 4,000 software design jobs to India during
the next five years; and Phillips will move 700 consumer electronic
design jobs to China in the next few years.
It is not hard then to see why U.S. companies are moving
some of their basic operations to other countries. Actually, it is
they wouldn't. But another factor for private companies
is the international component of their businesses. Gail
Dundas, a spokesperson
for Intel, says 70 percent of computer chip maker's
revenues are generated overseas, and it makes sense for
the company to have
a strong international presence.
We intend to maintain a steady level of employment in the United
States, but we will also have new job growth in markets outside the
United States, Dundas says. You have to look at all of
the factors. There are times when cost-effectiveness is a part of
it, but it is not the stand-alone reason. We have growing markets,
good talented people in those markets, and people who are more educated
than ever before. But we've been in foreign markets for 34 years.
This is not something that just started happening for Intel in the
past few years.
But is this move of jobs offshore any different than globalization
trends in the past? Is what is happening now any different than 1930s-era
protectionism or the move of auto manufacturing jobs during the 1980s
or the movement of electronics work to Asia and Mexico throughout
the 1990s? Ron Hira believes there may be a fundamental difference
now. With more than 2.6 million manufacturing jobs having been lost
since 2000, there is a spillover effect, which is already
decimating the IT industry, and a trend that may move to other engineering
jobs. Hira thinks the unprecedented loss in manufacturing jobs and
the movement of white-collar back-office jobs are related.
The trend has always been to put research and development closer
to production, Hira says. Location matters when it comes
to the innovation process because it generates enormous spillover
benefits and feeds on itself. An obvious example is Silicon Valley.
If production is moved out of the country, other jobs follow, and
the wages and benefits of our innovation are lost.
Hira points to the unemployment levels for engineers. According to
the U.S. Department of Labor Statistics, unemployment among electrical
and electronic engineers reached 7 percent during 2003; 6.5 percent
of all computer hardware engineers were unemployed; and 7.5 percent
of all computer software engineers were similarly out of work. The
recession had a lot to do with these unprecedented levels, but the
movement of work offshore is adding to the problem, Hira says.
The problem with Washington policy is that they ignore engineering
education, and they basically ignore why talented people make decisions
as students, Hira continues. If you agree that people
are rational when they make decisions, it follows that the best and
brightest students will look at the job market. Without jobs for all
engineering students, from the low levels to the highest, we have
the danger of slowly losing our competitive advantage.
The issue is fast becoming a hot-button topic in Washington, D.C.,
and may become an even bigger issue in the 2004 presidential race.
Sen. Joe Liebermann (D-Conn.), a candidate for the Democratic Party
presidential nomination, is particularly concerned with computer-chip
manufacturing, along with research and development in the industry,
moving to China. Liebermann believes the movement of the semiconductor
industry to China will have national-security implications for the
defense and intelligence community.
The loss goes beyond economics and security, Liebermann
wrote to Defense Secretary Donald H. Rumsfeld in June 2003. What
is at stake here is our ability to be pre-eminent in the world of
ideas on which the semiconductor industry is based. Much of applied
physical scienceoptics, materials science, computer science,
to name a fewwill be practiced at foreign centers of excellence.
This stunning loss of intellectual capability will impede our efforts
in all areas of society.
Liebermann encourages active enforcement of free-trade rules, especially
in computer-chip manufacturing, where China rebates 14 percent added
tax on chip sales. He also encourages the Department of Defense and
other government agencies to have some threshold of domestic content
on high-tech purchases. He suggests increased government funding for
R&D, cooperative research programs within universities, and tax
incentives for U.S. investments.
Rep. Don Manzullo (R-Ill.), chairman of the House Subcommittee on
Small Business, calls the movement of jobs offshore, not a trend
but an avalanche. You have to have engineers to do manufacturing.
You have to have engineers to find innovation. You need engineers
to create new industries. If the innovation process in manufacturing
shifts to other global centers, a decline in the U.S. standard of
living is assured.
The Bush administration is increasingly seeing the problem as a serious
one, both economic and political. It's a complex situation,
says Bruce P. Mehlman, Assistant Secretary of Technology Policy for
the Department of Commerce. We're seeing companies offering
a variety of reasons as to why they are moving work offshore, but
we continue to need to work to support job creation and retention
in the United States.
The real question is whether we're reaping a bitter harvest
in the post-Internet bubble, post-Worldcom, post-9/11, and post-Iraq
world, or whether a fundamental shift took place during this same
period of economic challenge that won't allow an information
technology workforce recovery as the broader economy recovers over
the next few years, Mehlman says.
With a problem so complex and so rooted in international economics,
foreign trade agreements, currency valuations, and engineering education,
there are no simple solutions. Globalization forces lower-level jobs
to get exported, increases the standard of living worldwide, and provides
for cheaper goods and services. But globalization also increases domestic
unemployment in some industries, decreases the U.S pre-eminence in
technology, and makes science and engineering a less attractive career
For engineering educators, the offshore job issue is becoming paramount.
From an increase in public/private partnerships, to new programs to
retrain older workers, to more of a focus on international marketing
and economics, educators are realizing that they are a vital cog in
the national economy and this issue of jobs moving out of the country.
But there are no easy solutions. Companies need certain workers at
a certain cost structure. But engineering schools must also have the
flexibility and the depth to create the minds that develop the
next big thing.
The short term is that we didn't produce the workers companies
needed for many years and now there aren't jobs, Rice University's
Richard Tapia says. Our problem right now is an educational
one. Technology follows science, so we have to have good, strong science
education. But there is nothing wrong with teaching students and placing
their education within the context of global economics. Engineering
schools can do both: encourage the innovation, but also keep in mind
that we are training people for good jobs. We need the flexibility
to do both.
NEXT MONTH: What engineering schools can do to stem the tide of jobs
Dan McGraw is a freelance writer based in Austin,
He can be reached at email@example.com.