The Millionaire Next Door

Engineering Economic Productivity

Today far too many college graduates are unable to find job.  To make matters worse, some of these same people borrowed heavily to fund their college educations.  Some have over $100,000 in outstanding student loans.  It is easy to blame the American economy for these ills, but it is the individual who possibly selected a pricey university and a college major where supply greatly exceeds demand in the labor market   

However,  recent engineering graduates are among the least likely to have trouble finding a job.  Most engineering majors had multiple job offers before they even completed their course work.  And how is it that so many of them graduated without debt?  One of the reasons is that engineering majors often take 5 to 6 years to complete their degree because they are involved in co-op and intern programs along the way.   As a result, they are well-paid and often their tuition is fully or partially covered by their employer.  Plus they gain valuable work experience.

In Stop Acting Rich, I mentioned that:

The frugal nature of wealthy engineers is certainly reflected in their demonstrated superior ability to generate wealth from income.  Overall, engineers produced about 22 percent more wealth per dollar of realized income than did millionaires in general. 

They have a higher than average propensity than others in their income/age cohort to accumulate wealth.  They are less likely to favor expensive status denoting products and brands than others. 

Among those engineers who are significantly more productive in transforming income into wealth are mining engineers, geological engineers, safety engineers, marine engineers, chemical engineers, aerospace engineers, petroleum engineers, etc.  Recently, USA Today reported the results of several studies of the projected lifetime earnings of 171 college majors.  Among those with the highest earnings over a 40 year career path were petroleum engineer majors, marine engineers and mining and mineral engineers.  But the article also suggested that several of the majors with the highest average annual earnings are among the least popular majors, “suggesting that there is a real demand in these areas.”

6 thoughts on “Engineering Economic Productivity”

  1. But, what if you…

    1) Don’t want to be an engineer?
    2) Don’t have the strengths/talents required of engineering?

    Should you try to be an engineer anyways, since it would be more profitable?

    Also, are you trying to say that it’s all the young people with large education loans should just bear the consequences without complaint, since they foolishly chose to be something other than an engineer? Because, that’s kind of what your post sounds like.

  2. Cor,

    I think the thing to take from the article is to be more like an engineer in the handling of money and the taking on of student loans than a suggestion to actually become an engineer. Because engineering degrees, unlike the vast majority of college degrees, is directly tied to an occupation that pays relatively well, it is a good choice of majors. Others that come to mind would be graphics arts, computer science, business, marketing, communicatons, and the sciences.

    Probably the better thing to take from the article is that you should think about the financial payback that your degree will provide when deciding where to go to school and taking on student debt. If you rack up a half million dollars in loans while working on a doctorate degree in French Literature from Harvard, you are very unlikely to get your investment back. It would be better to start your own business, become a multi-millionaire, and then go back to Harvard for the French Literature degree when you can pay cash.

    And yes, we should all take responsibility for our own stupidity, so if you have amassed huge amounts of student loans to receive a degree for a job that pays $30,000 a year, you shoud bear the consequences without complaint. You were an adult (and a smart adult if you were going to college) and made an adult choice. Instead of hanging out at an Occupy rally, you should take on extra jobs delivering pizzas or loading packages for FedEx to get rid of your debt as fast as possible. Also, tell everyone after you not to make your mistake.

  3. Cor, even if Dr. Stanley isn’t willing to state it that way, I will. =) Anyone who signed up for huge, unbankruptable debt without doing a future earnings analysis deserves to shut up and pay their own “stupid tax”. Those of us who did the math and behaved responsibly don’t owe the irresponsible borrowers a thing.

    I refuse to accept that anyone capable of graduating from an accredited college or university lacks the capacity to apply themselves and learn the discipline of engineering. However, I also believe that each of us should follow his or her own passions –> that’s where the real money will be made if you’re conservative about your risk and work hard and ambitiously at it.

    Do the math. Plan your career. Prepare for changes.

  4. Great article Dr. Stanley. Sadly, even a few people who read your blog are too ignorant to understand what your article was really about. You were simply giving an example of making wise career and educational decisions, not suggesting that everyone should be engineers.

  5. I don’t agree with Mr. Reed’s comment “I refuse to accept that anyone capable of graduating from an accredited college or university lacks the capacity to apply themselves and learn the discipline of engineering.” I am an engineer and during my tenure at school I taught an introductory programming course that was required for all engineering majors. Sadly, a large portion of college students lack the ability to think like an engineer. In my class, the inability to take a large task and divide it into its simplest steps was what got alot of people in trouble (the programming itself when someone gave them a list of simple tasks wasn’t). In the science classes, it was the ability to take the math they learned abstractly and apply it to real world problems. Not everybody can do it.

    However I agree with both of the last two posts that people need to accept the consequences of their financial actions. If they have mortgages, credit card debt, or student debt; I see no difference. Even if they lack the analytical mind to project the costs, there are calculators online for that.

  6. Engineering Comments

    Petroleum, marine, and mining engineers earn a lot probably due to the less pleasant working conditions.

    Also, the current downturn has not been good for civil engineers, for obvious reasons.

    Regarding the comment at “I refuse to accept that anyone capable of graduating from an accredited college or university lacks the capacity to apply themselves and learn the discipline of engineering”, there was actually a study at the University of Oregon that found that students with an SAT Reasoning Math score under 600 (74th percentile) had a very low chance of successfully completing a math or physics major (they suggest that this is also likely true for engineering, but University of Oregon does not have engineering). Given the very low standard of math education in US K-12 schools, it is not that surprising that nearly 3/4 of university students are ill prepared to successfully completed a major in a math-intensive subject.

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