A bit of an oldie (forgive me, work’s been a beeyatch). Economist Robert Samuelson writing for MSNBC, hits an issue recently discussed on Sepia Mutiny – the much feared Science & Engineering gap with India & China.
Samuelson’s retort is multi-pronged. First, the gap with India/China isn’t as crazy as the numbers might suggest it to be –
Judged realistically, China and India aren’t yet out-producing the United States in engineers. Widely publicized figures have them graduating 600,000 and 350,000 engineers a year respectively, from six to 10 times the U.S. level. But researchers at Duke University found the Chinese and Indian figures misleading. They include graduates with two- or three-year degrees–similar to “associate degrees” from U.S. community colleges. And the American figures excluded computer science graduates. Adjusted for these differences, the U.S. degrees jump to 222,335. Per million people, the United States graduates slightly more engineers with four-year degrees than China and three times as many as India.…Only about 4 percent of the U.S. workforce consists of scientists and engineers.
Secondly, even if the gap is real, econ 101 would dictate that the “shortage” should reveal itself in engineering salaries (on average). And yet….
..On average, American lawyers make 42 percent more than chemical engineers. At elite levels, huge pay gaps also exist. In 2005 the median starting salary for a new Harvard University MBA was $100,000. An MBA is a two-year degree. By contrast, a science or engineering PhD can take five to 10 years, with a few years of “post-doc” lab work. At a Business Roundtable press briefing, one CEO said his company might start this sort of scientist at $90,000. Does anyone wonder why some budding physicists switch to Wall Street?From 1993 to 2003, the median salary of engineers with bachelor’s degrees and one to five years’ experience rose 34 percent (after inflation), to $58,000, the NSF’s Regets says. Among math and computer science graduates, the increase was 28 percent, to $50,000. By contrast, the average increase for non-S&E college graduates was only 7.7 percent, to $37,000.
Despite being utterly enthralled by the romance of tech, the hard-headed economist in me loathes to try to influence national policy without looking first at these sorts of numbers. I’m certainly far more apt to believe that lawyers are paid too much (and attack our “surplus demand” there) before I conclude that engineers are paid too little – the latter live within a far more efficient / dynamic market.
All the while, of course, an Indian tech salary rockets you into the top 1% of the country while an American one merely gets you comfortably into middle class (on average). Is there any doubt why so many desi’s are positively hungry for our tech work? And is this such a bad thing? Econ – unlike the space race or cold war – isn’t a zero-sum game.
red herrings.
report assumes that the only variant in comparing the countries is the resource pool. The ability to disaggregate processes so that lower-skilled jobs can be taken up by the HUGE resource pool in India is where India scores big. In US/Canada, the disaggregation is not possible. You would have the same high-end resource doing the gruntwork that is farmed out to some cheapie resource. This makes for huge productivity gains operationally.
As an interesting aside, this is the reason cited by indian executives for returning to india. The low-end personal/business support like gardening, cooking, childcare, driving, accounting, bookkeeping, etc. that a midlevel executive has to do on his/her own time out here is farmed out at a fraction of the cost.
What I’m trying to say above is that if skills increase progressively from level A through D, and if the report is comparing resources at level D, then it ignores the fact that in outsourcing a business process can be disaggregated to leverage Levels A. Whatever the relative knowledge pool at Level D, countries like India / China score higher in the Level A.
No indian trusts any domestic help with the bookeeping or child care(may be diaper changing) but that is it. The bigger reason is the family ties.
Hmmm grades decrease progressively from A-D:-)
aside – I was tracking down “the future of outsourcing’ on Businessweek.com when noticed a headline saying berkshire hathaway is looking for a successor to buffett and here are the five nominees. drumroll. i thought… hmm… by the hair on my nose i bet there is some brown in there… sure enough, there’s some wunderboy jain who runs their reinsurance. so read on.
How about a few wrong moves after college- like doing a Ph.D? Econ equates satisfaction to $, which is not true for most of ‘humankind’.
Um, about this statement: “No indian trusts any domestic help with the bookeeping or child care(may be diaper changing) but that is it” – did you grow up in India? Every last upper middle class and upper class Indian of my acquaintance growing up entrusted MOST child care to domestic help. Can we dump the pious myth of the oh-so-dutiful Indian family please. For god’s sake.
I still live in india part time. And people let servants take care of kids but keep an eye out. Nor do they let servants take care of regular book keeping. And the point was that no people dont move to india b/c they can be more productive. Culture ties and family ties are primary reason. It is more easier to be productive in US.