Engineering Labor Force Overview

1. July | 2012 Engineering Labor Force Overview

2. Current Labor Force Statistics Engineerstypically specialize in a particular field or industry. The “Big 4” engineering fields combine to represent just over half of all US engineering talent in 2012. • Civil, mechanical, industrial, and electrical engineers comprise 51% of all engineers in the US. There are more than 1.7 million engineers in the US in 2012. While that sounds like a large number, in reality that represents just 1 out of every 100 US jobs. Source: EMSI - 2012

3. Current Labor Force Statistics • Manufacturing and engineering services represent the two largest industries for engineering talent, claiming just under half of all US engineering professionals. • Another 4% work at scientific R&D service-based companies. • The manufacturing industry continues to lose engineering professionals, while architectural and engineering services picked up the market share from 2001 – 2011. • Declines in the manufacturing industry are projected to slow, but the sector will continue to lose engineering talent to the services sector in the next decade. • The government is also a major employer of engineering talent. • Federal, state, and local governments combined to employ about 11 percent of all US engineers in 2011. • Approximately 7% of all US engineers are self-employed, or “free agent” workers, typically working as consultants. 7% of US Engineers are “Free Agents” US Engineering Employment by Industry Source: EMSI - 2012

4. Engineering Growth Projections • Over the next decade, demand for engineers will grow by 10%, compared to the • national increase of 12%. The decline in manufacturing industries is one of the main reasons that engineering occupations are projected to grow at a slower than average rate, but some specialty disciplines are expected to see robust growth. • Between 2010-2020, biomedical engineers are forecast to experience the fastest growth rate among all engineering disciplines, 62%. Biomedical engineers are increasingly in demand as the population ages and the health care industry continues to grow. • The continuing importance of the energy sector is reflected in the expected elevated growth in demand for environmental, petroleum, and nuclear engineers. • While niche engineering disciplines report the fastest growth rates, the Big 4 disciplines will still add the bulk of new workers over the next decade. Civil engineers, already the largest engineering specialty, are expected to post the largest growth over the next ten years, with demand increasing due to the ongoing need to improve the nation’s infrastructure. Source: BLS Occupational Projections 2010-2020

5. Engineering Growth Projections • Service-based industries are projected to see the greatest growth in engineering talent over the next decade, while the number of engineers in the manufacturing sector will shrink. • Demand for engineers in the architectural and engineering services industry is forecast to grow 16% between 2011 and 2021, while engineering talent in the manufacturing sector is expecting a 3% decline. The government growth trend is positive, but still lags the overall engineering growth rate. • Biomedical and petroleum engineers are forecast to experience the strongest growth trend across the three major industries for engineering talent. Source: EMSI - 2012

6. Emerging Engineering Trends Despite the subpar outlook for manufacturing, the sector is getting a boost from the growing idea of bringing offshored operations back to the United States. • Companies that had shifted functions overseas are increasingly looking at “re-shoring,” as many perceived benefits of offshoring are now being called into question. • KEY FACTORS GIVING RISE TO RE-SHORING • Labor costs in emerging nations such as China are rising faster than in the US. • Commodity prices are also rising, translating into higher transportation costs and higher production costs. • Turnaround times are becoming increasingly important as demand fluctuates. • Companies are looking for increased flexibility and fluidity in their workforces after the recession. • Rising income levels and increasing domestic demand in China and other developing markets means that production capacity may be increasingly used for filling domestic needs. • COMPANIES THAT ARE RE-SHORING • General Electric is moving some of its appliance manufacturing from China to Louisville, Kentucky. • NCR Corp. is moving all of its ATM machine production from China, India, and Hungary back to its Columbus, Georgia plant. • Master Lock is re-shoring about 100 jobs from China to a facility in Milwaukee. • Other companies that have re-shored jobs: • Ford, Honda, General Electric, Caterpillar and Intel. RE-SHORING CREATES JOBS The Boston Consulting Group projects that $100 billion in goods production can return to US shores in the next decade. As a result, the re-creation of hundreds of thousands of jobs will help reduce the unemployment rate by 1.5 percent. Source: http://www.voxeu.org/article/when-offshoring-backfires; http://www.forbes.com/sites/timworstall/2011/11/07/reshoring-onshoring-the-oppo; http://finance.yahoo.com/blogs/daily-ticker/president-obama-touts-onshoring-made-america-back-221759270.html site-of-offshoring-anyway/; https://www.bcgperspectives.com/content/articles/manufacturing_supply_chain_management_made_in_america_again/

7. Engineering Labor Demand • Demand for engineering talent moderated in late 2011 and the first quarter of 2012, but the long-term hiring outlook remains positive. • Demand for engineering talent showed a 13% YOY increase in Q1’12, compared to 9% growth in total labor demand. • Civil engineers are the clear leader among the “Big 4” engineering disciplines, with online advertised job vacancies up around 40% YOY in the first part of 2012. • Petroleum engineers continue to lead the niche disciplines, with job postings up around 25% YOY. • Ad volumes are also up in several engineering-related industries, including aircraft manufacturing and computer related fields. • Reported plans to hire engineering graduates increased to 75% in 2012, compared to 63% last year. Engineering Services Semiconductor Manufacturing Computer Systems Design Aircraft Manufacturing Scientific R&D Services Source: National Association of Colleges and Employers (11/11) Source: Wanted Analytics

8. Engineering Talent Pipeline Employers today are looking for engineers with a unique combination of skills, education, and experience — which may be difficult to find. • Employers are looking for candidates with the appropriate technical background, but other attributes are also key to getting hired. • For new graduates, past leadership experience is as important as the college major when it comes to hiring decisions, according to employers. Nearly three-fourths of employers also say they prefer to hire candidates with relevant work experience. • Teamwork and communication skills are essential skills for all job candidates, including engineers. • In a video sponsored by the National Science Foundation, technical hiring managers say that along with subject matter proficiency, good communication skills top the list of attributes they are looking for in new engineers. • The communications skills that are most critical for technical workers include the ability to collaborate and work on teams, particularly across geographies and functions. The ability to not only solve problems but to explain the problem solving approach is also essential. “Companies that hire engineers have wish lists of skills and experience, and the reality is that they’re not going to find anyone who meets all of those requirements.” —Paul Kostek, consulting engineer and principal of Air Direct Solutions and former president of IEEE-USA Skills and attributes rated on a 5 point scale: 1=No influence/ Not important to 5=Extreme influence/ Extremely important Sources: NACE Job Outlook 2012; 2012 Engineering Jobs Outlook, CareerBuilder; NSF Video: What Skills Do I Need to Get Hired? http://www.youtube.com/watch?v=A42Tab_bu6A

9. Engineering Talent Pipeline College engineering enrollment has been steadily increasing in recent years, suggesting the start of a “youth movement” in the field. thousands thousands • Total US enrollment in college engineering programs surpassed 650,000 in the fall of 2010, a 22% increase over 2005 levels and up 5% over the prior year. The number of degrees awarded in engineering fields also continues to grow, but at a somewhat slower pace. • There were around 130,000 engineering degrees granted in 2010, up 4% year over year but just 7% more than in 2005. Source: American Society for Engineering Education

10. Engineering Talent Pipeline • The more specialized disciplines such as petroleum, biomedical, and aerospace engineering saw the highest growth rates of college graduates from 2005-2010. • These three small fields together added more college graduates than the Big 4 fields combined over those five years. “Big 4” Disciplines While some of the Big 4 engineering fields continue to add large numbers of graduates, smaller niche disciplines are outpacing their growth rates and volumes. Source: American Society for Engineering Education

11. Engineering Talent Pipeline Improving performance in K-12 education is also key to maintaining a pipeline of future engineers. Although US high school students’ achievements in science and math have improved in recent years, significant shortfalls persist. • Only around a quarter of high school seniors and less than 40% of fourth graders and eighth graders score at or above grade-level proficiency in mathematics. • Achievement gaps are found among many student subgroups, with the largest gaps among students of different racial/ethnic backgrounds or with different family incomes. • US high school students have been taking increasingly more math and science courses in recent years. • The average number of credits that US high school students earned in math classes increased from 3.2 in 1990 to 3.9 in 2009; the average number of credits earned in science classes grew from 2.8 to 3.5 in the same time period. • Students are also taking more advanced math and science classes, such as trigonometry, calculus, chemistry, physics, and engineering courses. *The National Assessment of Educational Progress (NAEP), a congressionally mandated program, has monitored changes in US students’ academic performance in mathematics and science since 1969. Grade 12 Average: 26% **Income measured by eligibility for free/reduced lunch Source: Science and Engineering Indicators 2012

12. Engineering Talent Pipeline – International Perspective Despite recent improvements, US high school students also lag other countries in educational outcomes, with lower scores on international math and science assessment tests and sub-par high school graduation rates. • US scores on the Programme for International Student Assessment (PISA),* an international assessment of high school math and science literacy, have improved but remain consistently below other countries’ scores. • The US ranked 18th out of 33 OECD countries in PISA mathematics scores in 2009. • The 2009 US science PISA score was slightly above the OECD average, but was lower than 12 out of 33 other OECD nations. • The United States had an average high school graduation rate of 77% in 2009 compared with the OECD average of 80%. • The United States ranked 18th out of 25 OECD countries for which graduation rate data were available in 2008. • Average PISA Math and Science Literacy Scores Math Science OECD Average 80% *Sponsored by the Organization for Economic Co-operation and Development (OECD) and initially implemented in 2000, PISA assesses the performance of 15-year-olds in mathematics and science literacy every 3 years. PISA measures how well students apply their knowledge and understanding to real-world situations. Source: Science and Engineering Indicators 2012; OECD

13. Engineering Talent Pipeline Organizations of all kinds—including government, business, education and philanthropic groups—are taking steps to improve US education in the science, technology, engineering and mathematics (STEM) fields. • The Obama administration, under its “Educate to Innovate” campaign, has called for improving STEM education via several partnerships and initiatives. Source: http://www.whitehouse.gov/issues/education/educate-innovate; http://www.huffingtonpost.com/james-m-gentile/president-obamas-leadersh_b_418571.html

14. Key Engineering Talent Markets The top ten leading metro areas for engineering talent are projected to account for nearly 40% of the talent pool’s job growth through 2021. • The top ten metros are Houston, Washington DC, Dallas, Los Angeles, Boston, Atlanta, Chicago, Baltimore, Detroit, and San Jose. The top 5 fastest growing metro areas for engineering talent are all reporting growth rates nearly double the national average over the next ten years. • The Houston metro is projected to lead the engineering talent growth with an increase of more than 20% through 2021, compared to 10% nationally. • St. Louis is forecasted to experience the largest decline in engineering talent, shedding 550 jobs over the next ten years. Top 10 Metro Areas for Engineering Talent Source: EMSI-2012

15. Engineering Salary Trends • Among major college disciplines, engineering currently offers the highest earning potential – from graduation day onward. • The average starting salary for engineering majors was $58,581 in 2012, 38% higher than the overall starting salary. • Computer engineers report the best starting salary offers in 2012, with aerospace engineers closely behind. • The average salary for all US engineers in 2012 was nearly $93,000, compared to an average of around $45,000 for all occupations. • That translates into $1.4 million in additional earning potential over a 30 year career. Average All Engineers • 2012 Median Starting Salary By Discipline Sources: National Association of Colleges and Employers, April 2012 (Based on available fields); BLS Occupational Employment and Wage Estimates

16. Engineering Labor Market Demographics The aging workforce continues to be a significant demographic trend in the engineering field in 2011. • More than half (56%) of the engineering workforce is 45 or older, compared to 47% of the overall labor force. • Aerospace engineers currently hold the greatest threat for a possible supply shortage in coming years, with nearly two-thirds of the workforce age 45 or older. • More than 60% of electrical, petroleum, and industrial engineers are also age 45 or older. Source: BLS, US Census Factfinder, National Science Foundation, American Society for Engineering Education; National Association of Colleges and Employers

17. Engineering Labor Market Demographics Women continue to remain underrepresented in the engineering workforce—particularly in senior roles—but recent graduation rates suggest a narrowing trend. • Women average about 20% of all graduating engineering students, but only around 13% of the engineering workforce. • Women still lack a significant presence in senior engineering positions, representing only 7% of all engineering managers in 2010. • In 2010, the number of women graduating with engineering degrees grew 5% year over year, compared with 4% growth in male engineering graduates. • As the level of higher education progresses, the gap between women and men narrows, with women accounting for 18% of bachelor’s degrees but 23% of master’s and doctoral degrees. Sources: American Society for Engineering Education, Women in the (STEM) Workplace – Northwestern University; Master of Engineering Management (April 2012); U.S. Department of Education, National Center for Education Statistics

18. Engineering Labor Market Demographics Diversity trends among engineering graduates show a decline in the representation of African American and Asians in the field, but an increasing number of Hispanic engineers. • African Americans have shown a gradual decline in the number of engineering degrees earned over the past ten years, and remain significantly underrepresented in the field. • The percentage of Asian students receiving engineering degrees has fallen from 14% in 2001 to 12% in 2010, but that figure is still significantly higher than the overall concentration of Asian students receiving bachelor’s degrees (7%). • More engineering degrees have gone to Hispanic students, who accounted for 5% of degrees in 2001 and 7% in 2010. • Sources: American Society for Engineering Education, U.S. Department of Education, National Center for Education Statistics

19. Engineering Labor Market Demographics Foreign workers have become increasingly prevalent in the US engineering workforce. Of the approximately 4 million US residents with a bachelor’s degree in engineering, around a third are foreign born. • A majority (61%) of the foreign born U.S. population with engineering degrees came from Asia, including 22% who were born in India, and 13% who were born in China. The share of scientists and engineers who are foreign born has nearly doubled over the past twenty years. • However, the rate of growth of foreign-born S&E workers may have slowed in recent years as a result of the economic downturn. • The influx of skilled foreign workers has also slowed recently as the number of temporary visas declined. In 2010, the United States issued around 117,000 H-1B visas, down almost 25% from the 154,000 issued in 2007. Sources: Population Reference Bureau, Feb. 2012; The Foreign Born with Science and Engineering Degrees, US Census Bureau, Nov. 2011; Census Bureau Releases National-Level Data on Education Levels, Feb. 2012

20. Engineering Job Satisfaction • Engineering professionals say they are relatively content and committed to their current employer, according to the 2012 Kelly Global Workforce Index. • 69% of engineering professionals say they are committed to their current employer and 59% say they are happy in their current job. • However, feelings of discontent and restlessness are lurking under the surface for engineering professionals. • Less than half (49%) of engineering professionals feel valued by their current employer, with female engineers feeling significantly less valued than their male counterparts (44% of women and 51% of male engineers). • Overwhelmingly, engineering professionals derive meaning from their work by their ability to excel/develop in their field (76%). However, a critical gap exists in that only 53% agree that their current employment provides them with a sense of true meaning. • Engagement comes from the opportunity to do interesting work. • The top factor that makes engineering professionals more engaged/ committed to their job is more interesting or challenging work (32%), followed by higher salary/benefits (25%). Engineers Value the Ability to Excel/Develop Engineering Professionals: Job Satisfaction Indicators Source: Kelly Global Workforce Index 2012. Over 13,000 engineering professionals responded.

21. International Engineering Perspective There is significant difficulty in quantifying the number of engineers across countries, due to varying education and qualification levels necessary to practice in the profession, as well as differences in the availability of occupational information. • Engineers and other STEM professionals are more likely to be found in large developed countries, where much of the technological and knowledge resources are centered. • Some emerging markets such as Brazil and China also have large numbers of engineers and other science and technology workers, but they represent a much smaller portion of the total labor force. Data is 2008. Canada, US: 2007; India: 2005 Researchers are defined as professionals engaged in the conception or creation of new knowledge, products, processes, methods and systems, as well as in the management of these projects. Source: Engineering: Issues, Challenges, and Opportunities for Development, UNESCO, 2010; UNESCO Science and Technology Statistics

22. International Engineering Perspective Engineering is a diverse profession that faces global and local challenges, with both similarities and differences seen across countries. Many other countries are also looking for ways to promote engineering and other STEM professions. • Engineers around the world apply scientific principles and technology to address large scale challenges including: • Driving sustainable development, including environmental protection and natural resource management, and solutions in key sectors including transportation, industry, and energy. • Providing increased and equitable access to basic and critical needs in areas including healthcare and information via innovative technologies and advancements. • But engineers also tackle a diverse range of challenges depending on their locations: • Most engineering activity in bigger economies is larger and more global in scale. For example, very few smaller countries have the engineering resources to design and manufacture jet engines or advanced automotive technologies. • Engineers in smaller countries tend to be more concerned with developing solutions to localized problems. • Engineers across the globe face many similar challenges within the profession: • Aging of the engineering workforce and future engineering shortages. • Declining interest and enrollment of young people in STEM fields in colleges and universities. • Need to strengthen educational and training regimens for future engineers. • Lack of diversity within the engineering profession. • Forging more effective alliances with professionals in other disciplines, private enterprises, and public sector organizations. • Encouraging innovation, entrepreneurship, and job creation for STEM professionals. Source: Engineering: Issues, Challenges, and Opportunities for Development, UNESCO, 2010

23. Emerging Engineering Trends Engineers are at the forefront of creating innovations that shape the world and drive progress. Today’s engineers are using their expertise to solve critical challenges in diverse areas including biology, technology, sustainability and education. Source: WEF http://forumblog.org/2012/02/the-2012-top-10-emerging-technologies/