Some basic observations: fewer and fewer Americans want to be scientists and engineers (S&E). US S&E compensation growth has lagged that of doctors, lawyers and other professionals in the last ten years. Other nations, particularly in Asia, are catching up, with Asia now producing more S&E PhDs per year than the US, and China to surpass the US in PhDs per year in 2010. Freeman points out that lack of interest in S&E by native-born US students is rational - their career prospects are diminished by foreign (outsourcing) and foreign-born (immigration) competition.
Note Freeman's Proposition 2: Despite perennial concerns over shortages of scientific and engineering specialists, the job market in most S&E specialties is too weak to attract increasing numbers of US students. Nevertheless, US S&E pay rates are still high enough to attract talented foreigners. This competition further reduces the attractiveness of S&E careers to US students.
For related commentary, see my previous posts Don't become a scientist!, history repeats, brain drain slowdown and Tale of two geeks.
Abstract: This paper develops four propositions that show that changes in the global job market for science and engineering (S&E) workers are eroding US dominance in S&E, which diminishes comparative advantage in high tech production and creates problems for American industry and workers: (1) The U.S. share of the world's science and engineering graduates is declining rapidly as European and Asian universities, particularly from China, have increased S&E degrees while US degree production has stagnated. 2) The job market has worsened for young workers in S&E fields relative to many other high-level occupations, which discourages US students from going on in S&E, but which still has sufficient rewards to attract large immigrant flows, particularly from developing countries. 3) Populous low income countries such as China and India can compete with the US in high tech by having many S&E specialists although those workers are a small proportion of their work forces. This threatens to undo the "North-South" pattern of trade in which advanced countries dominate high tech while developing countries specialize in less skilled manufacturing. 4) Diminished comparative advantage in high-tech will create a long period of adjustment for US workers, of which the off-shoring of IT jobs to India, growth of high-tech production in China, and multinational R&D facilities in developing countries, are harbingers. To ease the adjustment to a less dominant position in science and engineering, the US will have to develop new labor market and R&D policies that build on existing strengths and develop new ways of benefitting from scientific and technological advances in other countries.
From the paper:
Enrollments in college or university per person aged 20-24 and/or the ratio of degrees granted per 24 year old and in several OECD countries (Australia, New Zealand, Netherlands, Norway, Finland, the United Kingdom, and France) exceeded that in the US. 5 In 2001-2002, UNCESCO data show that the US enrolled just 14% of tertiary level students – less than half the US share 30 years earlier. 6 In most countries, moreover, a larger proportion of college students studied science and engineering than in the US, so that the US share of students in those fields was considerably lower than the US share overall. In 2000, 17% of all university bachelor’s degrees in the US were in the natural sciences and engineering compared to a world average of 27% of degrees, and to 52% of degrees in China.
...Overall, the U.S. share of world S&E PhDs will fall to about 15% by 2010. Within the US, moreover, international students have come to earn an increasing proportion of S&E PhDs. In 1966, US-born males accounted for 71% of science and engineering PhDs awarded; 6% were awarded to US-born females; and 23% were awarded to the foreign-born. In 2000, 36% of S&E PhDs went to U.S.-born males, 25% to U.S.-born females and 39% to the foreign-born. 8 Looking among the S&E fields, in 2002, international students received 19.5% of all doctorates awarded in the social and behavioral sciences, 18.0% in the life sciences, 35.4% in the physical sciences, and 58.7% in engineering. 9
...Whichever indicator one examines, the evidence suggests that the job market for most scientists and engineers in the US has fallen short of the job markets in competitive high level occupations. Exhibit 3 records levels of pay and rates of change in pay from the Census of Population. It shows that scientists and engineers earn less than law and medical school graduate, and that rates of increase in earnings for science and engineering in the 1990’s fell short of the rates of increase for doctors and lawyers and for persons with bachelor’s degrees. The Census comparisons of the income between S&E doctorates and persons obtaining medical or law professional degrees understate the lower income associated with the PhD trajectory. Doctoral graduate students typically spend 7-8 years earning their PhD – a quarter of their post-bachelors working life – during which they are paid stipend rates. In some disciplines, notably the life sciences, most spend 3 or so years doing postdoctoral work, again at stipend incomes that fall far below alternative salaries available to bachelors degree holders or those with professional degrees. Since postdocs work many hours, their pay is particularly low on an hourly basis for someone with their years of education. Given their lengthy training and post-doctoral work, many S&E doctorates do not enter the “real job market” until they are in their mid-30s, by which time many of their undergraduate classmates who chose other careers are well-established in their work lives. The comparison with managers with 2 years of post-bachelor’s training does not adequately reflect the payoff to MBAs since the post-bachelor’s education refers to any sort of further education, not to that degree.
...In 1973, roughly 73% of new PhDs obtained faculty jobs within three years of earning their degrees. By 1999, just 37% of new PhDs obtained faculty jobs within three years of earning their degrees.