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High-Tech Hiring: Youth Matters

In IT engineering, young hires tend to be more energetic and up to date. Older workers need to keep skills fresh, or aim for management posts

In the engineering globalization debate, the battle lines are drawn. Companies like Microsoft (MSFT), Intel (INTC), and Oracle (ORCL) say there are severe shortages of skilled workers and they need more visas to bring in foreign workers to stay competitive. Unemployed engineers say this push for more visas is a plot to suppress wages. My own research at Duke University has shown that there is no general shortage of engineers in the U.S.

The globalization debate shouldn't focus on the issue of visas. Instead, it should examine an issue that tech executives don't like to discuss: age. Tech companies prefer to hire young engineers. Engineering has become an "up or out" profession—you either move up the ladder or you face unemployment. In other words, even though globalization has compounded the difficulties for aging engineers, it's not the culprit.

Documenting Age Discrimination

One of the staunchest opponents of foreign worker visas is Norm Matloff, a professor at the University of California, Davis, who says careers in the programming profession are notoriously short-lived. His research (flip to page 5 of the linked PDF) into attrition rates revealed that five years after finishing college, only 57% of computer science graduates were working as programmers; at 15 years the figure dropped to 34%, and at 20 years—when most were still only age 42—it was down to 19%. This was in sharp contrast to civil engineering, where careers lasted much longer. Matloff says age discrimination is rampant in the tech industry and the importation of foreign workers into the U.S. facilitates this.

I know from my days as a tech chief executive that finding good engineering talent in the U.S. is always difficult. And hiring policies and skill needs vary significantly between companies. Some can only afford to hire young, inexperienced workers, while others can pick and choose. But age is still the issue.

Startup firms are often the most cost-constrained. Consider former tech entrepreneur Jason Williamson, who is now a product manager at Oracle (ORCL). He says that during the six years he spent running BuildLinks, a software company focused on the construction industry, his strategy was to find young, impressionable workers who earned entry-level salaries and could learn on the job. He had limited capital and needed employees who could afford to work through the tough times when his company couldn't make payroll.

Even the well-funded, venture-backed companies usually echo the experiences of JiNan Glasgow, chief executive officer of patent software firm Neopatents in Raleigh, N.C. She says she can afford to pay what she needs, but her best hires and most productive employees have been new college graduates. She explains they tend to be more familiar with the latest technologies, adapt readily to change, are more creative, and try new things. Middle-aged hires have not always worked out as well for her. She says most had dated skills and expected to be paid for experience that wasn't relevant to her firm.

Limited Senior Management Berths

The fact is that in tech, youth is an asset and is in great demand. Experienced engineers are needed mostly in senior architect positions and in management, where they are paid the highest salaries.

Microsoft (MSFT) is known for the high quality of its hires. Senior Vice-President and Chief Technical Officer David Vaskevitch says younger workers have more energy and are sometimes more creative. But he adds there is a lot they don't know and can't know until they gain experience. So he says his company recruits aggressively for fresh talent on university campuses and for highly experienced engineers from within the industry. One is not at the expense of the other, he insists. For him, it is all about hiring the best and brightest—age and nationality are not important. He acknowledges that the vast majority of Microsoft hires are young, but that is because older workers tend to go into more senior jobs and there are fewer of those positions to begin with.

There is lots of competition for these senior jobs. And globalization is making things worse. Companies are increasingly locating their research and development operations closer to growth markets (BusinessWeek.com, 1/18/07). Companies like IBM (IBM) are adding tens of thousands to their workforce in places like Bangalore and Shanghai. Some of these jobs would otherwise go to older and more expensive workers in the U.S.

How Maturing Engineers Can Cope

So the days of lifelong employment for engineers may be long gone. And they face decreasing salaries as they reach their fifties. Research by University of California, Berkeley, professors Clair Brown and Greg Linden shows that even those with masters degrees and PhDs have reason to worry. Their analysis of Bureau of Labor Statistics and Census data for the semiconductor industry revealed that salaries increased dramatically for engineers in their 30s but these increases slowed after the age of 40. After 50, the mean salary dropped by 17% for those with bachelors degrees and 14% for those with masters degrees and PhDs. They found that salary increases for holders of post-graduate degrees were always lower than for those with bachelor's degrees.

The harsh reality is that as engineers progress in their careers, they need to stay current in new technologies and become project managers, designers, or architects. To keep their jobs, engineers need to build skills that are more valuable to companies and take positions that can't be filled by entry-level workers. Experienced engineers can also find rewards in entrepreneurship, teaching, and sales, as well as use their skills to excel in unrelated professions. And as Microsoft's Vaskevitch says, there are computer programmers "who become like rock stars and are unbelievably valuable (and well compensated) as they get older."

Joe Bennett, 44, provides a great example of the approach engineers should take. After working as an engineer for 13 years at Microsoft and becoming senior director of its developer and platform division, he realized that he was losing touch with the technologies he was marketing. So he took a three-month sabbatical to brush up on programming languages and frameworks like C# and ASP.NET, and transferred into a job where he was touting the benefits of different Microsoft technologies. He says that he isn't leading people, but is having fun again and is more intellectually engaged in his work than he has been in 10 years. He believes he is now more valuable to the company.

The bottom line is that we can't slow globalization or require companies to do things that aren't in their economic interests. Let's focus the debate on improving the skills of our existing workforce.

Wadhwa is Wertheim Fellow at the Harvard Law School and executive in residence at Duke University. He is a tech entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com .


Economic Impact of the Hollywood Writers Strike

By Matt Welsh

      The Writers’ Guild of America (WGA) has been on strike for a little over three months. The WGA is a union of writers who are responsible for writing American television shows and movies. The strike means that the writers are no longer providing new scripts for television shows and movies. As a result, many networks have resorted to airing reruns or unscripted television shows such as reality television. The writers are also not providing new scripts to movie studios, so if the strike continues, there will be no new movies probably by the end of the year. This strike has cost thousands of workers including television crews, assistants and other administrative staff their jobs in addition to an estimated $1.6 billion loss to the Los Angeles economy.

      At the center of the dispute between the writers and the Alliance of Motion Picture and Television Producers, which represents the studios, is how much writers should earn when television shows and movies are distributed online. Online distribution is difficult to monetize and calculate a fair compensation because it is such a new form of distribution. Currently, the writers do not receive any money when a show is viewed online at the network’s website or when it is downloaded on a service such as iTunes. The writers believe that they should get paid a portion of the money generated by online downloads and through advertising revenue that the networks generate when the show is aired for free on the network’s website. The networks and studios believe that under the current contract, which does not account for online distribution, that the networks should be compensated because they have purchased the rights to use that content.    

      There is some optimism that the strike will be resolved before the Academy Awards show before February 24. If it is not, then the Oscars may not be televised. The optimism stems from the fact the Directors Guild of America has reached an agreement for their contract. The studios gave the directors a flat residual payment of $1,200 for streaming their shows online. In contrast, writers typically earn about $20,000 when a one-hour drama is rerun on a network. Writers are hesitant to agree to the $1,200 rate because it could give networks more incentive to rerun shows online, where residuals are a fraction of what producers are required to pay for shows televised.

      Unfortunately for the writers, the studios have the most economic leverage in this dispute at least in the short run. As a result of the strike, the writers have no jobs and source of income from writing. Conversely, the studios are still airing shows, albeit reruns, reality, sports and news shows on the networks. These shows are still generating revenues for the networks. For example, American Idol, is airing new shows because it is unscripted and does not require writers to produce the show. Further, the studios are actually saving money because they do not need to pay the writers. Eventually, the studios will begin to see less revenue than they would with writers because advertisers will pay less for commercials during reruns. Additionally, studios will run out of scripts and movies to produce. However, any long term gain that the writers are seeking may not be enough to offset the current short term loss that they are incurring now.

During Matt Welsh’s junior year of college at the University of Notre Dame, Matt reached a point of virtual self-destruction that stirred within him the need to seek out an easier and more fulfilling way of life. This awakening sparked him to study the practices of today’s greatest spiritual teachers. His debut novel, The Bottom Line, tells the story about how their practices forever changed the way he lived his life. Matt also speaks to high school and college students about how they can turn their passions into their career path. Presently, he is a law student at Indiana UniversityIndianapolis. After he graduates from law school, Matt will work for the William Morris Agency.

You can read the first two chapters of The Bottom Line at Matt Welsh’s website, http://www.followyourpassiontoday.com

Disclaimer: The views and opinions expressed in these columns are solely those of the writers/interviewees and do not necessarily represent those of the editor/publisher.


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