Why finance majors make more than engineers

[phantom power]

Back in the 1970s and early 1980s, kids coming out of college didn’t lust after jobs in finance. The reason was simple: Finance jobs didn’t pay as well as those in other professions. That may be hard to imagine now, with some first-year financial analysts pulling down six-figure salaries and potentially six-figure bonuses, while newly minted engineers can only expect to earn around $70,000.

...

The two didn’t pursue this idea out of idle curiosity. Finance accounts for 15 to 25% of the overall increase in wage inequality since 1980, they say. To put it another way, lopsided compensation in the financial industry has greatly contributed to the disappearance of the middle class and the polarization of the U. S. into a country containing mainly people with low and high incomes.

The two economists, Thomas Philippon and Ariell Reshef, discovered something odd: There was another time in U. S. history when wages in the financial sector outpaced those elsewhere. That period extended from 1909 to 1933 which, in a spooky echo of today, spanned the roaring twenties, the 1929 stock market collapse, and the initiation of the Great Depression. It also casts doubt on the concept that information technology has been the force driving higher salaries — after all, there were no computers in the 1920s.

What the economists did find, however, was that the relative rise of salaries in finance corresponded with progressive deregulation of the industry beginning in the 1980s, probably because deregulation can intensify innovation and competition for talent. Similarly, salaries in finance started to fall during the 1930s, 40s, and 50s, not because of the punk economy or any nostalgic ideas about the rise of manufacturing industries. The more probable explanation, say Philippon and Reshef, is that that period was one of relatively heavy regulation of financial firms and, coincidentally, much higher tax rates on higher incomes.

http://machinedesign.com/article/why-finance-majors-make-more-than-engineers-1020

[Avalux]

1. We'll see who makes more after the zombie apocalype....

or...who will surivive the zombie apocalypse. My money's on the engineer. ;)

[phantom power]

2. Like they say, "eat the rich brains"

:patriot:

[Confusious]

6. zombie throwing trebuchet at my place! nt

[3waygeek]

12. The finance guys will survive OK..

zombies are looking for brains, making engineers (like me) their primary targets.

[Turbineguy]

3. According to Thorstein Veblen

eventually the economy will be so screwed up, it will take Engineers to fix it.

[Odin2005]

18. The engineers were in charge from about 1928 to 1970.

1928 because Hoover was an engineer, and a very respected one.

Then the Finance fuckers, indoctrinated by Milton Friedman, started taking over

[BOG PERSON]

19. ugh no

nerds who think they know what's best for everybody have done enough damage already.

[ddeclue]

4. I'm an engineer and I make 108k in Florida but I'm looking to go to law school.

I can make 120k up in the D.C. area or NYC or 150k out in Silicon Valley but I make far above the average for engineers and even if I moved the cost of living would eat most of it and only California sounds appealing.

My theory is that I need to switch to a career like law or medicine where I can work as long as I want and don't have to worry about forced retirement and which will (after a few years set back) in the end pay a lot more than engineering. (Considering aviation law, IP law or patent law). I figure sooner or later all technical jobs are going to end up in India or China where they can pay their engineers 5% of what an American engineer makes.

I get a lot of respect inside the engineering community for being a Georgia Tech grad and having a lot of technical skill but another reason I want to go to law is that I simply don't get much respect or admiration outside of my work environment for what I do.

Instead of admiration, being an engineer gets you labeled a dork or a geek or a nerd and pidgeon-holed into that annoying "Big Bang Theory" stereo-type. There is a social stigma that engineers suffer whereas doctors and lawyers are admired. Don't see too many TV shows about engineering and science these days and the few engineers or scientists we get offered on these shows are all "dorks". TV loves lawyers and doctors though.

Doug D.
Orlando, FL

[Lydia Leftcoast]

5. That's a real factor

Watching TV, you'd think that there were only four career choices in the world: doctors, lawyers, cops, or the military.

[elleng]

8. I wouldn't bet on future prospects for ANY profession.

I'm an attorney (retired from govt), nothing available in my area of expertise; engineer friend finds his skills dated, too.

Whatever you choose, be prepared to changed jobs several times down the road.

Good luck.

[jtuck004]

23. +1000 Be prepared...for the unknown. /nt

[Turbineguy]

13. And remember.....

What do Engineers use for birth control?

Their personalities.

[Boojatta]

20. If you had to choose, would you prefer admiration and low pay ...

or disrespect and high pay?

[Prometheus Bound]

21. An honest assessment of lawyers from a woman I know.

One was bragging that her husband was a lawyer and this one responded, not trying to be clever or anything, but just trying to find something positive about her husband: "My husband might be a drunkard and a gambler and poorly educated, but at least he isn't a lawyer."

[elleng]

24. Silly, imo.

My father's a lawyer; 2 of his brothers were lawyers; my cousin's a lawyer; my brother's a lawyer; I'm a lawyer; my 'husb's a lawyer. ONLY one of these I don't trust is my 'husb; the rest are/were intellectually honest, straightforward, hard-working, up-standing members of society.

:hi:

[Prometheus Bound]

26. You're no fun!

:)

[elleng]

27. HAHAHAHAHA!

And we have a great time when we're together!!!

[LeftyMom]

28. There are a whole lot of out of work lawyers.

Be careful.

[MadHound]

7. And yet starting teachers, who are arguably performing one of the most important jobs in our society

Make less than either of these two professions. A sad statement on where our priorities lie.

[phantom power]

9. To me it's a miracle we have any good teachers at all

I have a theory about teachers and sexism and salaries, which goes like this:

Prior to women's lib in the 70s, there were relatively few kinds of jobs a woman could get. Teacher, librarian, nurse, secretary come to mind. So, if you were a smart talented woman, teaching was on the short list of jobs that had any hope of being rewarding or challenging. And asking for or demanding excellent pay was not on the table either.

So, until pretty recently in history, we had a sort of very cheap labor pool of smart people who make up 50% of the population to draw on for things like teaching. And that our society's weird expectations that teachers ought to turn their wee ones all into well-educated geniuses for shit pay is a hangover from that era.

I realize that this is painting with a rather broad brush, but I think there's something to it.

[MadHound]

11. You're pretty spot on with that analysis

Teaching was one of the few intellectual jobs a woman could aspire to in this country, and thus teaching was filled with thousands and thousands of excellent, smart women. This labor force powered our education system, and was the major driving force in making US education the best in the world. The trouble was, teaching was considered women's work, and thus was undervalued and underpaid.

As more and more professions, professions that were paid better and better respected, more and more women fled from education. Yet our society still expects a top notch education system, but simply doesn't want to pay for it.

Look at the top public education systems in the world. They pay their teachers like we pay lawyers and doctors, and give their teachers the same sort of respect. This attracts the best and brightest to the profession.

[hedgehog]

15. I agree absolutely!

[Bigmack]

16. I can tell you there is something addicting about teaching...

The District and Admin piles shit on you... you learn to shake it off, but what really makes a lot of teacher stay is when some kid has an "A-ha!" moment. And you were what caused that "A-ha".

Some kid will come to you with a problem, and you can help.

Some kid learns to read, or write, or think critically.... with your help.

That shit is addictive.

[WCGreen]

10. The thing is almost anyone with a good understanding of math

could self teach themselves finance.

Not so much with engineering.

[Lucky Luciano]

29. Finance can get complicated too...which is why a lot of electrical engineers choose finance

...after graduation instead of engineering!

[vets74]

14. A guess: it's the LICENSE TO STEAL issued by the Manhattan prosecutors office ???

The Manhattan office is utterly corrupt.

Google - george anderson florence cioffi - for the single worst example.

Wall Street's whores take one helluva pay-off. That one got vehicular homicide, DUI, leaving-the-scene down to misdemeanor bullshit and 16-days and a $350 fine.

Theft and fraud by the billions of dollars.

Small potatoes if you're Wall Street and it's Manhattan.

[Odin2005]

17. The Financial industry is a cancer on society.

[Prometheus Bound]

22. I always thought of it as a leech on society, but 'cancer' seems more appropriate now.

They're not just sucking the blood out of the rest of the economy, but destroying it.

[elleng]

25. 'Leech' good term,

and we've got to deligitimize it ASAP. No useful purpose whatsoever.